12 U.S.C. § 1831t — Depository institutions lacking Federal

Page 1186 TITLE 12—BANKS AND BANKING § 1831s 1 So in original. The period probably should not appear. (B) any assistance provided by the Cor- poration under section 1823(c) of this title. (Sept. 21, 1950, ch. 967, § 2[42], formerly § 2[39], as added Pub. L. 102–242, title II, § 228, Dec. 19, 1991, 105 Stat. 2308; renumbered § 2[42], Pub. L. 102–550, title XVI, § 1602(a), Oct. 28, 1992, 106 Stat. 4078; amended Pub. L. 103–328, title I, § 106, Sept. 29, 1994, 108 Stat. 2357; Pub. L. 104–208, div. A, title II, § 2213, Sept. 30, 1996, 110 Stat. 3009–411.) Editorial Notes CODIFICATION Section was classified to section 1831p of this title prior to renumbering by Pub. L. 102–550. AMENDMENTS 1996—Subsec. (e). Pub. L. 104–208 added subsec. (e). 1994—Subsec. (d). Pub. L. 103–328 added subsec. (d). § 1831s. Transferred Editorial Notes CODIFICATION Section, act Sept. 21, 1950, ch. 967, § 2[39], as added Dec. 19, 1991, Pub. L. 102–242, title I, § 132(a), 105 Stat. 2267, as amended, which related to standards for safety and soundness, was transferred to section 1831p–1 of this title. § 1831t. Depository institutions lacking Federal deposit insurance (a) Annual independent audit of private deposit insurers (1) Audit required Any private deposit insurer shall obtain an annual audit from an independent auditor using generally accepted auditing standards. The audit shall include a determination of whether the private deposit insurer follows generally accepted accounting principles and has set aside sufficient reserves for losses. (2) Providing copies of audit report (A) Private deposit insurer The private deposit insurer shall provide a copy of the audit report— (i) to each depository institution the de- posits of which are insured by the private deposit insurer, not later than 14 days after the audit is completed; (ii) to the appropriate supervisory agen- cy of each State in which such an institu- tion receives deposits, not later than 7 days after the audit is completed; and (iii) in the case of depository institu- tions described in subsection (e)(2)(A) the deposits of which are insured by the pri- vate insurer which are members of a Fed- eral home loan bank, to the Federal Hous- ing Finance Agency, not later than 7 days after the audit is completed. (B) Depository institution Any depository institution the deposits of which are insured by the private deposit in- surer shall provide a copy of the audit re- port, upon request, to any current or pro- spective customer of the institution. (3) Enforcement by appropriate State super- visor Any appropriate State supervisor of a pri- vate deposit insurer, and any appropriate State supervisor of a depository institution which receives deposits that are insured by a private deposit insurer, may examine and en- force compliance with this subsection under the applicable regulatory authority of such su- pervisor. (b) Disclosure required Any depository institution lacking Federal de- posit insurance shall, within the United States, do the following: (1) Periodic statements; account records Include conspicuously in all periodic state- ments of account, on each signature card, and on each passbook, certificate of deposit, or share certificate.1 a notice that the institution is not federally insured, and that if the insti- tution fails, the Federal Government does not guarantee that depositors will get back their money. (2) Advertising; premises (A) In general Include clearly and conspicuously in all advertising, except as provided in subpara- graph (B); and at each station or window where deposits are normally received, its principal place of business and all its branches where it accepts deposits or opens accounts (excluding automated teller ma- chines or point of sale terminals), and on its main Internet page, a notice that the insti- tution is not federally insured. (B) Exceptions The following need not include a notice that the institution is not federally insured: (i) Any sign, document, or other item that contains the name of the depository institution, its logo, or its contact infor- mation, but only if the sign, document, or item does not include any information about the institution’s products or serv- ices or information otherwise promoting the institution. (ii) Small utilitarian items that do not mention deposit products or insurance