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12 U.S.C. § 4618 — Supervisory actions applicable to undercapitalized regulated entities

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

12 U.S.C. § 4618 — Supervisory actions applicable to undercapitalized regulated entities

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Stable record: federal_law:legal_authorities:record_usc_a33ef1cb8ecdcff7d4b5dcb1
Source file: Laws/federal/codes/united-states-code/title-12/section-4618-supervisory-actions-applicable-to-undercapitalized-regulated-entities--b9fcdf88ee.md
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Source location: Title 12, Chapter 46, § 4618; chapter-046-government-sponsored-enterprises.md

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**(a) Mandatory actions** (1) **Required monitoring** — The Director shall— (A) closely monitor the condition of any undercapitalized regulated entity; (B) closely monitor compliance with the capital restoration plan, restrictions, and requirements imposed on an undercapitalized regulated entity under this section; and (C) periodically review the plan, restrictions, and requirements applicable to an undercapitalized regulated entity to determine whether the plan, restrictions, and requirements are achieving the purpose of this section. (2) **Capital restoration plan** — A regulated entity that is classified as undercapitalized shall, within the time period provided in 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. (3) **Restriction on capital distributions** — A regulated entity that is classified as undercapitalized may not make any capital distribution that would result in the regulated entity being reclassified as significantly undercapitalized or critically undercapitalized. (4) **Restriction of asset growth** — An undercapitalized regulated entity shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter, unless— (A) the Director has accepted the capital restoration plan of the regulated entity; (B) any increase in total assets is consistent with the capital restoration plan; and (C) the ratio of tangible equity to assets of the regulated entity increases during the calendar quarter at a rate sufficient to enable the regulated entity to become adequately capitalized within a reasonable time. (5) **Prior approval of acquisitions and new activities** — An undercapitalized regulated entity shall not, directly or indirectly, acquire any interest in any entity or engage in any new activity, unless— (A) the Director has accepted the capital restoration plan of the regulated entity, the regulated entity is implementing the plan, and the Director determines that the proposed action is consistent with and will further the achievement of the plan; or (B) the Director determines that the proposed action will further the purpose of this subchapter. **(b) Reclassification from undercapitalized to significantly undercapitalized** The Director shall reclassify as significantly undercapitalized a regulated entity that is classified as undercapitalized (and the regulated entity shall be subject to the provisions of [section 4616 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4616&num=0&edition=prelim)) if— (1) the regulated entity does not submit a capital restoration plan that is substantially in compliance with [section 4622 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4622&num=0&edition=prelim) within the applicable period or the Director does not approve the capital restoration plan submitted by the regulated entity; or (2) the Director determines that the regulated entity has failed to comply with the capital restoration plan and fulfill the schedule for the plan approved by the Director in any material respect. **(c) Other discretionary safeguards** The Director may take, with respect to an undercapitalized regulated entity, any of the actions authorized to be taken under [section 4616 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4616&num=0&edition=prelim) with respect to a significantly undercapitalized regulated entity, if the Director determines that such actions are necessary to carry out the purpose of this subchapter.

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

12 U.S.C. § 4622 — Authority over critically undercapitalized regulated entities

**(a) Appointment of the Agency as conservator or receiver** (1) **In general** — Notwithstanding any other provision of Federal or State law, the Director may appoint the Agency as conservator or receiver for a regulated entity in the manner provided under paragraph (2) or (4). All references to the conservator or receiver under this section are references to the Agency acting as conservator or receiver. (2) **Discretionary appointment** — The Agency may, at the discretion of the Director, be appointed conservator or receiver for the purpose of reorganizing, rehabilitating, or winding up the affairs of a regulated entity. (3) **Grounds for discretionary appointment of conservator or receiver** — The grounds for appointing conservator or receiver for any regulated entity under paragraph (2) are as follows: (A) *Assets insufficient for obligations* — The assets of the regulated entity are less than the obligations of the regulated entity to its creditors and others. (B) *Substantial dissipation* — Substantial dissipation of assets or earnings due to— (i) any violation of any provision of Federal or State law; or (ii) any unsafe or unsound practice. (C) *Unsafe or unsound condition* — An unsafe or unsound condition to transact business. (D) *Cease and desist orders* — Any willful violation of a cease and desist order that has become final. (E) *Concealment* — Any concealment of the books, papers, records, or assets of the regulated entity, or any refusal to submit the books, papers, records, or affairs of the regulated entity, for inspection to any examiner or to any lawful agent of the Director. (F) *Inability to meet obligations* — The regulated entity is likely to be unable to pay its obligations or meet the demands of its creditors in th

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

12 U.S.C. § 4616 — Critical capital levels

**(a) Enterprises** For purposes of this subchapter, the critical capital level for each enterprise shall be the sum of— (1) 1.25 percent of the aggregate on-balance sheet assets of the enterprise, as determined in accordance with generally accepted accounting principles; (2) 0.25 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) 0.25 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** (1) **In general** — For purposes of this subchapter, the critical capital level for each Federal Home Loan Bank shall be such amount of capital as the Director shall, by regulation, require. (2) **Consideration of other critical capital levels** — In establishing the critical capital level under paragraph (1) for the Federal Home Loan Banks, the Director shall take due consideration of the critical capital level 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.

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

12 U.S.C. § 4618 — Notice of classification and enforcement

Page 1712 TITLE 12—BANKS AND BANKING § 4618 1 See References in Text note below. (k) Prohibition of charter revocation In no case may the receiver appointed pursu- ant to this section revoke, annul, or terminate the charter of an enterprise. (Pub. L. 102–550, title XIII, § 1367, Oct. 28, 1992, 106 Stat. 3980; Pub. L. 110–289, div. A, title I, § 1145(a), July 30, 2008, 122 Stat. 2734.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(4)(D) and (d)(8)(A), 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 com- plete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. Rule 65 of the Federal Rules of Civil Procedure, re- ferred to in subsec. (b)(16), (17), is set out in the Appen- dix to Title 28, Judiciary and Judicial Procedure. Sections 4402 through 4407 of this title, referred to in subsec. (b)(19)(A), was in the original ‘‘sections 402 through 407 of the Federal Deposit Insurance Corpora- tion Improvement Act of 1991 (12 U.S.C. 4402 through 4407)’’, and was translated as reading ‘‘sections 402 through 407A of the Federal Deposit Insurance Corpora- tion Improvement Act of 1991’’, meaning sections 402 to 407A of Pub. L. 102–242, which are classified to sections 4402 to 4407 of this title, to reflect the probable intent of Congress and the renumbering of section 407 of the Act as section 407A by Pub. L. 109–8, title IX, § 906(d)(1), Apr. 20, 2005, 119 Stat. 169. The Gramm-Leach-Bliley Act, referred to in subsec. (d)(14), is Pub. L. 106–102, Nov. 12, 1999, 113 Stat. 1338. For complete classification of this Act to the Code, see Short Title of 1999 Am

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