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’’ wherever appearing. Subsec. (b). Pub. L. 110–289, § 1144(4), (5)(A), (B), sub- stituted ‘‘Specific’’ for ‘‘Discretionary supervisory’’ in heading and ‘‘shall carry out this section by taking, at any time, 1 or more’’ for ‘‘may, at any time, take any’’ and ‘‘a regulated entity’’ for ‘‘an enterprise’’ in intro- ductory provisions. Subsec. (b)(1) to (4). Pub. L. 110–289, § 1144(2), sub- stituted ‘‘the regulated entity’’ for ‘‘the enterprise’’ wherever appearing. Subsec. (b)(5). Pub. L. 110–289, § 1144(5)(E), added par. (5). Former par. (5) redesignated (6). Pub. L. 110–289, § 1144(2), (4), substituted ‘‘a regulated entity’’ for ‘‘an enterprise’’ in introductory provisions and ‘‘the regulated entity’’ for ‘‘the enterprise’’ wher- ever appearing. Subsec. (b)(6). Pub. L. 110–289, § 1144(5)(C), (D), redesig- nated par. (5) as (6) and struck out former par. (6) which permitted the Director to appoint a conservator. Subsec. (b)(7). Pub. L. 110–289, § 1144(5)(F), added par. (7). Subsec. (c). Pub. L. 110–289, § 1144(6), added subsec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: ‘‘This section shall take effect upon the first classification of the enterprises within capital classifications that occurs under section 4614 of this title.’’ § 4617. Authority over critically undercapitalized regulated entities (a) Appointment of the Agency as conservator or receiver (1) In general Notwithstanding any other provision of Fed- eral 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 con- servator or receiver under this section are ref- erences to the Agency acting as conservator or receiver. (2) Discretionary appointment The Agency may, at the discretion of the Di- rector, 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 para- graph (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 earn- ings due to— (i) any violation of any provision of Fed- eral or State law; or (ii) any unsafe or unsound practice. (C) Unsafe or unsound condition An unsafe or unsound condition to trans- act 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 the normal course of busi- ness. (G) Losses The regulated entity has incurred or is likely to incur losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the regulated en- tity to become adequately capitalized (as de- fined in section 4614(a)(1) of this title). (H) Violations of law Any violation of any law or regulation, or any unsafe or unsound practice or condition that is likely to— (i) cause insolvency or substantial dis- sipation of assets or earnings; or Page 1695 TITLE 12—BANKS AND BANKING § 4617 (ii) weaken the condition of the regu- lated entity. (I) Consent The regulated entity, by resolution of its board of directors or its shareholders or members, consents to the appointment. (J) Undercapitalization The regulated entity is undercapitalized or significantly undercapitalized (as defined in section 4614(a)(3) of this title), and— (i) has no reasonable prospect of becom- ing adequately capitalized; (ii) fails to become adequately capital- ized, as required by— (I) section 4615(a)(1) of this title with respect to a regulated entity; or (II) section 4616(a)(1) of this title with respect to a significantly undercapital- ized regulated entity; (iii) fails to submit a capital restoration plan acceptable to the Agency within the time prescribed under section 4622 of this title; or (iv) materially fails to implement a cap- ital restoration plan submitted and ac- cepted under section 4622 of this title. (K) Critical undercapitalization The regulated entity is critically under- capitalized, as defined in section 4614(a)(4) of this title. (L) Money laundering The Attorney General notifies the Director in writing that the regulated entity has been found guilty of a criminal offense under sec- tion 1956 or 1957 of title 18 or section 5322 or 5324 of title 31. (4) Mandatory receivership (A) In general The Director shall appoint the Agency as receiver for a regulated entity if the Direc- tor determines, in writing, that— (i) the assets of the regulated entity are, and during the preceding 60 calendar days have been, less than the obligations of the regulated entity to its creditors and oth- ers; or (ii) the regulated entity is not, and dur- ing the preceding 60 calendar days has not been, generally paying the debts of the regulated entity (other than debts that are the subject of a bona fide dispute) as such debts become due. (B) Periodic determination required for criti- cally undercapitalized regulated entity If a regulated entity is critically under- capitalized, the Director shall make a deter- mination, in writing, as to whether the regu- lated entity meets the criteria specified in clause (i) or (ii) of subparagraph (A)— (i) not later than 30 calendar days after the regulated entity initially becomes critically undercapitalized; and (ii) at least once during each succeeding 30-calendar day period. (C) Determination not required if receiver- ship already in place Subparagraph (B) does not apply with re- spect to a regulated entity in any period during which the Agency serves as receiver for the regulated entity. (D) Receivership terminates conservatorship The appointment of the Agency as receiver of a regulated entity under this section shall immediately terminate any conservatorship established for the regulated entity under this chapter. (5) Judicial review (A) In general If the Agency is appointed conservator or receiver under this section, the regulated en- tity may, within 30 days of such appoint- ment, bring an action in the United States district court for the judicial district in which the home office of such regulated en- tity is located, or in the United States Dis- trict Court for the District of Columbia, for an order requiring the Agency to remove itself as conservator or receiver. (B) Review Upon the filing of an action under subpara- graph (A), the court shall, upon the merits, dismiss such action or direct the Agency to remove itself as such conservator or re- ceiver. (6) Directors not liable for acquiescing in ap- pointment of conservator or receiver The members of the board of directors of a regulated entity shall not be liable to the shareholders or creditors of the regulated enti- ty for acquiescing in or consenting in good faith to the appointment of the Agency as con- servator or receiver for that regulated entity. (7) Agency not subject to any other Federal agency When acting as conservator or receiver, the Agency shall not be subject to the direction or supervision of any other agency of the United States or any State in the exercise of the rights, powers, and privileges of the Agency. (b) Powers and duties of the Agency as conser- vator or receiver (1) Rulemaking authority of the agency The Agency may prescribe such regulations as the Agency determines to be appropriate re- garding the conduct of conservatorships or re- ceiverships. (2) General powers (A) Successor to regulated entity The Agency shall, as conservator or re- ceiver, and by operation of law, immediately succeed to— (i) all rights, titles, powers, and privi- leges of the regulated entity, and of any stockholder, officer, or director of such regulated entity with respect to the regu- lated entity and the assets of the regulated entity; and (ii) title to the books, records, and assets of any other legal custodian of such regu- lated entity. (B) Operate the regulated entity The Agency may, as conservator or re- ceiver— Page 1696 TITLE 12—BANKS AND BANKING § 4617 (i) take over the assets of and operate the regulated entity with all the powers of the shareholders, the directors, and the of- ficers of the regulated entity and conduct all business of the regulated entity; (ii) collect all obligations and money due the regulated entity; (iii) perform all functions of the regu- lated entity in the name of the regulated entity which are consistent with the ap- pointment as conservator or receiver; (iv) preserve and conserve the assets and property of the regulated entity; and (v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Agency as conservator or re- ceiver. (C) Functions of officers, directors, and shareholders of a regulated entity The Agency may, by regulation or order, provide for the exercise of any function by any stockholder, director, or officer of any regulated entity for which the Agency has been named conservator or receiver. (D) Powers as conservator The Agency may, as conservator, take such action as may be— (i) necessary to put the regulated entity in a sound and solvent condition; and (ii) appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity. (E) Additional powers as receiver In any case in which the Agency is acting as receiver, the Agency shall place the regu- lated entity in liquidation and proceed to re- alize upon the assets of the regulated entity in such manner as the Agency deems appro- priate, including through the sale of assets, the transfer of assets to a limited-life regu- lated entity established under subsection (i), or the exercise of any other rights or privi- leges granted to the Agency under this para- graph. (F) Organization of new enterprise The Agency may, as receiver for an enter- prise, organize a successor enterprise that will operate pursuant to subsection (i). (G) Transfer or sale of assets and liabilities The Agency may, as conservator or re- ceiver, transfer or sell any asset or liability of the regulated entity in default, and may do so without any approval, assignment, or consent with respect to such transfer or sale. (H) Payment of valid obligations The Agency, as conservator or receiver, shall, to the extent of proceeds realized from the performance of contracts or sale of the assets of a regulated entity, pay all valid ob- ligations of the regulated entity that are due and payable at the time of the appoint- ment of the Agency as conservator or re- ceiver, in accordance with the prescriptions and limitations of this section. (I) Subpoena authority (i) In general (I) Agency authority The Agency may, as conservator or re- ceiver, and for purposes of carrying out any power, authority, or duty with re- spect to a regulated entity (including de- termining any claim against the regu- lated entity and determining and real- izing upon any asset of any person in the course of collecting money due the regu- lated entity), exercise any power estab- lished under section 4588 of this title. (II) Applicability of law The provisions of section 4588 of this title shall apply with respect to the exer- cise of any power under this subpara- graph, in the same manner as such provi- sions apply under that section. (ii) Subpoena A subpoena or subpoena duces tecum may be issued under clause (i) only by, or with the written approval