12 USC 1831 - Prompt corrective action

Editorial Notes

References in Text

The Securities Exchange Act of 1934, referred to in subsec. (e)(2)(E)(ii)(III), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78a of Title 15 and Tables.

Amendments

2010—Subsec. (k). Puspan. L. 111–203, § 987(span), substituted “Reviews” for “Review” and “losses” for “material loss” in span.

Subsec. (k)(2)(B). Puspan. L. 111–203, § 987(a)(1), added subpar. (B) and struck out former subpar. (B). Prior to amendment, text read as follows: “A loss is material if it exceeds the greater of—

“(i) $25,000,000; or

“(ii) 2 percent of the institution’s total assets at the time the Corporation initiated assistance under section 1823(c) of this title or was appointed receiver.”

Subsec. (k)(4)(A). Puspan. L. 111–203, § 987(a)(2), substituted “any report on losses required under this subsection,” for “the report” in introductory provisions.

Subsec. (k)(5). Puspan. L. 111–203, § 987(a)(5), added par. (5). Former par. (5) redesignated (6).

Subsec. (k)(6). Puspan. L. 111–203, § 987(a)(3), (4), redesignated par. (5) as (6) and struck out former par. (6). Prior to amendment, par. (6) related to transition rule during the period beginning on July 1, 1993, and ending on June 30, 1997.

2008—Subsec. (j)(2). Puspan. L. 110–289 substituted “bridge depository institution” for “bridge bank”.

2006—Subsec. (a). Puspan. L. 109–173, § 8(a)(37), substituted “Fund” for “funds” in span.

Puspan. L. 109–171 repealed Puspan. L. 104–208, § 2704(d)(14)(AA). See 1996 Amendment note below.

Subsec. (a)(1). Puspan. L. 109–173, § 8(a)(36), substituted “the Deposit Insurance Fund” for “the deposit insurance fund”.

Subsec. (k)(1). Puspan. L. 109–173, § 8(a)(38)(A), substituted “the Deposit Insurance Fund” for “a deposit insurance fund” in introductory provisions.

Puspan. L. 109–171 repealed Puspan. L. 104–208, § 2704(d)(14)(BB)(i). See 1996 Amendment note below.

Subsec. (k)(1)(A)(i). Puspan. L. 109–173, § 8(a)(36), substituted “the Deposit Insurance Fund” for “the deposit insurance fund”.

Subsec. (k)(2)(A). Puspan. L. 109–173, § 8(a)(38)(B), substituted “The Deposit Insurance Fund” for “A deposit insurance fund” in introductory provisions.

Puspan. L. 109–171 repealed Puspan. L. 104–208, § 2704(d)(14)(BB)(ii). See 1996 Amendment note below.

Subsec. (k)(2)(A)(ii). Puspan. L. 109–173, § 8(a)(38)(C), substituted “the outlays of the Deposit Insurance Fund” for “the deposit insurance fund’s outlays”.

Subsec. (k)(3)(B). Puspan. L. 109–173, § 8(a)(38)(C), substituted “the outlays of the Deposit Insurance Fund” for “the deposit insurance fund’s outlays”.

Subsec. (o). Puspan. L. 109–173, § 8(a)(39), struck out span and text of par. (1) and designation and span of par. (2), redesignated former subpars. (A) to (C) of par. (2) as pars. (1) to (3), respectively, and former cls. (i) and (ii) of par. (2)(A) as subpars. (A) and (B) of par. (1), respectively, and realigned margins. Prior to amendment, text of par. (1) read as follows:

“(A) In general.—In implementing this section, the appropriate Federal banking agency (and, to the extent applicable, the Corporation) shall exercise the same care as if the Savings Association Insurance Fund (rather than the Resolution Trust Corporation) bore the cost of resolving the problems of insured savings associations described in clauses (i) and (ii)(II) of section 1441a(span)(3)(A) of this title.

“(B) Reports.—Subparagraph (A) does not require reports under subsection (k) of this section.”

Puspan. L. 109–171 repealed Puspan. L. 104–208, § 2704(d)(14)(CC). See 1996 Amendment note below.

1996—Subsec. (a). Puspan. L. 104–208, § 2704(d)(14)(AA), which directed substitution of “fund” for “funds” in span, was repealed by Puspan. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above.

Subsec. (k)(1). Puspan. L. 104–208, § 2704(d)(14)(BB)(i), which directed substitution of “the Deposit Insurance Fund” for “a deposit insurance fund”, was repealed by Puspan. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above.

Subsec. (k)(2)(A). Puspan. L. 104–208, § 2704(d)(14)(BB)(ii), which directed substitution of “The Deposit Insurance Fund” for “A deposit insurance fund” in introductory provisions and “the outlays of the Deposit Insurance Fund” for “the deposit insurance fund’s outlays” in cl. (ii), was repealed by Puspan. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above.

