12 U.S.C. § 3902 — Definitions

Page 1574 TITLE 12—BANKS AND BANKING § 3901 1 See References in Text note below. Sec. 3902. Definitions. 3903. Strengthened supervision of international lending. 3904. Reserves. 3904a. Additional reserve requirements. 3905. Accounting for fees on international loans. 3906. Collection and disclosure of international lending data. 3907. Capital adequacy. 3908. Foreign loan evaluations. 3909. General authorities. 3910. Audit authority of Government Account- ability Office. 3911. Equal representation for Federal Deposit In- surance Corporation and the Office of Thrift Supervision. 3912. Repealed. § 3901. Congressional declaration of policy (a)(1) It is the policy of the Congress to assure that the economic health and stability of the United States and the other nations of the world shall not be adversely affected or threatened in the future by imprudent lending practices or in- adequate supervision. (2) This shall be achieved by strengthening the bank regulatory framework to encourage pru- dent private decisionmaking and by enhancing international coordination among bank regu- latory authorities. (b) The Federal banking agencies shall consult with the banking supervisory authorities of other countries to reach understandings aimed at achieving the adoption of effective and con- sistent supervisory policies and practices with respect to international lending. (Pub. L. 98–181, title I [title IX, § 902], Nov. 30, 1983, 97 Stat. 1278.) Statutory Notes and Related Subsidiaries SHORT TITLE OF 1989 AMENDMENT Pub. L. 101–240, title IV, § 401, Dec. 19, 1989, 103 Stat. 2501, provided that: ‘‘This title [enacting section 3904a of this title and enacting provisions set out as notes under section 3904a of this title and section 2291 of Title 22, Foreign Relations and Intercourse] may be cited as the ‘Foreign Debt Reserving Act of 1989’.’’ SHORT TITLE Pub. L. 98–181, title I [title IX, § 901], Nov. 30, 1983, 97 Stat. 1278, provided that: ‘‘This title [enacting this chapter] may be cited as the ‘International Lending Su- pervision Act of 1983’.’’ ENCOURAGEMENT OF DEBT-FOR-DEVELOPMENT SWAPS THROUGH LOCAL CURRENCY REPAYMENT Pub. L. 101–240, title V, § 531, Dec. 19, 1989, 103 Stat. 2513, provided that: ‘‘(a) STATEMENT OF POLICY.—It is the sense of the Congress that— ‘‘(1) debt-for-development swaps, where payment is made in local currency at the free market rate, serve a useful purpose by providing banking institutions with constructive opportunities for the reduction of the external debt of highly indebted developing coun- tries in a process that involves the participation of private, nonprofit groups in providing a stimulus to the economic and social development of such devel- oping countries; ‘‘(2) debt-for-development swaps provide highly in- debted developing countries with a creative method of reducing external debt burdens, while promoting their economic growth and restructuring objectives; ‘‘(3) banking institutions should give careful con- sideration to engaging in such swaps as one means of strengthening overall loan portfolios through the re- duction of high external debt burdens while expand- ing economic opportunities through private sector initiatives; and ‘‘(4) in order to avoid any bias against such swaps in the regulatory framework applicable to the finan- cial reporting of banking institutions, where pay- ment is made in local currency at the free market rate, appropriate recognition of the fair market ex- change value of the currency so received should be made. ‘‘(b) NOTIFICATION RELATING TO LOCAL CURRENCY RE- PAYMENT THROUGH DEBT-FOR-DEVELOPMENT SWAPS.— Before the end of the 6-month period beginning on the date of the enactment of this section [Dec. 19, 1989], each appropriate Federal banking agency shall adopt uniform guidelines that will effectuate the policy set forth in subsection (a) concerning the regulatory framework and accounting treatment of debt-for-devel- opment swaps involving repayment in local currency at the free market rate. For the purpose of such guide- lines, the impact of such swaps on reported loan loss re- serves shall be determined by valuing currency re- ceived in such swaps at fair market exchange value. ‘‘(c) DEFINITIONS.—As used in this section: ‘‘(1) APPROPRIATE FEDERAL BANKING AGENCY.—The term ‘appropriate Federal banking agency’ has the meaning given such term in section 903(1) of the International Lending Supervision Act of 1983 [12 U.S.C. 3902(1)]. ‘‘(2) BANKING INSTITUTION.—The term ‘banking in- stitution’ has the meaning given such term in section 903(2) of the International Lending Supervision Act of 1983. ‘‘(3) DEBT-FOR-DEVELOPMENT SWAP.—The term ‘debt- for-development swap’ has the meaning given such term in section 1608(b)(2) of the International Finan- cial Institutions Act [22 U.S.C. 262p–4c(b)(2)]. ‘‘(4) HIGHLY INDEBTED COUNTRY.—The term ‘highly indebted country’ means any country designated as a ‘Highly Indebted Country’ in the annual World Debt Tables most recently published by the International Bank for Reconstruction and Development before the date of the enactment of this section [Dec. 19, 1989].’’ § 3902. Definitions For purposes of this chapter— (1) the term ‘‘appropriate Federal banking agency’’ has the same meaning given such term in section 1813(q) of this title, except that for purposes of this chapter such term means the Board of Governors of the Federal Reserve System for— (A) bank holding companies and any nonbank subsidiary thereof; (B) Edge Act corporations organized under section 25(a) 1 of the Federal Reserve Act [12 U.S.C. 611 et seq.]; and (C) Agreement Corporations operating under section 25 of the Federal Reserve Act [12 U.S.C. 601 et seq.]; and (2) the term ‘‘banking institution’’ means— (A)(i) an insured bank as defined in section 1813(h) of this title or any subsidiary of an insured bank; (ii) an Edge Act corporation organized under section 25(a) 1 of the Federal Reserve Act [12 U.S.C. 611 et seq.]; and (iii) an Agreement Corporation operating under section 25 of the Federal Reserve Act [12 U.S.C. 601 et seq.]; and Page 1575 TITLE 12—BANKS AND BANKING § 3904a (B) to the extent determined by the appro- priate Federal banking agency, any agency or branch of a foreign bank, and any com- mercial lending company owned or con- trolled by one or more foreign banks or com- panies that control a foreign bank as those terms are defined in the International Bank- ing Act of 1978 [12 U.S.C. 3101 et seq.]