if inclusion of the notice would be imprac- tical. (3) Acknowledgment of disclosure (A) New depositors obtained other than through a conversion or merger With respect to any depositor who was not a depositor at the depository institution be- fore October 13, 2006, and who is not a deposi- tor as described in subparagraph (B), receive any deposit for the account of such depositor only if the depositor has signed a written ac- knowledgement that— (i) the institution is not federally in- sured; and (ii) if the institution fails, the Federal Government does not guarantee that the depositor will get back the depositor’s money. (B) New depositors obtained through a con- version or merger With respect to a depositor at a federally insured depository institution that converts Page 1187 TITLE 12—BANKS AND BANKING § 1831t 2 So in original. No cl. (ii) has been enacted. to, or merges into, a depository institution lacking federal insurance after October 13, 2006, receive any deposit for the account of such depositor only if— (i) the depositor has signed a written ac- knowledgement described in subparagraph (A); or (ii) the institution makes an attempt, as described in subparagraph (D) and sent by mail no later than 45 days after the effec- tive date of the conversion or merger, to obtain the acknowledgment. (C) Current depositors Receive any deposit after October 13, 2006, for the account of any depositor who was a depositor on that date only if— (i) the depositor has signed a written ac- knowledgement described in subparagraph (A); or (ii) the institution has complied with the provisions of subparagraph (E) which are applicable as of the date of the deposit. (D) Alternative provision of notice to new de- positors obtained through a conversion or merger (i) 2 In general Transmit to each depositor who has not signed a written acknowledgement de- scribed in subparagraph (A)— (I) a conspicuous card containing the information described in clauses (i) and (ii) of subparagraph (A), and a line for the signature of the depositor; and (II) accompanying materials request- ing the depositor to sign the card, and return the signed card to the institution. (E) Alternative provision of notice to current depositors (i) In general Transmit to each depositor who was a depositor before October 13, 2006, and has not signed a written acknowledgement de- scribed in subparagraph (A)— (I) a conspicuous card containing the information described in clauses (i) and (ii) of subparagraph (A), and a line for the signature of the depositor; and (II) accompanying materials request- ing the depositor to sign the card, and return the signed card to the institution. (ii) Manner and timing of notice (I) First notice Make the transmission described in clause (i) via mail not later than three months after October 13, 2006. (II) Second notice Make a second transmission described in clause (i) via mail not less than 30 days and not more than three months after a transmission to the depositor in accordance with subclause (I), if the in- stitution has not, by the date of such mailing, received from the depositor a card referred to in clause (i) which has been signed by the depositor. (c) Manner and content of disclosure To ensure that current and prospective cus- tomers understand the risks involved in fore- going Federal deposit insurance, the Bureau, by regulation or order, shall prescribe the manner and content of disclosure required under this section, which shall be presented in such format and in such type size and manner as to be simple and easy to understand. (d) Exceptions for institutions not receiving re- tail deposits The Bureau may, by regulation or order, make exceptions to subsection (b) for any depository institution that, within the United States, does not receive initial deposits of less than an amount equal to the standard maximum deposit insurance amount from individuals who are citi- zens or residents of the United States, other than money received in connection with any draft or similar instrument issued to transmit money. (e) Definitions For purposes of this section: (1) Appropriate supervisor The ‘‘appropriate supervisor’’ of a depository institution means the agency primarily re- sponsible for supervising the institution. (2) Depository institution The term ‘‘depository institution’’ in- cludes— (A) any entity described in section 461(b)(1)(A)(iv) of