of, the Director, or the designee of the Director. (iii) Rule of construction This subsection shall not be construed to limit any rights that the Agency, in any capacity, might otherwise have under sec- tion 4517 or 4639 of this title. (J) Incidental powers The Agency may, as conservator or re- ceiver— (i) exercise all powers and authorities specifically granted to conservators or re- ceivers, respectively, under this section, and such incidental powers as shall be nec- essary to carry out such powers; and (ii) take any action authorized by this section, which the Agency determines is in the best interests of the regulated entity or the Agency. (K) Other provisions (i) Shareholders and creditors of failed reg- ulated entity Notwithstanding any other provision of law, the appointment of the Agency as re- ceiver for a regulated entity pursuant to paragraph (2) or (4) of subsection (a) and its succession, by operation of law, to the rights, titles, powers, and privileges de- scribed in subsection (b)(2)(A) shall termi- nate all rights and claims that the stock- holders and creditors of the regulated enti- ty may have against the assets or charter of the regulated entity or the Agency aris- ing as a result of their status as stock- holders or creditors, except for their right to payment, resolution, or other satisfac- tion of their claims, as permitted under subsections (b)(9), (c), and (e). (ii) Assets of regulated entity Notwithstanding any other provision of law, for purposes of this section, the char- ter of a regulated entity shall not be con- sidered an asset of the regulated entity. Page 1697 TITLE 12—BANKS AND BANKING § 4617 (3) Authority of receiver to determine claims (A) In general The Agency may, as receiver, determine claims in accordance with the requirements of this subsection and any regulations pre- scribed under paragraph (4). (B) Notice requirements The receiver, in any case involving the liq- uidation or winding up of the affairs of a closed regulated entity, shall— (i) promptly publish a notice to the creditors of the regulated entity to present their claims, together with proof, to the receiver by a date specified in the notice which shall be not less than 90 days after the date of publication of such notice; and (ii) republish such notice approximately 1 month and 2 months, respectively, after the date of publication under clause (i). (C) Mailing required The receiver shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the books of the regulated entity— (i) at the last address of the creditor ap- pearing in such books; or (ii) upon discovery of the name and ad- dress of a claimant not appearing on the books of the regulated entity, within 30 days after the discovery of such name and address. (4) Rulemaking authority relating to deter- mination of claims Subject to subsection (c), the Director may prescribe regulations regarding the allowance or disallowance of claims by the receiver and providing for administrative determination of claims and review of such determination. (5) Procedures for determination of claims (A) Determination period (i) In general Before the end of the 180-day period be- ginning on the date on which any claim against a regulated entity is filed with the Agency as receiver, the Agency shall de- termine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such claim. (ii) Extension of time The period described in clause (i) may be extended by a written agreement between the claimant and the Agency. (iii) Mailing of notice sufficient The requirements of clause (i) shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears— (I) on the books of the regulated enti- ty; (II) in the claim filed by the claimant; or (III) in documents submitted in proof of the claim. (iv) Contents of notice of disallowance If any claim filed under clause (i) is dis- allowed, the notice to the claimant shall contain— (I) a statement of each reason for the disallowance; and (II) the procedures available for ob- taining agency review of the determina- tion to disallow the claim or judicial de- termination of the claim. (B) Allowance of proven claim The receiver shall allow any claim re- ceived on or before the date specified in the notice published under paragraph (3)(B)(i) by the receiver from any claimant which is proved to the satisfaction of the receiver. (C) Disallowance of claims filed after filing period Claims filed after the date specified in the notice published under paragraph (3)(B)(i), or the date specified under paragraph (3)(C), shall be disallowed and such disallowance shall be final. (D) Authority to disallow claims (i) In general The receiver may disallow any portion of any claim by a creditor or claim of secu- rity, preference, or priority which is not proved to the satisfaction of the receiver. (ii) Payments to less than fully secured creditors In the case of a claim of a creditor against a regulated entity which is secured by any property or other asset of such reg- ulated entity, the receiver— (I) may treat the portion of such claim which exceeds an amount equal to the fair market value of such property or other asset as an unsecured claim against the regulated entity; and (II) may not make any payment with respect to such unsecured portion of the claim, other than in connection with the disposition of all claims of unsecured creditors of the regulated entity. (iii) Exceptions No provision of this paragraph shall apply with respect to— (I) any extension of credit from any Federal Reserve Bank, Federal Home Loan Bank, or the United States Treas- ury; or (II) any security interest in the assets of the regulated entity securing any such extension of credit. (E) No judicial review of determination pur- suant to subparagraph (D) No court may review the determination of the Agency under subparagraph (D) to dis- allow a claim. (F) Legal effect of filing (i) Statute of limitation tolled For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action. Page 1698 TITLE 12—BANKS AND BANKING § 4617 (ii) No prejudice to other actions Subject to paragraph (10), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the date of the appointment of the receiver, subject to the determination of claims by the re- ceiver. (6) Provision for judicial determination of claims (A) In general The claimant may file suit on a claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the principal place of business of the regulated entity is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim), before the end of the 60-day period beginning on the earlier of— (i) the end of the period described in paragraph (5)(A)(i) with respect to any claim against a regulated entity for which the Agency is receiver; or (ii) the date of any notice of disallow- ance of such claim pursuant to paragraph (5)(A)(i). (B) Statute of limitations A claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the receiver), and such dis- allowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim, if the claimant fails, before the end of the 60-day period described under subparagraph (A), to file suit on such claim (or continue an action commenced be- fore the appointment of the receiver). (7) Review of claims (A) Other review procedures (i) In general The Agency shall establish such alter- native dispute resolution processes as may be appropriate for the resolution of claims filed under paragraph (5)(A)(i). (ii) Criteria In establishing alternative dispute reso- lution processes, the Agency shall strive for procedures which are expeditious, fair, independent, and low cost. (iii) Voluntary binding or nonbinding pro- cedures The Agency may establish both binding and nonbinding processes under this sub- paragraph, which may be conducted by any government or private party. All parties, including the claimant and the Agency, must agree to the use of the process in a particular case. (B) Consideration of incentives The Agency shall seek to develop incen- tives for claimants to participate in the al- ternative dispute resolution process. (8) Expedited determination of claims (A) Establishment required The Agency shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (5) for claimants who— (i) allege the existence of legally valid and enforceable or perfected security in- terests in assets of any regulated entity for which the Agency has been appointed receiver; and (ii) allege that irreparable injury will occur if the routine claims procedure is followed. (B) Determination period Before the end of the 90-day period begin- ning on the date on which any claim is filed in accordance with the procedures estab- lished under subparagraph (A), the Director shall— (i) determine— (I) whether to allow or disallow such claim; or (II) whether such claim should be de- termined pursuant to the procedures es- tablished under paragraph (5); and (ii) notify the claimant of the determina- tion, and if the claim is disallowed, pro- vide a statement of each reason for the disallowance and the procedure for obtain- ing agency review or judicial determina- tion. (C) Period for filing or renewing suit Any claimant who files a request for expe- dited relief shall be permitted to file a suit, or to continue a suit filed before the date of appointment of the receiver, seeking a deter- mination of the rights of the claimant with respect to such security interest after the earlier of— (i) the end of the 90-day period beginning on the date of the filing of a request for ex- pedited relief; or (ii) the date on which the Agency denies the claim. (D) Statute of limitations If an action described under subparagraph (C) is not filed, or the motion to renew a pre- viously filed suit is not made, before the end of the 30-day period beginning on the date on which such action or motion may be filed under subparagraph (B), the claim shall be deemed to be disallowed as of the end of such period (other than any portion of such claim which was allowed by the receiver), such dis- allowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim. (E) Legal effect of filing (i) Statute of limitation tolled For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action. (ii) No prejudice to other actions Subject to paragraph (10), the filing of a claim with the receiver shall not prejudice Page 1699 TITLE 12—BANKS AND BANKING § 4617 any right of the claimant to continue any action that was filed before the appoint- ment of the receiver, subject to the deter- mination of claims by the receiver. (9) Payment of claims (A) In general The receiver may, in the discretion of the receiver, and to the extent that funds are available from the assets of the regulated entity, pay creditor claims, in such manner and amounts as are authorized under this section, which are— (i) allowed by the receiver; (ii) approved by the Agency