12 U.S.C. § 4615 — Supervisory actions applicable to under-

Page 1692 TITLE 12—BANKS AND BANKING § 4615 102–550, Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. Section 4615(c) of this title, referred to in subsec. (f), was repealed and a new section 4615(c) was added by Pub. L. 110–289, div. A, title I, § 1143(6), July 30, 2008, 122 Stat. 2734. The new section 4615(c) does not relate to ef- fective date. AMENDMENTS 2008—Subsec. (a). Pub. L. 110–289, § 1142(a)(1), sub- stituted ‘‘Enterprises’’ for ‘‘In general’’ in heading. Subsec. (b). Pub. L. 110–289, § 1142(a)(4), added subsec. (b) and struck out former subsec. (b) which related to discretionary classification. Subsec. (c). Pub. L. 110–289, § 1161(a)(3), which directed amendment of subsec. (c) by striking out the last sen- tence, was not executed as the probable intent of Con- gress. The amendment was probably intended to strike out the last sentence of former subsec. (c), now subsec. (d), as it existed prior to being struck out by Pub. L. 110–289, § 1142(a)(2)(C). See below. Pub. L. 110–289, § 1142(a)(3), (4), added subsec. (c) and redesignated former subsec. (c) as (d). Pub. L. 110–289, § 1142(a)(2)(C), struck out last sen- tence which read as follows: ‘‘The first such determina- tion shall be made during the 3-month period beginning on the appointment of the Director.’’ Pub. L. 110–289, § 1142(a)(2)(A), (B), substituted ‘‘regu- lated entities’’ for ‘‘enterprises’’ and ‘‘subsection (c)’’ for ‘‘subsection (b)’’. Subsec. (d). Pub. L. 110–289, § 1142(a)(3), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (f). Subsec. (e). Pub. L. 110–289, § 1142(a)(5), added subsec. (e). Subsec. (f). Pub. L. 110–289, § 1142(a)(3), redesignated subsec. (d) as (f). Statutory Notes and Related Subsidiaries REGULATIONS Pub. L. 110–289, div. A, title I, § 1142(b), July 30, 2008, 122 Stat. 2732, provided that: ‘‘Not later than the expi- ration of the 180-day period beginning on the date of en- actment of this Act [July 30, 2008], the Director of the Federal Housing Finance Agency shall issue regula- tions to carry out section 1364(b) of the Federal Hous- ing Enterprises Financial Safety and Soundness Act of 1992 [12 U.S.C. 4614(b)] (as added by this section), relat- ing to capital classifications for the Federal Home Loan Banks.’’ § 4615. Supervisory actions applicable to under- capitalized regulated entities (a) Mandatory actions (1) Required monitoring The Director shall— (A) closely monitor the condition of any undercapitalized regulated entity; (B) closely monitor compliance with the capital restoration plan, restrictions, and re- quirements imposed on an undercapitalized regulated entity under this section; and (C) periodically review the plan, restric- tions, and requirements applicable to an undercapitalized regulated entity to deter- mine whether the plan, restrictions, and re- quirements are achieving the purpose of this section. (2) Capital restoration plan A regulated entity that is classified as undercapitalized shall, within the time period provided in section 4622(b) and (d) of this title, submit to the Director a capital restoration plan that complies with section 4622 of this title and carry out the plan after approval. (3) Restriction on capital distributions A regulated entity that is classified as undercapitalized may not make any capital distribution that would result in the regulated entity being reclassified as significantly undercapitalized or critically undercapital- ized. (4) Restriction of asset growth An undercapitalized regulated entity shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter, unless— (A) the Director has accepted the capital restoration plan of the regulated entity; (B) any increase in total assets is con- sistent with the capital restoration plan; and (C) the ratio of tangible equity to assets of the regulated entity increases during the calendar quarter at a rate sufficient to en- able the regulated entity to become ade- quately capitalized within a reasonable time. (5) Prior approval of acquisitions and new ac- tivities An undercapitalized regulated entity shall not, directly or indirectly, acquire any inter- est in any entity or engage in any new activ- ity, unless— (A) the Director has accepted the capital restoration plan of the regulated entity, the regulated entity is implementing the plan, and the Director determines that the pro- posed action is consistent with and will fur- ther the achievement of the plan; or (B) the Director determines that the pro- posed action will further the purpose of this subchapter. (b) Reclassification from undercapitalized to sig- nificantly undercapitalized The Director shall reclassify as significantly undercapitalized a regulated entity that is clas- sified as undercapitalized (and the regulated en- tity shall be subject to the provisions of section 4616 of this title) if— (1) the regulated entity does not submit a capital restoration plan that is substantially in compliance with section 4622 of this title within the applicable period or the Director does not approve the capital restoration plan submitted by the regulated entity; or (2) the Director determines that the regu- lated entity has failed to comply with the cap- ital restoration plan and fulfill the schedule for the plan approved by the Director in any material respect. (c) Other discretionary safeguards The Director may take, with respect to an undercapitalized regulated entity, any of the ac- tions authorized to be taken under section 4616 of this title with respect to a significantly undercapitalized regulated entity, if the Direc- tor determines that such actions