this title; and (B) any entity that, as determined by the Bureau— (i) is engaged in the business of receiving deposits; and (ii) could reasonably be mistaken for a depository institution by the entity’s cur- rent or prospective customers. (3) Lacking Federal deposit insurance A depository institution lacks Federal de- posit insurance if the institution is not ei- ther— (A) an insured depository institution; or (B) an insured credit union, as defined in section 101 of the Federal Credit Union Act [12 U.S.C. 1752]. (4) Private deposit insurer The term ‘‘private deposit insurer’’ means any entity insuring the deposits of any deposi- tory institution lacking Federal deposit insur- ance. (5) Bureau The term ‘‘Bureau’’ means the Bureau of Consumer Financial Protection. (f) Enforcement (1) Limited enforcement authority Compliance with the requirements of sub- sections (b), (c), and (e), and any regulation prescribed or order issued under such sub- section, shall be enforced under the Consumer Financial Protection Act of 2010, by the Bu- reau, subject to subtitle B of the Consumer Fi- nancial Protection Act of 2010 [12 U.S.C. 5511 et seq.], and under the Federal Trade Commis- Page 1188 TITLE 12—BANKS AND BANKING § 1831t sion Act (15 U.S.C. 41 et seq.) by the Federal Trade Commission. (2) Broad State enforcement authority (A) In general Subject to subparagraph (C), an appro- priate State supervisor of a depository insti- tution lacking Federal deposit insurance may examine and enforce compliance with the requirements of this section, and any regulation prescribed under this section. (B) State powers For purposes of bringing any action to en- force compliance with this section, no provi- sion of this section shall be construed as pre- venting an appropriate State supervisor of a depository institution lacking Federal de- posit insurance from exercising any powers conferred on such official by the laws of such State. (C) Limitation on State action while Federal action pending If the Bureau or Federal Trade Commis- sion has instituted an enforcement action for a violation of this section, no appro- priate State supervisory agency may, during the pendency of such action, bring an action under this section against any defendant named in the complaint of the Bureau or Federal Trade Commission for any violation of this section that is alleged in that com- plaint. (Sept. 21, 1950, ch. 967, § 2[43], formerly § 2[40], as added Pub. L. 102–242, title I, § 151(a)(1), Dec. 19, 1991, 105 Stat. 2282; renumbered § 2[43], Pub. L. 102–550, title XVI § 1602(b), Oct. 28, 1992, 106 Stat. 4078; amended Pub. L. 103–325, title III, § 340(a), Sept. 23, 1994, 108 Stat. 2237; Pub. L. 109–173, § 2(c)(3), Feb. 15, 2006, 119 Stat. 3602; Pub. L. 109–351, title V, § 505, Oct. 13, 2006, 120 Stat. 1975; Pub. L. 111–203, title X, § 1090(2), July 21, 2010, 124 Stat. 2094; Pub. L. 114–94, div. G, title LXXXII, § 82001(b), Dec. 4, 2015, 129 Stat. 1796.) Editorial Notes REFERENCES IN TEXT The Consumer Financial Protection Act of 2010, re- ferred to in subsec. (f)(1), is title X of Pub. L. 111–203, July 21, 2010, 124 Stat. 1955, which enacted subchapter V (§ 5481 et seq.) of chapter 53 of this title and enacted, amended, and repealed numerous other sections and notes in the Code. Subtitle B of the Act is classified generally to part B (§ 5511 et seq.) of subchapter V of chapter 53 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables. The Federal Trade Commission Act, referred to in subsec. (f)(1), is act Sept. 26, 1914, ch. 311, 38 Stat. 717, which is classified generally to subchapter I (§ 41 et seq.) of chapter 2 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see sec- tion 58 of Title 15 and Tables. AMENDMENTS 2015—Subsec. (a)(2)(A)(iii). Pub. L. 114–94 added cl. (iii). 2010—Subsecs. (c), (d), (e)(2)(B). Pub. L. 111–203, § 1090(2)(A)–(C)(i), substituted ‘‘Bureau’’ for ‘‘Federal Trade Commission’’. Subsec. (e)(5). Pub. L. 111–203, § 1090(2)(C)(ii), added par. (5). Subsec. (f)(1). Pub. L. 111–203, § 1090(2)(D)(i), added par. (1) and struck out former par. (1). Prior to amendment, text read as follows: ‘‘Compliance with the require- ments of subsections (b), (c) and (e), and any regulation prescribed or order issued under any such subsection, shall be enforced under the Federal Trade Commission Act by the Federal Trade Commission.’’ Subsec. (f)(2)(C). Pub. L. 111–203, § 1090(2)(D)(ii), added subpar. (C) and struck out former subpar. (C). Prior to amendment, text read as follows: ‘‘If the Federal Trade Commission has instituted an enforcement action for a violation of this section, no appropriate State super- visor may, during the pendency of such action, bring an action under this section against any defendant named in the complaint of the Commission for any violation of this section that is alleged in that complaint.’’ 2006—Subsec. (a)(3). Pub. L. 109–351, § 505(a), added par. (3). Subsec. (b)(1). Pub. L. 109–351, § 505(b), substituted ‘‘or share certificate.’’ for ‘‘or similar instrument evidenc- ing a deposit’’. Subsec. (b)(2). Pub. L. 109–351, § 505(c), amended head- ing and text generally. Prior to amendment, text read as follows: ‘‘Include conspicuously in all advertising and at each place where deposits are normally received a notice that the institution is not federally insured.’’ Subsec. (b)(3). Pub. L. 109–351, § 505(d), amended par. (3) generally. Prior to amendment, par. (3) related to acknowledgement of disclosure and consisted of sub- pars. (A) to (C). Subsec. (c). Pub. L. 109–351, § 505(e), amended heading and text generally. Prior to amendment, text read as follows: ‘‘To ensure that current and prospective cus- tomers understand the risks involved in foregoing Fed- eral deposit insurance, the Federal Trade Commission, by regulation or order, shall prescribe the manner and content of disclosure required under this section.’’ Subsec. (d). Pub. L. 109–173 substituted ‘‘an amount equal to the standard maximum deposit insurance amount’’ for ‘‘$100,000’’. Subsec. (e). Pub. L. 109–351, § 505(f), redesignated sub- sec. (f) as (e) and struck out former subsec. (e) which related to eligibility for Federal deposit insurance. Subsec. (f). Pub. L. 109–351, § 505(g), amended heading and text generally. Prior to amendment, text read as follows: ‘‘Compliance with the requirements of this sec- tion, and any regulation prescribed or order issued under this section, shall be enforced under the Federal Trade Commission Act by the Federal Trade Commis- sion.’’ Pub. L. 109–351, § 505(f)(2), redesignated subsec. (g) as (f). Former subsec. (f) redesignated (e). Subsec. (g). Pub. L. 109–351, § 505(f)(2), redesignated subsec. (g) as (f). 1994—Subsec. (b)(3). Pub. L. 103–325 amended heading and text of subsec. (b)(3) generally. Prior to amend- ment, text read as follows: ‘‘Receive deposits only for the account of persons who have signed a written ac- knowledgment that the institution is not federally in- sured, and that if the institution fails, the Federal Gov- ernment does not guarantee that they will get back their money.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–173 effective Apr. 1, 2006, see section 2(e) of Pub. L. 109–173, set out as a note under section 1785 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Pub. L. 103–325, title III, § 340(b), Sept. 23, 1994, 108 Stat. 2238, provided that: ‘‘Section 43(b)(3) of the Fed- Page 1189 TITLE 12—BANKS AND BANKING § 1831u eral Deposit Insurance Act [12 U.S.C. 1831t(b)(3)], as amended by subsection (a), shall take effect in accord- ance with section 151(a)(2)(D) of the Federal Deposit In- surance Corporation Improvement Act of 1991 [see Ef- fective Date note below].’’ EFFECTIVE DATE Pub. L. 102–242, title I, § 151(a)(2), Dec. 19, 1991, 105 Stat. 2284, provided that: ‘‘Section 40 of the Federal De- posit Insurance Act [12 U.S.C. 1831t] (as added by para- graph (1)) shall become effective on the date of enact- ment of this Act [Dec. 19, 1991], except that— ‘‘(A) paragraphs (1) and (2) of subsection (b) shall become effective 1 year after the date of enactment of this Act; ‘‘(B) during the period beginning 1 year after that date of enactment of this Act and ending 30 months after that date of enactment, subsection (b)(1) shall apply with ‘, and that if the institution fails, the Federal Government does not guarantee that deposi- tors will get back their money’ omitted; ‘‘(C) subsection (e) shall become effective 2 years after that date of enactment; and ‘‘(D) subsection (b)(3) shall become effective 30 months after that date of enactment.’’ VIABILITY OF PRIVATE DEPOSIT INSURERS Pub. L. 102–242, title I, § 151(b), Dec. 19, 1991, 105 Stat. 2285, as amended by Pub. L. 102–550, title XVI, § 1603(f)(1), Oct. 28, 1992, 106 Stat. 4081, provided that: ‘‘(1) DEADLINE FOR INITIAL INDEPENDENT AUDIT.