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12 U.S.C. § 4617 — Capital classifications

Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4617 — Capital classifications

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Stable record: federal_law:legal_authorities:record_usc_6043e1f9d3c51682155ad327
Source file: Laws/federal/codes/united-states-code/title-12/section-4617-capital-classifications--0047e8bc37.md
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Source location: Title 12, Chapter 46, § 4617; chapter-046-government-sponsored-enterprises.md

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**(a) Enterprises** For purposes of this subchapter, the Director shall classify the enterprises according to the following capital classifications: (1) **Adequately capitalized** — An enterprise shall be classified as adequately capitalized if the enterprise— (A) maintains an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise under [section 4611 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4611&num=0&edition=prelim); and (B) maintains an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise under [section 4612 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4612&num=0&edition=prelim). (2) **Undercapitalized** — An enterprise shall be classified as undercapitalized if— (A) the enterprise— (i) does not maintain an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise; and (ii) maintains an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise; or (B) the enterprise is otherwise classified as undercapitalized under subsection (b)(1) of this section. (3) **Significantly undercapitalized** — An enterprise shall be classified as significantly undercapitalized if— (A) the enterprise— (i) does not maintain an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise; (ii) does not maintain an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise; and (iii) maintains an amount of core capital that is equal to or exceeds the critical capital level established for the enterprise under [section 4613 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4613&num=0&edition=prelim); or (B) the enterprise is otherwise classified as significantly undercapitalized under subsection (b)(2) of this section or [section 4615(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4615/b&num=0&edition=prelim). (4) **Critically undercapitalized** — An enterprise shall be classified as critically undercapitalized if— (A) the enterprise— (i) does not maintain an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise; and (ii) does not maintain an amount of core capital that is equal to or exceeds the critical capital level for the enterprise; or (B) is otherwise classified as critically undercapitalized under subsection (b)(3) of this section or section 4616(b)(5) 11 See References in Text note below. of this title. **(b) Federal Home Loan Banks** (1) **Establishment and criteria** — For purposes of this subchapter, the Director shall, by regulation— (A) establish the capital classifications specified under paragraph (2) for the Federal Home Loan Banks; (B) establish criteria for each such capital classification based on the amount and types of capital held by a bank and the risk-based, minimum, and critical capital levels for the banks and taking due consideration of the capital classifications established under subsection (a) for the enterprises, with such modifications as the Director determines to be appropriate to reflect the difference in operations between the banks and the enterprises; and (C) shall classify the Federal Home Loan Banks according to such capital classifications. (2) **Classifications** — The capital classifications specified under this paragraph are— (A) adequately capitalized; (B) undercapitalized; (C) significantly undercapitalized; and (D) critically undercapitalized. **(c) Discretionary classification** (1) **Grounds for reclassification** — The Director may reclassify a regulated entity under paragraph (2) if— (A) at any time, the Director determines in writing that the regulated entity is engaging in conduct that could result in a rapid depletion of core or total capital or the value of collateral pledged as security has decreased significantly or that the value of the property subject to mortgages held by the regulated entity (or securitized in the case of an enterprise) has decreased significantly; (B) after notice and an opportunity for hearing, the Director determines that the regulated entity is in an unsafe or unsound condition; or (C) pursuant to [section 4631(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4631/b&num=0&edition=prelim), the Director deems the regulated entity to be engaging in an unsafe or unsound practice. (2) **Reclassification** — In addition to any other action authorized under this chapter, including the reclassification of a regulated entity for any reason not specified in this subsection, if the Director takes any action described in paragraph (1), the Director may classify a regulated entity— (A) as undercapitalized, if the regulated entity is otherwise classified as adequately capitalized; (B) as significantly undercapitalized, if the regulated entity is otherwise classified as undercapitalized; and (C) as critically undercapitalized, if the regulated entity is otherwise classified as significantly undercapitalized. **(d) Quarterly determination** The Director shall determine the capital classification of the regulated entities for purposes of this subchapter on not less than a quarterly basis (and as appropriate under subsection (c)). **(e) Restriction on capital distributions** (1) **In general** — A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. (2) **Exception** — Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— (A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and (B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity. **(f) Implementation** Notwithstanding any other provision of this section, during the period beginning on October 28, 1992, and ending upon the effective date of [section 4615 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4615&num=0&edition=prelim) (as provided in section 4615(c) 1 of this title), an enterprise shall be classified as adequately capitalized if the enterprise maintains an amount of core capital that is equal to or exceeds the minimum capital level for the enterprise under [section 4612 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4612&num=0&edition=prelim).