pursuant to a final determination pursuant to para- graph (7) or (8); or (iii) determined by the final judgment of any court of competent jurisdiction. (B) Agreements against the interest of the Agency No agreement that tends to diminish or defeat the interest of the Agency in any asset acquired by the Agency as receiver under this section shall be valid against the Agency unless such agreement is in writing and executed by an authorized officer or rep- resentative of the regulated entity. (C) Payment of dividends on claims The receiver may, in the sole discretion of the receiver, pay from the assets of the regu- lated entity dividends on proved claims at any time, and no liability shall attach to the Agency by reason of any such payment, for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment. (D) Rulemaking authority of the Director The Director may prescribe such rules, in- cluding definitions of terms, as the Director deems appropriate to establish a single uni- form interest rate for, or to make payments of post-insolvency interest to creditors hold- ing proven claims against the receivership estates of the regulated entity, following satisfaction by the receiver of the principal amount of all creditor claims. (10) Suspension of legal actions (A) In general After the appointment of a conservator or receiver for a regulated entity, the conser- vator or receiver may, in any judicial action or proceeding to which such regulated entity is or becomes a party, request a stay for a period not to exceed— (i) 45 days, in the case of any conser- vator; and (ii) 90 days, in the case of any receiver. (B) Grant of stay by all courts required Upon receipt of a request by the conser- vator or receiver under subparagraph (A) for a stay of any judicial action or proceeding in any court with jurisdiction of such action or proceeding, the court shall grant such stay as to all parties. (11) Additional rights and duties (A) Prior final adjudication The Agency shall abide by any final unappealable judgment of any court of com- petent jurisdiction which was rendered be- fore the appointment of the Agency as con- servator or receiver. (B) Rights and remedies of conservator or re- ceiver In the event of any appealable judgment, the Agency as conservator or receiver— (i) shall have all of the rights and rem- edies available to the regulated entity (be- fore the appointment of such conservator or receiver) and the Agency, including re- moval to Federal court and all appellate rights; and (ii) shall not be required to post any bond in order to pursue such remedies. (C) No attachment or execution No attachment or execution may issue by any court upon assets in the possession of the receiver, or upon the charter, of a regu- lated entity for which the Agency has been appointed receiver. (D) Limitation on judicial review Except as otherwise provided in this sub- section, no court shall have jurisdiction over— (i) any claim or action for payment from, or any action seeking a determina- tion of rights with respect to, the assets or charter of any regulated entity for which the Agency has been appointed receiver; or (ii) any claim relating to any act or omission of such regulated entity or the Agency as receiver. (E) Disposition of assets In exercising any right, power, privilege, or authority as conservator or receiver in connection with any sale or disposition of assets of a regulated entity for which the Agency has been appointed conservator or receiver, the Agency shall conduct its oper- ations in a manner which— (i) maximizes the net present value re- turn from the sale or disposition of such assets; (ii) minimizes the amount of any loss re- alized in the resolution of cases; and (iii) ensures adequate competition and fair and consistent treatment of offerors. (12) Statute of limitations for actions brought by conservator or receiver (A) In general Notwithstanding any provision of any con- tract, the applicable statute of limitations with regard to any action brought by the Agency as conservator or receiver shall be— (i) in the case of any contract claim, the longer of— (I) the 6-year period beginning on the date on which the claim accrues; or (II) the period applicable under State law; and (ii) in the case of any tort claim, the longer of— (I) the 3-year period beginning on the date on which the claim accrues; or (II) the period applicable under State law. Page 1700 TITLE 12—BANKS AND BANKING § 4617 (B) Determination of the date on which a claim accrues For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such subpara- graph shall be the later of— (i) the date of the appointment of the Agency as conservator or receiver; or (ii) the date on which the cause of action accrues. (13) Revival of expired state causes of action (A) In general In the case of any tort claim described under clause (ii) for which the statute of limitations applicable under State law with respect to such claim has expired not more than 5 years before the appointment of the Agency as conservator or receiver, the Agen- cy may bring an action as conservator or re- ceiver on such claim without regard to the expiration of the statute of limitations ap- plicable under State law. (B) Claims described A tort claim referred to under clause (i) is a claim arising from fraud, intentional mis- conduct resulting in unjust enrichment, or intentional misconduct resulting in substan- tial loss to the regulated entity. (14) Accounting and recordkeeping require- ments (A) In general The Agency as conservator or receiver shall, consistent with the accounting and re- porting practices and procedures established by the Agency, maintain a full accounting of each conservatorship and receivership or other disposition of a regulated entity in de- fault. (B) Annual accounting or report With respect to each conservatorship or receivership, the Agency shall make an an- nual accounting or report available to the Board, the Comptroller General of the United States, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives. (C) Availability of reports Any report prepared under subparagraph (B) shall be made available by the Agency upon request to any shareholder of a regu- lated entity or any member of the public. (D) Recordkeeping requirement After the end of the 6-year period begin- ning on the date on which the conservator- ship or receivership is terminated by the Di- rector, the Agency may destroy any records of such regulated entity which the Agency, in the discretion of the Agency, determines to be unnecessary, unless directed not to do so by a court of competent jurisdiction or governmental agency, or prohibited by law. (15) Fraudulent transfers (A) In general The Agency, as conservator or receiver, may avoid a transfer of any interest of an entity-affiliated party, or any person deter- mined by the conservator or receiver to be a debtor of the regulated entity, in property, or any obligation incurred by such party or person, that was made within 5 years of the date on which the Agency was appointed conservator or receiver, if such party or per- son voluntarily or involuntarily made such transfer or incurred such liability with the intent to hinder, delay, or defraud the regu- lated entity, the Agency, the conservator, or receiver. (B) Right of recovery To the extent a transfer is avoided under subparagraph (A), the conservator or re- ceiver may recover, for the benefit of the regulated entity, the property transferred, or, if a court so orders, the value of such property (at the time of such transfer) from— (i) the initial transferee of such transfer or the entity-affiliated party or person for whose benefit such transfer was made; or (ii) any immediate or mediate transferee of any such initial transferee. (C) Rights of transferee or obligee The conservator or receiver may not re- cover under subparagraph (B) from— (i) any transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith; or (ii) any immediate or mediate good faith transferee of such transferee. (D) Rights under this paragraph The rights under this paragraph of the conservator or receiver described under sub- paragraph (A) shall be superior to any rights of a trustee or any other party (other than any party which is a Federal agency) under title 11. (16) Attachment of assets and other injunctive relief Subject to paragraph (17), any court of com- petent jurisdiction may, at the request of the conservator or receiver, issue an order in ac- cordance with rule 65 of the Federal Rules of Civil Procedure, including an order placing the assets of any person designated by the conser- vator or receiver under the control of the court, and appointing a trustee to hold such assets. (17) Standards of proof Rule 65 of the Federal Rules of Civil Proce- dure shall apply with respect to any pro- ceeding under paragraph (16) without regard to the requirement of such rule that the appli- cant show that the injury, loss, or damage is irreparable and immediate. (18) Treatment of claims arising from breach of contracts executed by the conservator or receiver (A) In general Notwithstanding any other provision of this subsection, any final and unappealable judgment for monetary damages entered against the conservator or receiver for the Page 1701 TITLE 12—BANKS AND BANKING § 4617 1 See References in Text note below. 