—The initial annual audit under section 43(a)(1) of the Fed- eral Deposit Insurance Act [12 U.S.C. 1831t(a)(1)] (as added by subsection (a)) shall be completed not later than 120 days after the date of enactment of this Act [Dec. 19, 1991]. ‘‘(2) BUSINESS PLAN REQUIRED.—Not later than 240 days after the date of enactment of this Act [Dec. 19, 1991], any private deposit insurer shall provide a busi- ness plan to each appropriate supervisor of each State in which deposits are received by any depository insti- tution lacking Federal deposit insurance the deposits of which are insured by a private deposit insurer. The business plan shall explain in detail why the private de- posit insurer is viable, and shall, at a minimum— ‘‘(A) describe the insurer’s— ‘‘(i) underwriting standards; ‘‘(ii) resources, including trends in and forecasts of assets, income, and expenses; ‘‘(iii) risk-management program, including exam- ination and supervision, problem case resolution, and remedies; and ‘‘(B) include, for the preceding 5 years, copies of an- nual audits, annual reports, and annual meeting agendas and minutes. ‘‘(3) DEFINITIONS.—For purposes of this subsection, the terms ‘appropriate supervisor’, ‘depository institu- tion’, ‘lacking Federal deposit insurance’, and ‘private deposit insurer’ have the same meaning as in section 43(f) of the Federal Deposit Insurance Act [12 U.S.C. 1831t(f)] (as added by subsection (a)).’’ § 1831u. Interstate bank mergers (a) Approval of interstate merger transactions authorized (1) In general Beginning on June 1, 1997, the responsible agency may approve a merger transaction under section 1828(c) of this title between in- sured banks with different home States, with- out regard to whether such transaction is pro- hibited under the law of any State. (2) State election to prohibit interstate merger transactions (A) In general Notwithstanding paragraph (1), a merger transaction may not be approved pursuant to paragraph (1) if the transaction involves a bank the home State of which has enacted a law after September 29, 1994, and before June 1, 1997, that— (i) applies equally to all out-of-State banks; and (ii) expressly prohibits merger trans- actions involving out-of-State banks. (B) No effect on prior approvals of merger transactions A law enacted by a State pursuant to sub- paragraph (A) shall have no effect on merger transactions that were approved before the effective date of such law. (3) State election to permit early interstate merger transactions (A) In general A merger transaction may be approved pursuant to paragraph (1) before June 1, 1997, if the home State of each bank involved in the transaction has in effect, as of the date of the approval of such transaction, a law that— (i) applies equally to all out-of-State banks; and (ii) expressly permits interstate merger transactions with all out-of-State banks. (B) Certain conditions allowed A host State may impose conditions on a branch within such State of a bank resulting from an interstate merger transaction if— (i) the conditions do not have the effect of discriminating against out-of-State banks, out-of-State bank holding compa- nies, or any subsidiary of such bank or company (other than on the basis of a na- tionwide reciprocal treatment require- ment); (ii) the imposition of the conditions is not preempted by Federal law; and (iii) the conditions do not apply or re- quire performance after May 31, 1997. (4) Interstate merger transactions involving ac- quisitions of branches (A) In general An interstate merger transaction may in- volve the acquisition of a branch of an in- sured bank without the acquisition of the bank only if the law of the State in which the branch is located permits out-of-State banks to acquire a branch of a bank in such State without acquiring the bank. (B) Treatment of branch for purposes of this section In the case of an interstate merger trans- action which involves the acquisition of a branch of an insured bank without the ac- quisition of the bank, the branch shall be treated, for purposes of this section, as an insured bank the home State of which is the State in which the branch is located. (5) Preservation of State age laws (A) In general The responsible agency may not approve an application pursuant to paragraph (1) that would have the effect of permitting an