Subsec. (k)(5). Puspan. L. 104–316 amended span and text of par. (5) generally. Prior to amendment, text read as follows: “The General Accounting Office shall annually—

“(A) review reports made under paragraph (1) and recommend improvements in the supervision of insured depository institutions (including the implementation of this section); and

“(B) verify the accuracy of 1 or more of those reports.”

Subsec. (o). Puspan. L. 104–208, § 2704(d)(14)(CC), which directed the amendment of subsec. (o) by striking par. (1) and the par. designation and span of par. (2), redesignating subpars. (A) to (C) as pars. (1) to (3), respectively, and cls. (i) and (ii) as subpars. (A) and (B), respectively, and realigning margins, was repealed by Puspan. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above.

1994—Subsec. (f)(6). Puspan. L. 103–325 substituted “Commission” for “Commisssion”.

1992—Subsec. (e)(2)(D)(i). Puspan. L. 102–550, § 1603(d)(1)(A), struck out “and” after semicolon at end.

Subsec. (f)(6). Puspan. L. 102–550, § 1603(d)(1)(B), (D), in span substituted “other regulators” for “functional regulators” and in text substituted “appropriate regulator” for “functional regulator (as defined in section 1841(s) of this title)”.

Subsec. (g)(1)(B). Puspan. L. 102–550, § 1603(d)(1)(C), substituted “capitalized (but not well capitalized)” for “capitalized”.

Statutory Notes and Related Subsidiaries

Effective Date of 2010 Amendment

Amendment by Puspan. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Puspan. L. 111–203, set out as an Effective Date note under section 5301 of this title.

Effective Date of 2006 Amendment

Amendment by Puspan. L. 109–173 effective Mar. 31, 2006, see section 8(span) of Puspan. L. 109–173, set out as a note under section 1813 of this title.

Amendment by Puspan. L. 109–171 effective no later than the first day of the first calendar quarter that begins after the end of the 90-day period beginning Fespan. 8, 2006, see section 2102(c) of Puspan. L. 109–171, set out as a Merger of BIF and SAIF note under section 1821 of this title.

Effective Date of 1996 Amendment

Amendment by Puspan. L. 104–208 effective Jan. 1, 1999, if no insured depository institution is a savings association on that date, see section 2704(c) of Puspan. L. 104–208, formerly set out as a note under section 1821 of this title.

Effective Date of 1992 Amendment

Amendment by Puspan. L. 102–550 effective as if included in the Federal Deposit Insurance Corporation Improvement Act of 1991, Puspan. L. 102–242, as of Dec. 19, 1991, except that where amendment is to any provision of law added or amended by Puspan. L. 102–242 effective after Dec. 19, 1992, then amendment by Puspan. L. 102–550 effective on effective date of amendment by Puspan. L. 102–242, see section 1609 of Puspan. L. 102–550, set out as a note under section 191 of this title.

Effective Date

Section effective 1 year after Dec. 19, 1991, see section 131(f) of Puspan. L. 102–242, set out as an Effective Date of 1991 Amendment note under section 1464 of this title.

Regulations

Puspan. L. 102–242, title I, § 131(span), Dec. 19, 1991, 105 Stat. 2266, provided that: “Each appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) (and the Corporation, acting in the Corporation’s capacity as insurer of depository institutions under that Act [12 U.S.C. 1811 et seq.]) shall, after notice and opportunity for comment, promulgate final regulations under section 38 of the Federal Deposit Insurance Act [12 U.S.C. 1831o] (as added by subsection (a)) not later than 9 months after the date of enactment of this Act [Dec. 19, 1991], and those regulations shall become effective not later than 1 year after that date of enactment.”

Supplementary Leverage Ratio for Custodial Banks

Puspan. L. 115–174, title IV, § 402, May 24, 2018, 132 Stat. 1359, provided that:

“(a)Definition.—In this section, the term ‘custodial bank’ means any depository institution holding company predominantly engaged in custody, safekeeping, and asset servicing activities, including any insured depository institution subsidiary of such a holding company.

“(span)Regulations.—

“(1)Definition.—In this subsection, the term ‘central bank’ means—

“(A) the Federal Reserve System;

“(B) the European Central Bank; and

“(C) central banks of member countries of the Organisation for Economic Co-operation and Development, if—

“(i) the member country has been assigned a zero percent risk weight under sections 3.32, 217.32, and 324.32 of title 12, Code of Federal Regulations, or any successor regulation; and

“(ii) the sovereign debt of such member country is not in default or has not been in default during the previous 5 years.

