Assistance to insured depository institutions
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—
if such action is taken to prevent the default of such insured depository institution;
if, with respect to an insured bank in default, such action is taken to restore such insured bank to normal operation; or
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.
In order to facilitate a merger or consolidation of another
So in original. Probably should be “an”.
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—
to purchase any such assets or assume any such liabilities;
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;
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
to take any combination of the actions referred to in subparagraphs (i) through (iii).
For the purpose of subparagraph (A), the insured depository institution must be an insured depository institution—
which, in the judgment of the Board of Directors, is in danger of default; or
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.
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.
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.
Least-cost resolution required.—
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) with respect to any insured depository institution unless—
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
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.
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:
Present-value analysis; documentation required.—
The Corporation shall—
evaluate alternatives on a present-value basis, using a realistic discount rate;
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
retain the documentation for not less than 5 years.
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.
Time of determination.—
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.
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—
the date on which a conservator is appointed for such institution;
the date on which a receiver is appointed for such institution; or
the date on which the Corporation makes any determination to provide any assistance under this section with respect to such institution.
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.
Deposit insurance fund available for intended purpose only.—
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 the Deposit Insurance Fund by protecting—
depositors for more than the insured portion of deposits (determined without regard to whether such institution is liquidated); or
creditors other than depositors.
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.
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.
Any determination which the Corporation may make under this paragraph shall be made in the sole discretion of the Corporation.
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—
the Corporation’s compliance with subparagraphs (A) and (E) with respect to an insured depository institution for which the Corporation has been appointed receiver would have serious adverse effects on economic conditions or financial stability; and
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 for the purpose of winding up the insured depository institution for which the Corporation has been appointed receiver as necessary to avoid or mitigate such effects.
Repayment of loss.—
The Corporation shall recover the loss to the Deposit Insurance Fund arising from any action taken or assistance provided with respect to an insured depository institution under clause (i) from 1 or more special assessments on insured depository institutions, depository institution holding companies (with the concurrence of the Secretary of the Treasury with respect to holding companies), or both, as the Corporation determines to be appropriate.
Treatment of depository institution holding companies.—
For purposes of this clause, sections 1817(c)(2) and 1828(h) of this title shall apply to depository institution holding companies as if they were insured depository institutions.
The Corporation shall prescribe such regulations as it deems necessary to implement this clause. In prescribing such regulations, defining terms, and setting the appropriate assessment rate or rates, the Corporation shall establish rates sufficient to cover the losses incurred as a result of the actions of the Corporation under clause (i) and shall consider: the types of entities that benefit from any action taken or assistance provided under this subparagraph; economic conditions, the effects on the industry, and such other factors as the Corporation deems appropriate and relevant to the action taken or the assistance provided. Any funds so collected that exceed actual losses shall be placed in the Deposit Insurance Fund.
The Secretary of the Treasury shall—
document any determination under clause (i); and
retain the documentation for review under clause (iv).
The Comptroller General of the United States shall review and report to the Congress on any determination under clause (i), including—
the basis for the determination;
the purpose for which any action was taken pursuant to such clause; and
the likely effect of the determination and such action on the incentives and conduct of insured depository institutions and uninsured depositors.
Not later than 3 days after making a determination under clause (i), 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.
Description of basis of determination.—
The notice under subclause (I) shall include a description of the basis for any determination under clause (i).
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.
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.
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.
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.
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.
Assistance before appointment of conservator or receiver.—
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:
Troubled condition criteria.—
The Corporation determines—
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
it is unlikely that the institution can meet all currently applicable capital standards without assistance.
The depository institution meets the following criteria:
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.
The institution’s management did not engage in any insider dealing, speculative practice, or other abusive activity.
Any determination under this paragraph to provide assistance under this section shall be made in writing and published in the Federal Register.
Any assistance provided under this subsection may be in subordination to the rights of depositors and other creditors.
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.
Unenforceability of certain agreements.—
No provision contained in any existing or future standstill, confidentiality, or other agreement that, directly or indirectly—
affects, restricts, or limits the ability of any person to offer to acquire or acquire,
prohibits any person from offering to acquire or acquiring, or
prohibits any person from using any previously disclosed information in connection with any such offer to acquire or acquisition of,
all or part of any insured depository institution, including any liabilities, assets, or interest therein, in connection with any transaction in which the Corporation exercises its authority under section 1821 of this title
or this section, shall be enforceable against or impose any liability on such person, as such enforcement or liability shall be contrary to public policy.
[Sept. 21, 1950, ch. 967, § 2], [64 Stat. 888]; [Pub. L. 95–369, § 6(c)(24)], Sept. 17, 1978, [92 Stat. 619]; [Pub. L. 97–320, title I], §§ 111, 113(m), 116, 141(a)(1), (3), title II, §§ 203, 206, Oct. 15, 1982, [96 Stat. 1469], 1474, 1476, 1488, 1489, 1492, 1496; [Pub. L. 97–457], §§ 1(a), 4, 10(a), Jan. 12, 1983, [96 Stat. 2507], 2508; [Pub. L. 98–29, § 1(a)], May 16, 1983, [97 Stat. 189]; [Pub. L. 100–86, title V], §§ 502(a)–(g), (i), 509(a), title VIII, § 801, Aug. 10, 1987, [101 Stat. 623–627], 629, 635, 656; [Pub. L. 101–73, title II], §§ 201(a), 217, Aug. 9, 1989, [103 Stat. 187], 254; [Pub. L. 102–242, title I], §§ 123(b), 141(a)(1), (e), Dec. 19, 1991, [105 Stat. 2252], 2273, 2278; [Pub. L. 103–325, title III, § 317], title VI, § 602(a)(34)–(42), Sept. 23, 1994, [108 Stat. 2223], 2289, 2290; [Pub. L. 104–208, div. A, title II, § 2704(d)(14)(M)], Sept. 30, 1996, [110 Stat. 3009–492]; [Pub. L. 109–8, title IX, § 909], Apr. 20, 2005, [119 Stat. 183]; [Pub. L. 109–171, title II, § 2102(b)], Feb. 8, 2006, [120 Stat. 9]; [Pub. L. 109–173], §§ 3(a)(8), 8(a)(19), Feb. 15, 2006, [119 Stat. 3606], 3613; [Pub. L. 110–343, div. A, title I, § 126(c)], Oct. 3, 2008, [122 Stat. 3795]; [Pub. L. 111–22, div. A, title II, § 204(d)], May 20, 2009, [123 Stat. 1650]; [Pub. L. 111–203, title III, § 363(6)], title XI, § 1106(b), July 21, 2010, [124 Stat. 1553], 2125.)