2 So in original. A second closing parenthesis probably should precede the period. breach of an agreement executed or ap- proved in writing by the conservator or re- ceiver after the date of its appointment, shall be paid as an administrative expense of the conservator or receiver. (B) No limitation of power Nothing in this paragraph shall be con- strued to limit the power of the conservator or receiver to exercise any rights under con- tract or law, including to terminate, breach, cancel, or otherwise discontinue such agree- ment. (19) General exceptions (A) Limitations The rights of the conservator or receiver appointed under this section shall be subject to the limitations on the powers of a re- ceiver under sections 4402 through 4407 of this title.1 (B) Mortgages held in trust (i) In general Any mortgage, pool of mortgages, or in- terest in a pool of mortgages held in trust, custodial, or agency capacity by a regu- lated entity for the benefit of any person other than the regulated entity shall not be available to satisfy the claims of credi- tors generally, except that nothing in this clause shall be construed to expand or oth- erwise affect the authority of any regu- lated entity. (ii) Holding of mortgages Any mortgage, pool of mortgages, or in- terest in a pool of mortgages described in clause (i) shall be held by the conservator or receiver appointed under this section for the beneficial owners of such mortgage, pool of mortgages, or interest in accord- ance with the terms of the agreement cre- ating such trust, custodial, or other agen- cy arrangement. (iii) Liability of conservator or receiver The liability of the conservator or re- ceiver appointed under this section for damages shall, in the case of any contin- gent or unliquidated claim relating to the mortgages held in trust, be estimated in accordance with the regulations of the Di- rector. (c) Priority of expenses and unsecured claims (1) In general Unsecured claims against a regulated entity, or the receiver therefor, that are proven to the satisfaction of the receiver shall have priority in the following order: (A) Administrative expenses of the re- ceiver. (B) Any other general or senior liability of the regulated entity (which is not a liability described under subparagraph (C) or (D).2 (C) Any obligation subordinated to general creditors (which is not an obligation de- scribed under subparagraph (D)). (D) Any obligation to shareholders or members arising as a result of their status as shareholder or members. (2) Creditors similarly situated All creditors that are similarly situated under paragraph (1) shall be treated in a simi- lar manner, except that the receiver may take any action (including making payments) that does not comply with this subsection, if— (A) the Director determines that such ac- tion is necessary to maximize the value of the assets of the regulated entity, to maxi- mize the present value return from the sale or other disposition of the assets of the regu- lated entity, or to minimize the amount of any loss realized upon the sale or other dis- position of the assets of the regulated enti- ty; and (B) all creditors that are similarly situ- ated under paragraph (1) receive not less than the amount provided in subsection (e)(2). (3) Definition As used in this subsection, the term ‘‘admin- istrative expenses of the receiver’’ includes— (A) the actual, necessary costs and ex- penses incurred by the receiver in preserving the assets of a failed regulated entity or liq- uidating or otherwise resolving the affairs of a failed regulated entity; and (B) any obligations that the receiver deter- mines are necessary and appropriate to fa- cilitate the smooth and orderly liquidation or other resolution of the regulated entity. (d) Provisions relating to contracts entered into before appointment of conservator or re- ceiver (1) Authority to repudiate contracts In addition to any other rights a conservator or receiver may have, the conservator or re- ceiver for any regulated entity may disaffirm or repudiate any contract or lease— (A) to which such regulated entity is a party; (B) the performance of which the conser- vator or receiver, in its sole discretion, de- termines to be burdensome; and (C) the disaffirmance or repudiation of which the conservator or receiver deter- mines, in its sole discretion, will promote the orderly administration of the affairs of the regulated entity. (2) Timing of repudiation The conservator or receiver shall determine whether or not to exercise the rights of repudi- ation under this subsection within a reason- able period following such appointment. (3) Claims for damages for repudiation (A) In general Except as otherwise provided under sub- paragraph (C) and paragraphs (4), (5), and (6), the liability of the conservator or receiver for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be— (i) limited to actual direct compensatory damages; and (ii) determined as of— Page 1702 TITLE 12—BANKS AND BANKING § 4617 (I) the date of the appointment of the conservator or receiver; or (II) in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudi- ation of such contract or agreement. (B) No liability for other damages For purposes of subparagraph (A), the term ‘‘actual direct compensatory damages’’ shall not include— (i) punitive or exemplary damages; (ii) damages for lost profits or oppor- tunity; or (iii) damages for pain and suffering. (C) Measure of damages for repudiation of fi- nancial contracts In the case of any qualified financial con- tract or agreement to which paragraph (8) applies, compensatory damages shall be— (i) deemed to include normal and reason- able costs of cover or other reasonable measures of damages utilized in the indus- tries for such contract and agreement claims; and (ii) paid in accordance with this sub- section and subsection (e), except as other- wise specifically provided in this section. (4) Leases under which the regulated entity is the lessee (A) In general If the conservator or receiver disaffirms or repudiates a lease under which the regulated entity was the lessee, the conservator or re- ceiver shall not be liable for any damages (other than damages determined under sub- paragraph (B)) for the disaffirmance or repu- diation of such lease. (B) Payments of rent Notwithstanding subparagraph (A), the lessor under a lease to which that subpara- graph applies shall— (i) be entitled to the contractual rent ac- cruing before the later of the date on which— (I) the notice of disaffirmance or repu- diation is mailed; or (II) the disaffirmance or repudiation becomes effective, unless the lessor is in default or breach of the terms of the lease; (ii) have no claim for damages under any acceleration clause or other penalty provi- sion in the lease; and (iii) have a claim for any unpaid rent, subject to all appropriate offsets and de- fenses, due as of the date of the appoint- ment, which shall be paid in accordance with this subsection and subsection (e). (5) Leases under which the regulated entity is the lessor (A) In general If the conservator or receiver repudiates an unexpired written lease of real property of the regulated entity under which the reg- ulated entity is the lessor and the lessee is not, as of the date of such repudiation, in de- fault, the lessee under such lease may ei- ther— (i) treat the lease as terminated by such repudiation; or (ii) remain in possession of the leasehold interest for the balance of the term of the lease, unless the lessee defaults under the terms of the lease after the date of such re- pudiation. (B) Provisions applicable to lessee remaining in possession If any lessee under a lease described under subparagraph (A) remains in possession of a leasehold interest under clause (ii) of sub- paragraph (A)— (i) the lessee— (I) shall continue to pay the contrac- tual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and (II) may offset against any rent pay- ment which accrues after the date of the repudiation of the lease, and any dam- ages which accrue after such date due to the nonperformance of any obligation of the regulated entity under the lease after such date; and (ii) the conservator or receiver shall not be liable to the lessee for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II). (6) Contracts for the sale of real property (A) In general If the conservator or receiver repudiates any contract for the sale of real property and the purchaser of such real property under such contract is in possession, and is not, as of the date of such repudiation, in de- fault, such purchaser may either— (i) treat the contract as terminated by such repudiation; or (ii) remain in possession of such real property. (B) Provisions applicable to purchaser re- maining in possession If any purchaser of real property under any contract described under subparagraph (A) remains in possession of such property under clause (ii) of subparagraph (A)— (i) the purchaser— (I) shall continue to make all pay- ments due under the contract after the date of the repudiation of the contract; and (II) may offset against any such pay- ments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the regulated entity under the contract; and (ii) the conservator or receiver shall— (I) not be liable to the purchaser for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II); (II) deliver title to the purchaser in ac- cordance with the provisions of the con- tract; and (III) have no obligation under the con- tract other than the performance re- quired under subclause (II). Page 1703 TITLE 12—BANKS AND BANKING § 4617 (C) Assignment and sale allowed (i) In general No provision of this paragraph shall be construed as limiting the right of the con- servator or receiver to assign the contract described under subparagraph (A), and sell the property subject to the contract and the provisions of this paragraph. (ii) No liability after assignment and sale If an assignment and sale described under clause (i) is consummated, the con- servator or receiver shall have no further liability under the contract described under subparagraph (A), or with respect to the real property which was the subject of such contract. (7) Service contracts (A) Services performed before appointment In the case of any contract for services be- tween any person and any regulated entity for which the Agency has been appointed conservator or receiver, any claim of such person for services performed before the ap- pointment of the conservator or receiver shall be— (i) a claim to be paid in accordance with subsections (b) and (e); and (ii) deemed to have arisen as of the date on which the conservator or receiver was appointed. (B) Services performed after appointment and prior to repudiation If, in the case of any contract for services described under subparagraph (A), the con- servator or receiver accepts performance by the other person before the conservator or receiver makes any determination to exer- cise the right of repudiation of such contract under this section— (i) the other party shall be paid under the terms of the contract for the services performed; and (ii) the amount of such payment shall be treated as an administrative expense of the conservatorship or receivership. (C) Acceptance of performance no bar to sub- sequent repudiation The acceptance by the conservator or re- ceiver of services referred to under subpara- graph (B) in connection with a contract de- scribed in such subparagraph shall not affect the right of the conservator or receiver to repudiate such contract under this section at any time after such performance. (8) Certain qualified financial contracts (A) Rights of parties to contracts Subject to paragraphs (9) and (10), and not- withstanding any other provision of this chapter (other than subsection (b)(9)(B) of this section), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising— (i) any right of that person to cause the termination, liquidation, or acceleration of any qualified financial contract with a regulated entity that arises upon the ap- pointment of the Agency as receiver for such regulated entity at any time after such appointment; (ii) any right under any security agree- ment or arrangement or other credit en- hancement relating to one or more