“(2)Regulations.—The appropriate Federal banking agencies shall promulgate regulations to amend sections 3.10, 217.10, and 324.10 of title 12, Code of Federal Regulations, to specify that—

“(A) subject to subparagraph (B), funds of a custodial bank that are deposited with a central bank shall not be taken into account when calculating the supplementary leverage ratio as applied to the custodial bank; and

“(B) with respect to the funds described in subparagraph (A), any amount that exceeds the total value of deposits of the custodial bank that are linked to fiduciary or custodial and safekeeping accounts shall be taken into account when calculating the supplementary leverage ratio as applied to the custodial bank.

“(c)Rule of Construction.—Nothing in subsection (span) shall be construed to limit the authority of the appropriate Federal banking agencies to tailor or adjust the supplementary leverage ratio or any other leverage ratio for any company that is not a custodial bank.”

[For definitions of terms used in section 402 of Puspan. L. 115–174, set out above, see section 2 of Puspan. L. 115–174, set out as a Definitions note under section 5365 of this title.]

Deposit of Insurance Proceeds

Puspan. L. 105–18, title V, § 50003, June 12, 1997, 111 Stat. 211, provided that:

“(a)In General.—The appropriate Federal banking agency may, by order, permit an insured depository institution to subtract from the institution’s total assets, in calculating compliance with the leverage limit prescribed under section 38 of the Federal Deposit Insurance Act [12 U.S.C. 1831o], an amount not exceeding the qualifying amount attributable to insurance proceeds, if the agency determines that—

“(1) the institution—

“(A) had its principal place of business within an area in which the President, pursuant to section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act [42 U.S.C. 5170], has determined, on or after February 28, 1997, that a major disaster exists, or within an area determined to be eligible for disaster relief under other Federal law by reason of damage related to the 1997 flooding of the Red River of the North, the Minnesota River, and the tributaries of such rivers, on the day before the date of any such determination;

“(B) derives more than 60 percent of its total deposits from persons who normally reside within, or whose principal place of business is normally within, areas of intense devastation caused by the major disaster;

“(C) was adequately capitalized (as defined in section 38 of the Federal Deposit Insurance Act) before the major disaster; and

“(D) has an acceptable plan for managing the increase in its total assets and total deposits; and

“(2) the subtraction is consistent with the purpose of section 38 of the Federal Deposit Insurance Act.

“(span)Time Limit on Exceptions.—Any exception made under this section shall expire not later than February 28, 1999.

“(c)Definitions.—For purposes of this section:

“(1)Appropriate federal banking agency.—The term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act [12 U.S.C. 1813].

“(2)Insured depository institution.—The term ‘insured depository institution’ has the same meaning as in section 3 of the Federal Deposit Insurance Act.

“(3)Leverage limit.—The term ‘leverage limit’ has the same meaning as in section 38 of the Federal Deposit Insurance Act [12 U.S.C. 1831o].

“(4)Qualifying amount attributable to insurance proceeds.—The term ‘qualifying amount attributable to insurance proceeds’ means the amount (if any) by which the institution’s total assets exceed the institution’s average total assets during the calendar quarter ending before the date of any determination referred to in subsection (a)(1)(A), because of the deposit of insurance payments or governmental assistance made with respect to damage caused by, or other costs resulting from, the major disaster.”

Similar provisions were contained in the following prior acts:

Puspan. L. 103–76, § 3, Aug. 12, 1993, 107 Stat. 753.

Puspan. L. 102–485, § 4, Oct. 23, 1992, 106 Stat. 2772.

Transition Rule Regarding Current Directors and Senior Executive Officers

Puspan. L. 102–242, title I, § 131(e), Dec. 19, 1991, 105 Stat. 2267, provided that:

“(1)Dismissal from office.—Section 38(f)(2)(F)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1831o(f)(2)(F)(ii)] (as added by subsection (a)) shall not apply with respect to—

“(A) any director whose current term as a director commenced on or before the date of enactment of this Act [Dec. 19, 1991] and has not been extended—

“(i) after that date of enactment, or

“(ii) to evade section 38(f)(2)(F)(ii); or

“(B) any senior executive officer who accepted employment in his or her current position on or before the date of enactment of this Act and whose contract of employment has not been renewed or renegotiated—

“(i) after that date of enactment, or

“(ii) to evade section 38(f)(2)(F)(ii).

“(2)Restricting compensation.—Section 38(f)(4) of the Federal Deposit Insurance Act [12 U.S.C. 1831o(f)(4)] (as added by subsection (a)) shall not apply with respect to any senior executive officer who accepted employment in his or her current position on or before the date of enactment of this Act [Dec. 19, 1991] and whose contract of employment has not been renewed or renegotiated—

“(A) after that date of enactment, or

“(B) to evade section 38(f)(4).”