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4501 — Notice of service

Any service required or authorized to be made by the Director under this subchapter may be made by registered mail, or in such other manner reasonably calculated to give actual notice as the Director may by regulation or otherwise provide.

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12 U.S.C. § 4613 — Transition

Before the expiration of the period ending 18 months after the appointment of the Director under [section 4512 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4512&num=0&edition=prelim), any rules and regulations promulgated before October 28, 1992, by the Secretary pursuant to the Federal National Mortgage Association Charter Act [[12 U.S.C. 1716](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1716&num=0&edition=prelim) et seq.] or the Federal Home Loan Mortgage Corporation Act [[12 U.S.C. 1451](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1451&num=0&edition=prelim) et seq.] shall remain in effect unless modified, terminated, superseded, or revoked by operation of law or in accordance with law. Such rules and regulations shall terminate, effective upon the expiration of such period.

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4612 — Studies of effects of privatization of FNMA and FHLMC

**(a) In general** The Comptroller General of the United States, the Secretary of Housing and Urban Development, the Secretary of the Treasury, and the Director of the Congressional Budget Office shall each conduct and submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, not later than the expiration of the 2-year period beginning on October 28, 1992, a study regarding the desirability and feasibility of repealing the Federal charters of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, eliminating any Federal sponsorship of the enterprises, and allowing the enterprises to continue to operate as fully private entities. **(b) Requirements** Each study shall particularly examine the effects of such privatization on— (1) the requirements applicable to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation under Federal law and the costs to the enterprises; (2) the cost of capital to the enterprises; (3) housing affordability and availability and the cost of homeownership; (4) the level of secondary mortgage market competition subsequently available in the private sector; (5) whether increased amounts of capital would be necessary for the enterprises to continue operation; (6) the secondary market for residential loans and the liquidity of such loans; and (7) any other factors that the Comptroller General, the Secretary of Housing and Urban Development, the Secretary of the Treasury, or the Director of the Congressional Budget Office deems appropriate to enable the Congress to evaluate the desirability and feasibility of privatization of the enterprises. **(c) Information** The Fed

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4612

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4615 — Minimum capital levels

**(a) Enterprises** For purposes of this subchapter, the minimum capital level for each enterprise shall be the sum of— (1) 2.50 percent of the aggregate on-balance sheet assets of the enterprise, as determined in accordance with generally accepted accounting principles; (2) 0.45 percent of the unpaid principal balance of outstanding mortgage-backed securities and substantially equivalent instruments issued or guaranteed by the enterprise that are not included in paragraph (1); and (3) 0.45 percent of other off-balance sheet obligations of the enterprise not included in paragraph (2) (excluding commitments in excess of 50 percent of the average dollar amount of the commitments outstanding each quarter over the preceding 4 quarters), except that the Director shall adjust such percentage to reflect differences in the credit risk of such obligations in relation to the instruments included in paragraph (2). **(b) Federal Home Loan Banks** For purposes of this subchapter, the minimum capital level for each Federal Home Loan Bank shall be the minimum capital required to be maintained to comply with the leverage requirement for the bank established under [section 1426(a)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1426/a/2&num=0&edition=prelim). **(c) Establishment of revised minimum capital levels** Notwithstanding subsections (a) and (b) and notwithstanding the capital classifications of the regulated entities, the Director may, by regulations issued under [section 4526 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4526&num=0&edition=prelim), establish a minimum capital level for the enterprises, for the Federal Home Loan Banks, or for both the enterprises and the banks, that