quali- fied financial contracts; or (iii) any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts and agreements described in clause (i), includ- ing any master agreement for such con- tracts or agreements. (B) Applicability of other provisions Subsection (b)(10) shall apply in the case of any judicial action or proceeding brought against any receiver referred to under sub- paragraph (A), or the regulated entity for which such receiver was appointed, by any party to a contract or agreement described under subparagraph (A)(i) with such regu- lated entity. (C) Certain transfers not avoidable (i) In general Notwithstanding paragraph (11), or any other provision of Federal or State law re- lating to the avoidance of preferential or fraudulent transfers, the Agency, whether acting as such or as conservator or re- ceiver of a regulated entity, may not avoid any transfer of money or other property in connection with any qualified financial contract with a regulated entity. (ii) Exception for certain transfers Clause (i) shall not apply to any transfer of money or other property in connection with any qualified financial contract with a regulated entity if the Agency deter- mines that the transferee had actual in- tent to hinder, delay, or defraud such regu- lated entity, the creditors of such regu- lated entity, or any conservator or re- ceiver appointed for such regulated entity. (D) Certain contracts and agreements de- fined In this subsection the following definitions shall apply: (i) Qualified financial contract The term ‘‘qualified financial contract’’ means any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any simi- lar agreement that the Agency determines by regulation, resolution, or order to be a qualified financial contract for purposes of this paragraph. (ii) Securities contract The term ‘‘securities contract’’— (I) means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, or any inter- est in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (in- cluding any interest therein or based on the value thereof) or any option on any Page 1704 TITLE 12—BANKS AND BANKING § 4617 of the foregoing, including any option to purchase or sell any such security, cer- tificate of deposit, mortgage loan, inter- est, group or index, or option, and in- cluding any repurchase or reverse repur- chase transaction on any such security, certificate of deposit, mortgage loan, in- terest, group or index, or option; (II) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan, unless the Agency determines by regulation, resolution, or order to in- clude any such agreement within the meaning of such term; (III) means any option entered into on a national securities exchange relating to foreign currencies; (IV) means the guarantee by or to any securities clearing agency of any settle- ment of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, cer- tificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option; (V) means any margin loan; (VI) means any other agreement or transaction that is similar to any agree- ment or transaction referred to in this clause; (VII) means any combination of the agreements or transactions referred to in this clause; (VIII) means any option to enter into any agreement or transaction referred to in this clause; (IX) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this clause, ex- cept that the master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), (IV), (V), (VI), (VII), or (VIII); and (X) means any security agreement or arrangement or other credit enhance- ment related to any agreement or trans- action referred to in this clause, includ- ing any guarantee or reimbursement ob- ligation in connection with any agree- ment or transaction referred to in this clause. (iii) Commodity contract The term ‘‘commodity contract’’ means— (I) with respect to a futures commis- sion merchant, a contract for the pur- chase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade; (II) with respect to a foreign futures commission merchant, a foreign future; (III) with respect to a leverage trans- action merchant, a leverage transaction; (IV) with respect to a clearing organi- zation, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or com- modity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization; (V) with respect to a commodity op- tions dealer, a commodity option; (VI) any other agreement or trans- action that is similar to any agreement or transaction referred to in this clause; (VII) any combination of the agree- ments or transactions referred to in this clause; (VIII) any option to enter into any agreement or transaction referred to in this clause; (IX) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master agree- ment, without regard to whether the master agreement provides for an agree- ment or transaction that is not a com- modity contract under this clause, ex- cept that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII); or (X) any security agreement or arrange- ment or other credit enhancement re- lated to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause. (iv) Forward contract The term ‘‘forward contract’’ means— (I) a contract (other than a commodity contract) for the purchase, sale, or trans- fer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward con- tract trade, or product or byproduct thereof, with a maturity date more than 2 days after the date on which the con- tract is entered into, including a repur- chase transaction, reverse repurchase transaction, consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated trans- action, or any other similar agreement; (II) any combination of agreements or transactions referred to in subclauses (I) and (III); Page 1705 TITLE 12—BANKS AND BANKING § 4617 (III) any option to enter into any agreement or transaction referred to in subclause (I) or (II); (IV) a master agreement that provides for an agreement or transaction referred to in subclauses (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, ex- cept that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or (V) any security agreement or arrange- ment or other credit enhancement re- lated to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reim- bursement obligation in connection with any agreement or transaction referred to in any such subclause. (v) Repurchase agreement The term ‘‘repurchase agreement’’ (in- cluding a reverse repurchase agreement)— (I) means an agreement, including re- lated terms, which provides for the transfer of one or more certificates of de- posit, mortgage-related securities (as such term is defined in section 78c of title 15), mortgage loans, interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (defined for purposes of this clause as a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organi- zation for Economic Cooperation and De- velopment, as determined by regulation or order adopted by the appropriate Fed- eral banking authority), or securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mort- gage loans, or interests with a simulta- neous agreement by such transferee to transfer to the transferor thereof certifi- cates of deposit, eligible bankers’ accept- ances, securities, mortgage loans, or in- terests as described above, at a date cer- tain not later than 1 year after such transfers or on demand, against the transfer of funds, or any other similar agreement; (II) does not include any repurchase obligation under a participation in a commercial mortgage loan, unless the Agency determines by regulation, reso- lution, or order to include any such par- ticipation within the meaning of such term; (III) means any combination of agree- ments or transactions referred to in sub- clauses (I) and (IV); (IV) means any option to enter into any agreement or transaction referred to in subclause (I) or (III); (V) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement pro- vides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a re- purchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); and (VI) means any security agreement or arrangement or other credit enhance- ment related to any agreement or trans- action referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction re- ferred to in any such subclause. (vi) Swap agreement The term ‘‘swap agreement’’ means— (I) any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an in- terest rate swap, option, future, or for- ward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day- tomorrow, tomorrow-next, forward, or other foreign exchange or precious met- als agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or forward agree- ment; a total return, credit spread or credit swap, option, future, or forward agreement; a commodity index or com- modity swap, option, future, or forward agreement; or a weather swap, weather derivative, or weather option; (II) any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is pres- ently, or in the future becomes, the sub- ject of recurrent dealings in the swap markets (including terms and conditions incorporated by reference in such agree- ment) and that is a forward, swap, fu- ture, or option on one or more rates, cur- rencies, commodities, equity securities or other equity instruments, debt securi- ties or other debt instruments, quan- titative measures associated with an oc- currence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or meas- ures of economic or financial risk or value; (III) any combination of agreements or transactions referred to in this clause; Page 1706 TITLE 12—BANKS AND BANKING § 4617 (IV) any option to enter into any agreement or transaction referred to in this clause; (V) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), to- gether with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, ex- cept that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the mas- ter agreement that is referred to in sub- clause (I), (II), (III), or (IV); and (VI) any security agreement or ar- rangement or other credit enhancement related to any agreements or trans- actions referred to in subclause (I), (II), (III), (IV), or (V), including any guar- antee or reimbursement obligation in connection with any agreement or trans- action referred to in any such subclause. (vii) Treatment of master agreement as one agreement Any master agreement for any contract or agreement described in any preceding clause of this subparagraph (or any master agreement for such master agreement or agreements), together with all supple- ments to such master agreement, shall be treated as a single agreement and a single qualified financial contract. If a master agreement contains provisions relating to agreements or transactions that are not themselves qualified financial contracts, the master agreement shall be deemed to be a qualified financial contract