View all text of Part E [§ 2277a - § 2277a-14]
§ 2277a–10. Powers of Corporation with respect to troubled insured System banks
(a) Authority to provide assistance
(1) Stand-alone assistance
The Corporation, in its sole discretion and on such terms and conditions as the Board of Directors may prescribe, may make loans to, purchase the assets or securities of, assume the liabilities of, or make contributions to, any insured System bank if such action is taken—
(A) to prevent the placing of the bank in receivership;
(B) to restore the bank to normal operation; or
(C) to reduce the risk to the Corporation posed by the bank when severe financial conditions threaten the stability of a significant number of insured System banks or of insured System banks possessing significant financial resources.
(2) Facilitation of mergers or consolidation
(A) In general
To facilitate a merger or consolidation of a qualifying insured System bank, the sale of assets of such insured System bank to another insured System bank, the assumption of such insured System bank’s liabilities by such other insured System bank, or the acquisition of the stock of such insured System bank by such other insured System bank, the Corporation, in its sole discretion and on such terms and conditions as the Board of Directors may prescribe, may—
(i) purchase any such assets or assume any such liabilities;
(ii) make loans or contributions to, or purchase debt securities of, such other insured System bank;
(iii) guarantee such other insured System bank against loss by reason of such other insured System bank’s merging or consolidating with, or assuming the liabilities and purchasing the assets of, such insured System bank; or
(iv) take any combination of the actions referred to in the preceding clauses.
(B) Qualifying insured System bank
For purposes of subparagraph (A), the term “qualifying insured System bank” means any insured System bank that—
(i) is in receivership;
(ii) is, in the judgment of the Board of Directors, in danger of being placed in receivership; or
(iii) is, in the sole discretion of the Corporation, an insured System bank that, when severe financial conditions exist that threaten the stability of a significant number of insured System banks or of insured System banks possessing significant financial resources, requires assistance under subparagraph (A) to lessen the risk to the Corporation posed by such insured System bank under such threat of instability.
(3) Limitation
(A) Least-cost resolution
(B) Determining least costly approach
In determining the least costly alternative under subparagraph (A), the Corporation shall—
(i) evaluate alternatives on a present-value basis, using a reasonable discount rate;
(ii) document the evaluation and the assumptions on which the evaluation is based; and
(iii) retain the documentation for not less than 5 years.
(C) Time of determination
(i) General rule
(ii) Rule for liquidations
For purposes of this subsection, the determination of the costs of liquidation of any insured System bank shall be made as of the earliest of—
(I) the date on which a conservator is appointed for the insured System bank;(II) the date on which a receiver is appointed for the insured System bank; or(III) the date on which the Corporation makes any determination to provide any assistance under this section with respect to the insured System bank.(D) Rule for stand-alone assistance
(E) Discretionary determinations
(F) Purchase of stock
(4) Subordination
(5) Reports
(b) Authority to pledge or sell assets
(c) Subrogation
(1) In general
(2) Receipt of dividends
(d) Right to assets
Any agreement that shall diminish or defeat the right, title, or interest of the Corporation in any asset acquired by such Corporation under this section, either as security for a loan or by purchase, shall not be valid against the Corporation unless the agreement—
(1) is in writing;
(2) is 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) has been approved by the board of directors of the bank or its loan committee, which approval shall be reflected in the minutes of the board or committee; and
(4) has been, continuously, from the time of its execution, an official record of the bank.
(e) Insured System bank
(f) Effective date
(Pub. L. 92–181, title V, § 5.61, as added Pub. L. 100–233, title III, § 302, Jan. 6, 1988, 101 Stat. 1616; amended Pub. L. 101–220, § 6(b)(4), Dec. 12, 1989, 103 Stat. 1880; Pub. L. 101–624, title XVIII, § 1836(b), Nov. 28, 1990, 104 Stat. 3833; Pub. L. 104–105, title II, § 217, Feb. 10, 1996, 110 Stat. 179.)