are necessary to carry out the purpose of this subchapter. Page 1693 TITLE 12—BANKS AND BANKING § 4616 (Pub. L. 102–550, title XIII, § 1365, Oct. 28, 1992, 106 Stat. 3978; Pub. L. 110–289, div. A, title I, § 1143, July 30, 2008, 122 Stat. 2732.) Editorial Notes AMENDMENTS 2008—Subsec. (a)(1). Pub. L. 110–289, § 1143(4)(B), added par. (1). Former par. (1) redesignated (2). Pub. L. 110–289, § 1143(2), substituted ‘‘A regulated en- tity’’ for ‘‘An enterprise’’. Subsec. (a)(2). Pub. L. 110–289, § 1143(4)(A), redesig- nated par. (1) as (2). Former par. (2) redesignated (3). Pub. L. 110–289, § 1143(1), (2), substituted ‘‘the regu- lated entity’’ for ‘‘the enterprise’’ and ‘‘A regulated en- tity’’ for ‘‘An enterprise’’. Subsec. (a)(3). Pub. L. 110–289, § 1143(4)(A), redesig- nated par. (2) as (3). Subsec. (a)(4), (5). Pub. L. 110–289, § 1143(4)(C), added pars. (4) and (5). Subsec. (b). Pub. L. 110–289, § 1143(5)(A), (B), sub- stituted ‘‘Reclassification’’ for ‘‘Discretionary reclassi- fication’’ in heading and ‘‘shall’’ for ‘‘may’’ in introduc- tory provisions. Pub. L. 110–289, § 1143(1), (3), substituted ‘‘a regulated entity’’ for ‘‘an enterprise’’ and ‘‘the regulated entity’’ for ‘‘the enterprise’’ in introductory provisions. Subsec. (b)(1). Pub. L. 110–289, § 1143(1), substituted ‘‘the regulated entity’’ for ‘‘the enterprise’’ in two places. Subsec. (b)(2). Pub. L. 110–289, § 1143(5)(C), struck out ‘‘make, in good faith, reasonable efforts necessary to’’ before ‘‘comply with’’ and inserted ‘‘in any material re- spect’’ before period at end. Pub. L. 110–289, § 1143(1), substituted ‘‘the regulated entity’’ for ‘‘the enterprise’’. Subsec. (c). Pub. L. 110–289, § 1143(6), added subsec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: ‘‘This section shall take effect upon the expiration of the 1-year period beginning on the date of the effectiveness of the regulations issued under section 4611(e) of this title establishing the risk- based capital test.’’ § 4616. Supervisory actions applicable to signifi- cantly undercapitalized regulated entities (a) Mandatory supervisory actions (1) Capital restoration plan A regulated entity that is classified as sig- nificantly undercapitalized shall, within the time period under section 4622(b) and (d) of this title, submit to the Director a capital res- toration plan that complies with section 4622 of this title and carry out the plan after ap- proval. (2) Restrictions on capital distributions (A) Prior approval A regulated entity that is classified as sig- nificantly undercapitalized may not make any capital distribution that would result in the regulated entity being reclassified as critically undercapitalized. A regulated enti- ty that is classified as significantly under- capitalized may not make any other capital distribution unless the Director approves the distribution. (B) Standard for approval The Director may approve a capital dis- tribution by a regulated entity classified as significantly undercapitalized only if the Di- rector determines that the distribution (i) will enhance the ability of the regulated en- tity to meet the risk-based capital level and the minimum capital level for the regulated entity promptly, (ii) will contribute to the long-term financial safety and soundness of the regulated entity, or (iii) is otherwise in the public interest. (b) Specific actions In addition to any other actions taken by the Director (including actions under subsection (a)), the Director shall carry out this section by taking, at any time, 1 or more of the following actions with respect to a regulated entity that is classified as significantly undercapitalized: (1) Limitation on increase in obligations Limit any increase in, or order the reduction of, any obligations of the regulated entity, in- cluding off-balance sheet obligations. (2) Limitation on growth Limit or prohibit the growth of the assets of the regulated entity or require contraction of the assets of the regulated entity. (3) Acquisition of new capital Require the regulated entity to acquire new capital in a form and amount determined by the Director. (4) Restriction of activities Require the regulated entity to terminate, reduce, or modify any activity that the Direc- tor determines creates excessive risk to the regulated entity. (5) Improvement of management Take 1 or more of the following actions: (A) New election of board Order a new election for the board of direc- tors of the regulated entity. (B) Dismissal of directors or executive offi- cers Require the regulated entity to dismiss from office any director or executive officer who had held office for more than 180 days immediately before the date on which the regulated entity became undercapitalized. Dismissal under this subparagraph shall not be construed to be a removal pursuant to the enforcement powers of the Director under section 4636a of this title. (C) Employ qualified executive officers Require the regulated entity to employ qualified executive officers (who, if the Di- rector so specifies, shall be subject to ap- proval by the Director). (6) Reclassification from significantly to criti- cally undercapitalized The Director may reclassify as critically undercapitalized a regulated entity that is classified as significantly undercapitalized (and the regulated entity shall be subject to the provisions of section 4617 of this title) if— (A) the regulated entity does not submit a capital restoration plan that is substantially in compliance with section 4622 of this title within the applicable period or the Director does not approve the capital restoration plan submitted by the regulated entity; or