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4615

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4611 — Review of underwriting guidelines

**(a) Study** Each of the enterprises shall conduct a study to review the underwriting guidelines of the enterprise. The studies shall examine— (1) the extent to which the underwriting guidelines prevent or inhibit the purchase or securitization of mortgages for housing located in mixed-use, urban center, and predominantly minority neighborhoods and for housing for low- and moderate-income families; (2) the standards employed by private mortgage insurers and the extent to which such standards inhibit the purchase and securitization by the enterprises of mortgages described in paragraph (1); and (3) the implications of implementing underwriting standards that— (A) establish a downpayment requirement for mortgagors of 5 percent or less; (B) allow the use of cash on hand as a source for downpayments; and (C) approve borrowers who have a credit history of delinquencies if the borrower can demonstrate a satisfactory credit history for at least the 12-month period ending on the date of the application for the mortgage. **(b) Report** Not later than the expiration of the 1-year period beginning on October 28, 1992, each enterprise shall submit to the Secretary, the Committee on Banking, Finance and Urban Affairs of the House of Representatives, and the Committee on Banking, Housing, and Urban Affairs of the Senate a report regarding the study conducted by the enterprise under subsection (a). Each report shall include any recommendations of the enterprise for better meeting the housing needs of low- and moderate-income families.

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 1423 — Federal Home Loan Bank districts; number and boundaries; establishment of Federal Home Loan Banks; names

**(a) In general** As soon as practicable the Director shall divide the continental United States, Puerto Rico, the Virgin Islands, Guam, and the Territories of Alaska and Hawaii into not less than eight nor more than twelve districts. Such districts shall be apportioned with due regard to the convenience and customary course of business of the institutions eligible to and likely to subscribe for stock of a Federal Home Loan Bank to be formed under this chapter, but no such district shall contain a fractional part of any State. The districts thus created may be readjusted and new districts may from time to time be created by the Director, not to exceed twelve in all. Such districts shall be known as Federal Home Loan Bank districts and may be designated by number. As soon as practicable the Director shall establish, in each district, a Federal Home Loan Bank at such city as may be designated by the Director. Its title shall include the name of the city at which it is established. **(b) Authority to reduce districts** Notwithstanding subsection (a), the number of districts may be reduced to a number less than 8— (1) pursuant to a voluntary merger between Banks, as approved pursuant to [section 1446(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1446/b&num=0&edition=prelim); or (2) pursuant to a decision by the Director to liquidate a Bank pursuant to [section 4617 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4617&num=0&edition=prelim).

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4403 — Bilateral netting

**(a) General rule** Notwithstanding any other provision of State or Federal law (other than [section 1821(e) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1821/e&num=0&edition=prelim), [section 5390(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section5390/c&num=0&edition=prelim), [section 4617 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4617&num=0&edition=prelim), [section 1787(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1787/c&num=0&edition=prelim), or any order authorized under [section 78eee(b)(2) of title 15](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78eee/b/2&num=0&edition=prelim)), the covered contractual payment obligations and the covered contractual payment entitlements between any 2 financial institutions shall be terminated, liquidated, accelerated, and netted in accordance with, and subject to the conditions of, the terms of any applicable netting contract (except as provided in [section 561(b)(2) of title 11](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section561/b/2&num=0&edition=prelim)). **(b) Limitation on obligation to make payment** The only obligation, if any, of a financial institution to make payment with respect to covered contractual payment obligations to another financial institution shall be equal to its net obligation to such other financial institution, and no such obligation shall exist if there is no net obligation. **(c) Limitation on right to receive payment** The only right, if any, of a financial institution to receive payments with respect to covered contractual payment entitlements from anoth

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4403

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4520 — Prohibition and withholding of executive compensation