only with respect to those transactions that are themselves qualified financial contracts. (viii) Transfer The term ‘‘transfer’’ means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an inter- est in property, including retention of title as a security interest and foreclosure of the equity of redemption of the regulated entity. (E) Certain protections in event of appoint- ment of conservator Notwithstanding any other provision of this section, any other Federal law, or the law of any State (other than paragraph (10) of this subsection and subsection (b)(9)(B)), no person shall be stayed or prohibited from exercising— (i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a regulated entity in a conservatorship based upon a default under such financial contract which is enforceable under appli- cable noninsolvency law; (ii) any right under any security agree- ment or arrangement or other credit en- hancement relating to 1 or more such qualified financial contracts; or (iii) any right to offset or net out any termination values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts. (F) Clarification No provision of law shall be construed as limiting the right or power of the Agency, or authorizing any court or agency to limit or delay in any manner, the right or power of the Agency to transfer any qualified finan- cial contract in accordance with paragraphs (9) and (10), or to disaffirm or repudiate any such contract in accordance with subsection (d)(1). (G) Walkaway clauses not effective (i) In general Notwithstanding the provisions of sub- paragraphs (A) and (E), and sections 4403 and 4404 of this title, no walkaway clause shall be enforceable in a qualified financial contract of a regulated entity in default. (ii) Walkaway clause defined For purposes of this subparagraph, the term ‘‘walkaway clause’’ means a provi- sion in a qualified financial contract that, after calculation of a value of a party’s po- sition or an amount due to or from 1 of the parties in accordance with its terms upon termination, liquidation, or acceleration of the qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obliga- tion of a party in whole or in part solely because of the status of such party as a nondefaulting party. (9) Transfer of qualified financial contracts In making any transfer of assets or liabil- ities of a regulated entity in default which in- cludes any qualified financial contract, the conservator or receiver for such regulated en- tity shall either— (A) transfer to 1 person— (i) all qualified financial contracts be- tween any person (or any affiliate of such person) and the regulated entity in de- fault; (ii) all claims of such person (or any af- filiate of such person) against such regu- lated entity under any such contract (other than any claim which, under the terms of any such contract, is subordi- nated to the claims of general unsecured creditors of such regulated entity); (iii) all claims of such regulated entity against such person (or any affiliate of such person) under any such contract; and (iv) all property securing, or any other credit enhancement for any contract de- scribed in clause (i), or any claim de- scribed in clause (ii) or (iii) under any such contract; or (B) transfer none of the financial con- tracts, claims, or property referred to under subparagraph (A) (with respect to such per- son and any affiliate of such person). Page 1707 TITLE 12—BANKS AND BANKING § 4617 (10) Notification of transfer (A) In general The conservator or receiver shall notify any person that is a party to a contract or transfer by 5:00 p.m. (Eastern Standard Time) on the business day following the date of the appointment of the receiver in the case of a receivership, or the business day following such transfer in the case of a con- servatorship, if— (i) the conservator or receiver for a regu- lated entity in default makes any transfer of the assets and liabilities of such regu- lated entity; and (ii) such transfer includes any qualified financial contract. (B) Certain rights not enforceable (i) Receivership A person who is a party to a qualified fi- nancial contract with a regulated entity may not exercise any right that such per- son has to terminate, liquidate, or net such contract under paragraph (8)(A) of this subsection or under section 4403 or 4404 of this title, solely by reason of or in- cidental to the appointment of a receiver for the regulated entity (or the insolvency or financial condition of the regulated en- tity for which the receiver has been ap- pointed)— (I) until 5:00 p.m. (Eastern Standard Time) on the business day following the date of the appointment of the receiver; or (II) after the person has received no- tice that the contract has been trans- ferred pursuant to paragraph (9)(A). (ii) Conservatorship A person who is a party to a qualified fi- nancial contract with a regulated entity may not exercise any right that such per- son has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection or under section 4403 or 4404 of this title, solely by reason of or in- cidental to the appointment of a conser- vator for the regulated entity (or the in- solvency or financial condition of the reg- ulated entity for which the conservator has been appointed). (iii) Notice For purposes of this paragraph, the con- servator or receiver of a regulated entity shall be deemed to have notified a person who is a party to a qualified financial con- tract with such regulated entity, if the conservator or receiver has taken steps reasonably calculated to provide notice to such person by the time specified in sub- paragraph (A). (C) Business day defined For purposes of this paragraph, the term ‘‘business day’’ means any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed. (11) Disaffirmance or repudiation of qualified financial contracts In exercising the rights of disaffirmance or repudiation of a conservator or receiver with respect to any qualified financial contract to which a regulated entity is a party, the con- servator or receiver for such institution shall either— (A) disaffirm or repudiate all qualified fi- nancial contracts between— (i) any person or any affiliate of such person; and (ii) the regulated entity in default; or (B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such per- son or any affiliate of such person). (12) Certain security interests not avoidable No provision of this subsection shall be con- strued as permitting the avoidance of any le- gally enforceable or perfected security inter- est in any of the assets of any regulated enti- ty, except where such an interest is taken in contemplation of the insolvency of the regu- lated entity, or with the intent to hinder, delay, or defraud the regulated entity or the creditors of such regulated entity. (13) Authority to enforce contracts (A) In general Notwithstanding any provision of a con- tract providing for termination, default, ac- celeration, or exercise of rights upon, or solely by reason of, insolvency or the ap- pointment of, or the exercise of rights or powers by, a conservator or receiver, the conservator or receiver may enforce any contract, other than a contract for liability insurance for a director or officer, or a con- tract or a regulated entity bond, entered into by the regulated entity. (B) Certain rights not affected No provision of this paragraph may be con- strued as impairing or affecting any right of the conservator or receiver to enforce or re- cover under a liability insurance contract for an officer or director, or regulated entity bond under other applicable law. (C) Consent requirement (i) In general Except as otherwise provided under this section, no person may exercise any right or power to terminate, accelerate, or de- clare a default under any contract to which a regulated entity is a party, or to obtain possession of or exercise control over any property of the regulated entity, or affect any contractual rights of the reg- ulated entity, without the consent of the conservator or receiver, as appropriate, for a period of— (I) 45 days after the date of appoint- ment of a conservator; or (II) 90 days after the date of appoint- ment of a receiver. (ii) Exceptions This subparagraph shall not— Page 1708 TITLE 12—BANKS AND BANKING § 4617 (I) apply to a contract for liability in- surance for an officer or director; (II) apply to the rights of parties to certain qualified financial contracts under subsection (d)(8); and (III) be construed as permitting the conservator or receiver to fail to comply with otherwise enforceable provisions of such contracts. (14) Savings clause The meanings of terms used in this sub- section are applicable for purposes of this sub- section only, and shall not be construed or ap- plied so as to challenge or affect the charac- terization, definition, or treatment of any similar terms under any other statute, regula- tion, or rule, including the Gramm-Leach-Bli- ley Act, the Legal Certainty for Bank Prod- ucts Act of 2000 [7 U.S.C. 27 to 27f], the securi- ties laws (as that term is defined in section 78c(a)(47) of title 15), and the Commodity Ex- change Act [7 U.S.C. 1 et seq.]. (15) Exception for Federal Reserve and Federal Home Loan Banks No provision of this subsection shall apply with respect to— (A) any extension of credit from any Fed- eral Home Loan Bank or Federal Reserve Bank to any regulated entity; or (B) any security interest in the assets of the regulated entity securing any such ex- tension of credit. (e) Valuation of claims in default (1) In general Notwithstanding any other provision of Fed- eral law or the law of any State, and regard- less of the method which the Agency deter- mines to utilize with respect to a regulated entity in default or in danger of default, in- cluding transactions authorized under sub- section (i), this subsection shall govern the rights of the creditors of such regulated enti- ty. (2) Maximum liability The maximum liability of the Agency, act- ing as receiver or in any other capacity, to any person having a claim against the receiver or the regulated entity for which such receiver is appointed shall be not more than the amount that such claimant would have re- ceived if the Agency had liquidated the assets and liabilities of the regulated entity without exercising the authority of the Agency under subsection (i). (f) Limitation on court action Except as provided in this section or at the re- quest of the Director, no court may take any ac- tion to restrain or affect the exercise of powers or functions of the Agency as a conservator or a receiver. (g) Liability of directors and officers (1) In general A director or officer of a regulated entity may be held personally liable for monetary damages in any civil action described in para- graph (2) brought by, on behalf