. The term ‘‘banking institution’’ shall not in- clude a foreign bank. (Pub. L. 98–181, title I [title IX, § 903], Nov. 30, 1983, 97 Stat. 1278.) Editorial Notes REFERENCES IN TEXT Section 25(a) of the Federal Reserve Act, referred to in pars. (1) and (2)(A), which is classified to subchapter II (§ 611 et seq.) of chapter 6 of this title, was renum- bered section 25A of that act by Pub. L. 102–242, title I, § 142(e)(2), Dec. 19, 1991, 105 Stat. 2281. Section 25 of the Federal Reserve Act is classified to subchapter I (§ 601 et seq.) of chapter 6 of this title. The International Banking Act of 1978, referred to in par. (2)(B), is Pub. L. 95–369, Sept. 17, 1978, 92 Stat. 607, which enacted chapter 32 (§ 3101 et seq.) and sections 347d and 611a of this title, amended sections 72, 378, 614, 615, 618, 619, 1813, 1815, 1817, 1818, 1820, 1821, 1822, 1823, 1828, 1829b, 1831b, and 1841 of this title, and enacted pro- visions set out as notes under sections 247, 611a, and 3101 of this title and formerly set out as notes under sections 36, 247, and 601 of this title. For definitions, see section 3101 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 3101 of this title and Tables. § 3903. Strengthened supervision of international lending (a) Each appropriate Federal banking agency shall evaluate banking institution foreign coun- try exposure and transfer risk for use in banking institution examination and supervision. (b) Each such agency shall establish examina- tion and supervisory procedures to assure that factors such as foreign country exposure and transfer risk are taken into account in evalu- ating the adequacy of the capital of banking in- stitutions. (Pub. L. 98–181, title I [title IX, § 904], Nov. 30, 1983, 97 Stat. 1279.) § 3904. Reserves (a) Establishment and maintenance of special re- serves (1) Each appropriate Federal banking agency shall require a banking institution to establish and maintain a special reserve whenever, in the judgment of such appropriate Federal banking agency— (A) the quality of such banking institution’s assets has been impaired by a protracted in- ability of public or private borrowers in a for- eign country to make payments on their ex- ternal indebtedness as indicated by such fac- tors, among others, as— (i) a failure by such public or private bor- rowers to make full interest payments on external indebtedness; (ii) a failure to comply with the terms of any restructured indebtedness; or (iii) a failure by the foreign country to comply with any International Monetary Fund or other suitable adjustment program; or (B) no definite prospects exist for the or- derly restoration of debt service. (2) Such reserves shall be charged against cur- rent income and shall not be considered as part of capital and surplus or allowances for possible loan losses for regulatory, supervisory, or dis- closure purposes. (b) Accommodation of potential losses on foreign loans by United States banks The appropriate Federal banking agencies shall analyze the results of foreign loan resched- uling negotiations, assess the loan loss risk re- flected in rescheduling agreements, and, using the powers set forth in section 3907 of this title (regarding capital adequacy), ensure that the capital and reserve positions of United States banks are adequate to accommodate potential losses on their foreign loans. (c) Regulations and orders of Federal banking agencies The appropriate Federal banking agencies shall promulgate regulations or orders nec- essary to implement this section within one hundred and twenty days after November 30, 1983. (Pub. L. 98–181, title I [title IX, § 905], Nov. 30, 1983, 97 Stat. 1279.) § 3904a. Additional reserve requirements (a) In general Each appropriate Federal banking agency shall review the exposure to risk of United States banking institutions arising from the medium- and long-term loans made by such in- stitutions that are outstanding to any highly in- debted country. Each agency shall provide direc- tion to such institutions regarding additions to general reserves maintained by each banking in- stitution for potential loan losses and special re- serves required by such agency arising from such review. (b) Determination of institutional exposure to risk In determining the exposure of an institution to risk for purposes of subsection (a), the appro- priate Federal banking agency— (1) shall determine whether any country ex- posure that is, and has been for at least 2 years, rated in the category ‘‘Other Transfer Risk Problems’’ or the category ‘‘Sub- standard’’ by the Interagency Country Expo- sure Review Committee should be reevaluated; (2) may exempt, in full or in part, from re- serve requirements established pursuant to subsection (a), any loan— (A) to a country that enters into a debt re- duction, debt service reduction, or financing program with its bank creditors that is sup- ported by the International Bank for Recon- struction and Development or the Inter- national Monetary Fund; or (B) secured, in whole or in part, by appro- priate collateral for payment of interest or principal; (3) take into account any other factors which bear on such exposure and the par- ticular circumstances of the institution; and