**(a) In general** The Director shall prohibit the regulated entities from providing compensation to any executive officer of the regulated entity that is not reasonable and comparable with compensation for employment in other similar businesses (including other publicly held financial institutions or major financial services companies) involving similar duties and responsibilities. **(b) Factors** In making any determination under subsection (a), the Director may take into consideration any factors the Director considers relevant, including any wrongdoing on the part of the executive officer, and such wrongdoing shall include any fraudulent act or omission, breach of trust or fiduciary duty, violation of law, rule, regulation, order, or written agreement, and insider abuse with respect to the regulated entity. The approval of an agreement or contract pursuant to [section 1723a(d)(3)(B) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1723a/d/3/B&num=0&edition=prelim) or [section 1452(h)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1452/h/2&num=0&edition=prelim) shall not preclude the Director from making any subsequent determination under subsection (a). **(c) Withholding of compensation** In carrying out subsection (a), the Director may require a regulated entity to withhold any payment, transfer, or disbursement of compensation to an executive officer, or to place such compensation in an escrow account, during the review of the reasonableness and comparability of compensation. **(d) Prohibition of setting compensation** In carrying out subsection (a), the Director may not prescribe or set a specific level or range of compensation. **(e) Authority to regulate or prohibit cer

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12 U.S.C. § 4619 to 4621 — Supervisory actions applicable to significantly undercapitalized regulated entities

**(a) Mandatory supervisory actions** (1) **Capital restoration plan** — A regulated entity 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](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4622&num=0&edition=prelim) and carry out the plan after approval. (2) **Restrictions on capital distributions** (A) *Prior approval* — A regulated entity that is classified as significantly undercapitalized may not make any capital distribution that would result in the regulated entity being reclassified as critically undercapitalized. A regulated entity that is classified as significantly undercapitalized may not make any other capital distribution unless the Director approves the distribution. (B) *Standard for approval* — The Director may approve a capital distribution by a regulated entity classified as significantly undercapitalized only if the Director determines that the distribution (i) will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity promptly, (ii) will contribute to the long-term financial safety and soundness of the regulated entity, or (iii) is otherwise in the public interest. **(b) Specific actions** In addition to any other actions taken by the Director (including actions under subsection (a)), the Director shall carry out this section by taking, at any time, 1 or more of the following actions with respect to a regulated entity that is classified as significantly undercapitalized: (1) **Limitation on increase in obligations** — Limit any increase in, or order the reduc

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4619 to 4621

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4617 — Authority over critically undercapitalized

Page 1694 TITLE 12—BANKS AND BANKING § 4617 (B) the Director determines that the regu- lated entity 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 Di- rector. (7) Other action Require the regulated entity to take any other action that the Director determines will better carry out the purpose of this section than any of the other actions specified in this subsection. (c) Restriction on compensation of executive offi- cers A regulated entity that is classified as signifi- cantly undercapitalized in accordance with sec- tion 4614 of this title may not, without prior written approval by the Director— (1) pay any bonus to any executive officer; or (2) provide compensation to any executive officer at a rate exceeding the average rate of compensation of that officer (excluding bo- nuses, stock options, and profit sharing) dur- ing the 12 calendar months preceding the cal- endar month in which the regulated entity be- came significantly undercapitalized. (Pub. L. 102–550, title XIII, § 1366, Oct. 28, 1992, 106 Stat. 3978; Pub. L. 110–289, div. A, title I, § 1144, July 30, 2008, 122 Stat. 2733.) Editorial Notes AMENDMENTS 2008—Subsec. (a)(1). Pub. L. 110–289, § 1144(3), sub- stituted ‘‘A regulated entity’’ for ‘‘An enterprise’’. Subsec. (a)(2)(A). Pub. L. 110–289, § 1144(1)–(3), sub- stituted ‘‘A regulated entity’’ for ‘‘An enterprise’’ in two places, ‘‘the regulated entity’’ for ‘‘the enterprise’’, and, in second sentence, ‘‘undercapitalized’’ for ‘‘under- capitalized enterprise’’. Subsec. (a)(2)(B). Pub. L. 110–289, § 1144(2), (4), sub- stituted ‘‘a regulated entity’’ for ‘‘an enterprise’’ and ‘‘the regulated entity’’ for ‘‘the enterprise’

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