of, or at the re- quest or direction of the Agency, and pros- ecuted wholly or partially for the benefit of the Agency— (A) acting as conservator or receiver of such regulated entity; or (B) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by such receiver or conservator. (2) Actions addressed Paragraph (1) applies in any civil action for gross negligence, including any similar con- duct or conduct that demonstrates a greater disregard of a duty of care than gross neg- ligence, including intentional tortious con- duct, as such terms are defined and deter- mined under applicable State law. (3) No limitation Nothing in this subsection shall impair or affect any right of the Agency under other ap- plicable law. (h) Damages In any proceeding related to any claim against a director, officer, employee, agent, attorney, accountant, appraiser, or any other party em- ployed by or providing services to a regulated entity, recoverable damages determined to re- sult from the improvident or otherwise improper use or investment of any assets of the regulated entity shall include principal losses and appro- priate interest. (i) Limited-life regulated entities (1) Organization (A) Purpose The Agency, as receiver appointed pursu- ant to subsection (a)— (i) may, in the case of a Federal Home Loan Bank, organize a limited-life regu- lated entity with those powers and at- tributes of the Federal Home Loan Bank in default or in danger of default as the Di- rector determines necessary, subject to the provisions of this subsection, and the Director shall grant a temporary charter to that limited-life regulated entity, and that limited-life regulated entity may op- erate subject to that charter; and (ii) shall, in the case of an enterprise, or- ganize a limited-life regulated entity with respect to that enterprise in accordance with this subsection. (B) Authorities Upon the creation of a limited-life regu- lated entity under subparagraph (A), the limited-life regulated entity may— (i) assume such liabilities of the regu- lated entity that is in default or in danger of default as the Agency may, in its discre- tion, determine to be appropriate, except that the liabilities assumed shall not ex- ceed the amount of assets purchased or transferred from the regulated entity to the limited-life regulated entity; (ii) purchase such assets of the regulated entity that is in default, or in danger of default as the Agency may, in its discre- tion, determine to be appropriate; and Page 1709 TITLE 12—BANKS AND BANKING § 4617 (iii) perform any other temporary func- tion which the Agency may, in its discre- tion, prescribe in accordance with this sec- tion. (2) Charter and establishment (A) Transfer of charter (i) Fannie Mae If the Agency is appointed as receiver for the Federal National Mortgage Associa- tion, the limited-life regulated entity es- tablished under this subsection with re- spect to such enterprise shall, by operation of law and immediately upon its organiza- tion— (I) succeed to the charter of the Fed- eral National Mortgage Association, as set forth in the Federal National Mort- gage Association Charter Act [12 U.S.C. 1716 et seq.]; and (II) thereafter operate in accordance with, and subject to, such charter, this Act, and any other provision of law to which the Federal National Mortgage Association is subject, except as other- wise provided in this subsection. (ii) Freddie Mac If the Agency is appointed as receiver for the Federal Home Loan Mortgage Corpora- tion, the limited-life regulated entity es- tablished under this subsection with re- spect to such enterprise shall, by operation of law and immediately upon its organiza- tion— (I) succeed to the charter of the Fed- eral Home Loan Mortgage Corporation, as set forth in the Federal Home Loan Mortgage Corporation Charter Act 1 [12 U.S.C. 1451 et seq.]; and (II) thereafter operate in accordance with, and subject to, such charter, this Act, and any other provision of law to which the Federal Home Loan Mortgage Corporation is subject, except as other- wise provided in this subsection. (B) Interests in and assets and obligations of regulated entity in default Notwithstanding subparagraph (A) or any other provision of law— (i) a limited-life regulated entity shall assume, acquire, or succeed to the assets or liabilities of a regulated entity only to the extent that such assets or liabilities are transferred by the Agency to the lim- ited-life regulated entity in accordance with, and subject to the restrictions set forth in, paragraph (1)(B); (ii) a limited-life regulated entity shall not assume, acquire, or succeed to any ob- ligation that a regulated entity for which a receiver has been appointed may have to any shareholder of the regulated entity that arises as a result of the status of that person as a shareholder of the regulated entity; and (iii) no shareholder or creditor of a regu- lated entity shall have any right or claim against the charter of the regulated entity once the Agency has been appointed re- ceiver for the regulated entity and a lim- ited-life regulated entity succeeds to the charter pursuant to subparagraph (A). (C) Limited-life regulated entity treated as being in default for certain purposes A limited-life regulated entity shall be treated as a regulated entity in default at such times and for such purposes as the Agency may, in its discretion, determine. (D) Management Upon its establishment, a limited-life reg- ulated entity shall be under the manage- ment of a board of directors consisting of not fewer than 5 nor more than 10 members appointed by the Agency. (E) Bylaws The board of directors of a limited-life reg- ulated entity shall adopt such bylaws as may be approved by the Agency. (3) Capital stock (A) No agency requirement The Agency is not required to pay capital stock into a limited-life regulated entity or to issue any capital stock on behalf of a lim- ited-life regulated entity established under this subsection. (B) Authority If the Director determines that such ac- tion is advisable, the Agency may cause cap- ital stock or other securities of a limited-life regulated entity established with respect to an enterprise to be issued and offered for sale, in such amounts and on such terms and conditions as the Director may determine, in the discretion of the Director. (4) Investments Funds of a limited-life regulated entity shall be kept on hand in cash, invested in obliga- tions of the United States or obligations guar- anteed as to principal and interest by the United States, or deposited with the Agency, or any Federal reserve bank. (5) Exempt tax status Notwithstanding any other provision of Fed- eral or State law, a limited-life regulated enti- ty, its franchise, property, and income shall be exempt from all taxation now or hereafter im- posed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority. (6) Winding up (A) In general Subject to subparagraphs (B) and (C), not later than 2 years after the date of its orga- nization, the Agency shall wind up the af- fairs of a limited-life regulated entity. (B) Extension The Director may, in the discretion of the Director, extend the status of a limited-life regulated entity for 3 additional 1-year peri- ods. (C) Termination of status as limited-life regu- lated entity (i) In general Upon the sale by the Agency of 80 per- cent or more of the capital stock of a lim- Page 1710 TITLE 12—BANKS AND BANKING § 4617 ited-life regulated entity, as defined in clause (iv), to 1 or more persons (other than the Agency)— (I) the status of the limited-life regu- lated entity as such shall terminate; and (II) the entity shall cease to be a lim- ited-life regulated entity for purposes of this subsection. (ii) Divestiture of remaining stock, if any (I) In general Not later than 1 year after the date on which the status of a limited-life regu- lated entity is terminated pursuant to clause (i), the Agency shall sell to 1 or more persons (other than the Agency) any remaining capital stock of the former limited-life regulated entity. (II) Extension authorized The Director may extend the period re- ferred to in subclause (I) for not longer than an additional 2 years, if the Direc- tor determines that such action would be in the public interest. (iii) Savings clause Notwithstanding any provision of law, other than clause (ii), the Agency shall not be required to sell the capital stock of an enterprise or a limited-life regulated enti- ty established with respect to an enter- prise. (iv) Applicability This subparagraph applies only with re- spect to a limited-life regulated entity that is established with respect to an en- terprise. (7) Transfer of assets and liabilities (A) In general (i) Transfer of assets and liabilities The Agency, as receiver, may transfer any assets and liabilities of a regulated en- tity in default, or in danger of default, to the limited-life regulated entity in accord- ance with and subject to the restrictions of paragraph (1). (ii) Subsequent transfers At any time after the establishment of a limited-life regulated entity, the Agency, as receiver, may transfer any assets and li- abilities of the regulated entity in default, or in danger of default, as the Agency may, in its discretion, determine to be appro- priate in accordance with and subject to the restrictions of paragraph (1). (iii) Effective without approval The transfer of any assets or liabilities of a regulated entity in default or in dan- ger of default to a limited-life regulated entity shall be effective without any fur- ther approval under Federal or State law, assignment, or consent with respect there- to. (iv) Equitable treatment of similarly situ- ated creditors The Agency shall treat all creditors of a regulated entity in default or in danger of default that are similarly situated under subsection (c)(1) in a similar manner in ex- ercising the authority of the Agency under this subsection to transfer any assets or li- abilities of the regulated entity to the lim- ited-life regulated entity established with respect to such regulated entity, except that the Agency may take actions (includ- ing making payments) that do not comply with this clause, if— (I) the Director determines that such actions are necessary to maximize the value of the assets of the regulated enti- ty, to maximize the present value return from the sale or other disposition of the assets of the regulated entity, or to min- imize the amount of any loss realized upon the sale or other disposition of the assets of the regulated entity; and (II) all creditors that are similarly sit- uated under subsection (c)(1) receive not less than the amount provided in sub- section (e)(2). (v) Limitation on transfer of liabilities Notwithstanding any other provision of law, the aggregate amount of liabilities of a regulated entity that are transferred to, or assumed by, a limited-life regulated en- tity may not exceed the aggregate amount of assets of the regulated entity that are transferred to, or purchased by, the lim- ited-life regulated entity. (8) Regulations The Agency may promulgate such regula- tions as the Agency determines to be nec- essary or appropriate to implement this sub- section. (9) Powers of limited-life regulated entities (A) In general Each limited-life regulated entity created under this subsection shall have all cor- porate powers of, and be subject to the same provisions of law as, the regulated entity in default or in danger of default to which it re- lates, except that— (i) the Agency may— (I) remove the directors of a limited- life regulated entity; (II) fix the compensation of members of the board of directors and senior man- agement, as determined by the Agency in its discretion, of a limited-life regu- lated entity; and (III) indemnify the representatives for purposes of paragraph (1)(B), and the di- rectors, officers, employees, and agents of a limited-life regulated entity on such terms as the Agency determines to be appropriate; and (ii) the board of directors of a limited- life regulated entity— (I) shall elect a chairperson who may also serve in the position of chief execu- tive officer, except that such person shall not serve either as chairperson or as chief executive officer without the prior approval of the Agency; and (II) may appoint a chief executive offi- cer who is not also the chairperson, ex- Page 1711 TITLE 12—BANKS AND BANKING § 4617 3 So in original. No cl. (ii) has been enacted. cept that such person shall not serve as chief executive officer without the prior approval of the Agency. (B) Stay of judicial action Any judicial action to which a limited-life regulated entity becomes a party by virtue of its acquisition of any assets or assump- tion of any liabilities of a regulated entity in default shall be stayed from further pro- ceedings for a period of not longer than 45 days, at the request of the limited-life regu- lated entity. Such period may be modified upon the consent of all parties. (10) No Federal status (A) Agency status A limited-life regulated entity is not an agency, establishment, or instrumentality of the United States. (B) Employee status Representatives for purposes of paragraph (1)(B), interim directors, directors, officers, employees, or agents of a limited-life regu- lated entity are not, solely by virtue of serv- ice in any such capacity, officers or employ- ees of the United States. Any employee of the Agency or of any Federal instrumen- tality who serves at the request of the Agen- cy as a representative for purposes of para- graph (1)(B), interim director, director, offi- cer, employee, or agent of a limited-life reg- ulated entity shall not— (i) solely by virtue of service in any such capacity lose any existing status as an of- ficer or employee of the United States for purposes of title 5 or any other provision of law; or (ii) receive any salary or benefits for service in any such capacity with respect to a limited-life regulated entity in addi- tion to such salary or benefits as are ob- tained through employment with the Agency or such Federal instrumentality. (11) Authority to obtain credit (A) In general A limited-life regulated entity may obtain unsecured credit and issue unsecured debt. (B) Inability to obtain credit If a limited-life regulated entity is unable to obtain unsecured credit or issue unse- cured debt, the Director may authorize the obtaining of credit or the issuance of debt by the limited-life regulated entity— (i) with priority over any or all of the ob- ligations of the limited-life regulated enti- ty; (ii) secured by a lien on property of the limited-life regulated entity that is not otherwise subject to a lien; or (iii) secured by a junior lien on property of the limited-life regulated entity that is subject to a lien. (C) Limitations (i) 3 In general The Director, after notice and a hearing, may authorize the obtaining of credit or the issuance of debt by a limited-life regu- lated entity that is secured by a senior or equal lien on property of the limited-life regulated entity that is subject to a lien (other than mortgages that collateralize the mortgage-backed securities issued or guaranteed by an enterprise) only if— (I) the limited-life regulated entity is unable to otherwise obtain such credit or issue such debt; and (II) there is adequate protection of the interest of the holder of the lien on the property with respect to which such sen- ior or equal lien is proposed to be grant- ed. (D) Burden of proof In any hearing under this subsection, the Director has the burden of proof on the issue of adequate protection. (12) Effect on debts and liens The reversal or modification on appeal of an authorization under this subsection to obtain credit or issue debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so issued, or any pri- ority or lien so granted, to an entity that ex- tended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the issuance of such debt, or the granting of such priority or lien, were stayed pending appeal. (j) Other Agency exemptions (1) Applicability The provisions of this subsection shall apply with respect to the Agency in any case in which the Agency is acting as a conservator or a receiver. (2) Taxation The Agency, including its franchise, its cap- ital, reserves, and surplus, and its income, shall be exempt from all taxation imposed by any State, county, municipality, or local tax- ing authority, except that any real property of the Agency shall be subject to State, terri- torial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed, except that, not- withstanding the failure of any person to chal- lenge an assessment under State law of the value of such property, and the tax thereon, shall be determined as of the period for which such tax is imposed. (3) Property protection No property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency, nor shall any involuntary lien attach to the prop- erty of the Agency. (4) Penalties and fines The Agency shall not be liable for any amounts in the nature of penalties or fines, in- cluding those arising from the failure of any person to pay any real property, personal property, probate, or recording tax or any re- cording or filing fees when due. 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 Amendment note set out under sec- tion 1811 of this title and Tables. The Legal Certainty for Bank Products Act of 2000, referred to in subsec. (d)(14), is title IV of H.R. 5660, as enacted by Pub. L. 106–554, § 1(a)(5), Dec. 21, 2000, 114 Stat. 2763, 2763A–457, which is classified to sections 27 to 27f of Title 7, Agriculture. For complete classifica- tion of this Act to the Code, see Short Title of 2000 Amendment note set out under section 1 of Title 7 and Tables. The Commodity Exchange Act, referred to in subsec. (d)(14), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables. The Federal National Mortgage Association Charter Act, referred to in subsec. (i)(2)(A)(i)(I), is title III of act June 27, 1934, ch. 847, 48 Stat. 1252, which is classi- fied generally to subchapter III (§ 1716 et seq.) of chap- ter 13 of this title. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 1716 of this title and Tables. This Act, referred to in subsec. (i)(2)(A)(i)(II), (ii)(II), is Pub. L. 102–550, Oct. 28, 1992, 106 Stat. 3672, known as the Housing and Community Development Act of 1992. For complete classification of this Act to the Code, see Short Title of 1992 Amendment note set out under sec- tion 5301 of Title 42, The Public Health and Welfare, and Tables. The Federal Home Loan Mortgage Corporation Char- ter Act, referred to in subsec. (i)(2)(A)(ii)(I), probably means the Federal Home Loan Mortgage Corporation Act, title III of Pub. L. 91–351, July 24, 1970, 84 Stat. 451, which is classified generally to chapter 11A (§ 1451 et seq.) of this title. For complete classification of this Act to the Code, see Short Title and Statement of Pur- pose note set out under section 1451 of this title and Ta- bles. AMENDMENTS 2008—Pub. L. 110–289 amended section generally. Prior to amendment, section related to appointment of con- servators for critically undercapitalized enterprises. § 4618. Notice of classification and enforcement action (a) Notice Before taking any action referred to in sub- section (b), the Director shall provide to the reg- ulated entity written notice of the proposed ac- tion, which states the reasons for the proposed action and the information on which the pro- posed action is based. (b) Applicability The requirements of subsection (a) shall apply to the following actions: (1) Classification or reclassification of a reg- ulated entity within a particular capital clas- sification under section 4614 of this title. (2) Any discretionary supervisory action pur- suant to section 4615 of this title. (3) Any discretionary supervisory action pur- suant to section 4616 of this title except a deci- sion to appoint a conservator under section 4616(b)(6) 1 of this title. Notice of classification under paragraph (1) and notice of supervisory actions under paragraph (2) or (3) may be provided together in a single notice under subsection (a). (c) Response period (1) In general During the 30-day period beginning on the date that a regulated entity is provided notice under subsection (a) of a proposed action, the regulated entity may submit to the Director any information relevant to the action that the regulated entity considers appropriate for consideration by the Director in determining whether to take such action. The Director may, at the discretion of the Director, hold an informal administrative hearing to receive and discuss such information and the proposed determination. (2) Extended period The Director may extend the period under paragraph (1) for good cause for not more than 30 additional days. (3) Shortened period The Director may shorten the period under paragraph (1) if the Director determines that the condition of the regulated entity so re- quires or the regulated entity consents. (4) Failure to respond The failure of a regulated entity to provide information during the response period under this subsection (as extended or shortened) shall waive any right of the regulated entity to comment on the proposed action of the Di- rector. (d) Consideration of information and determina- tion After the expiration of the response period under subsection (c) or upon receipt of informa- tion provided during such period by the regu- lated entity, whichever occurs earlier, the Di- rector shall determine whether to take the ac- tion proposed, taking into consideration any rel-