12 U.S.C. § 4612 — Minimum capital levels

Page 1689 TITLE 12—BANKS AND BANKING § 4612 ch. 847, 48 Stat. 1252, which is classified generally to subchapter III (§ 1716 et seq.) of chapter 13 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1716 of this title and Tables. The Federal Home Loan Mortgage Corporation Act, referred to in text, is title III of Pub. L. 91–351, July 24, 1970, 84 Stat. 451, which is classified generally to chap- ter 11A (§ 1451 et seq.) of this title. For complete classi- fication of this Act to the Code, see Short Title and Statement of Purpose note set out under section 1451 of this title and Tables. SUBCHAPTER II—REQUIRED CAPITAL LEV- ELS FOR REGULATED ENTITIES, SPE- CIAL ENFORCEMENT POWERS, AND RE- VIEWS OF ASSETS AND LIABILITIES § 4611. Risk-based capital levels for regulated en- tities (a) In general (1) Enterprises The Director shall, by regulation, establish risk-based capital requirements for the enter- prises to ensure that the enterprises operate in a safe and sound manner, maintaining suffi- cient capital and reserves to support the risks that arise in the operations and management of the enterprises. (2) Federal Home Loan Banks The Director shall establish risk-based cap- ital standards under section 1426 of this title for the Federal Home Loan Banks. (b) No limitation Nothing in this section shall limit the author- ity of the Director to require other reports or undertakings, or take other action, in further- ance of the responsibilities of the Director under this Act. (Pub. L. 102–550, title XIII, § 1361, Oct. 28, 1992, 106 Stat. 3972; Pub. L. 110–289, div. A, title I, § 1110(a), July 30, 2008, 122 Stat. 2675.) Editorial Notes REFERENCES IN TEXT This Act, referred to in subsec. (b), 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 section 5301 of Title 42, The Public Health and Welfare, and Tables. AMENDMENTS 2008—Pub. L. 110–289 amended section generally. Prior to amendment, section related to risk-based capital levels for enterprises. § 4612. Minimum capital levels (a) Enterprises For purposes of this subchapter, the minimum capital level for each enterprise shall be the sum of— (1) 2.50 percent of the aggregate on-balance sheet assets of the enterprise, as determined in accordance with generally accepted ac- counting principles; (2) 0.45 percent of the unpaid principal bal- ance of outstanding mortgage-backed securi- ties and substantially equivalent instruments issued or guaranteed by the enterprise that are not included in paragraph (1); and (3) 0.45 percent of other off-balance sheet ob- ligations of the enterprise not included in paragraph (2) (excluding commitments in ex- cess of 50 percent of the average dollar amount of the commitments outstanding each quarter over the preceding 4 quarters), except that the Director shall adjust such percentage to re- flect differences in the credit risk of such obli- gations in relation to the instruments in- cluded in paragraph (2). (b) Federal Home Loan Banks For purposes of this subchapter, the minimum capital level for each Federal Home Loan Bank shall be the minimum capital required to be maintained to comply with the leverage require- ment for the bank established under section 1426(a)(2) of this title. (c) Establishment of revised minimum capital levels Notwithstanding subsections (a) and (b) and notwithstanding the capital classifications of the regulated entities, the Director may, by reg- ulations issued under section 4526 of this title, establish a minimum capital level for the enter- prises, for the Federal Home Loan Banks, or for both the enterprises and the banks, that is high- er than the level specified in subsection (a) for the enterprises or the level specified in sub- section (b) for the Federal Home Loan Banks, to the extent needed to ensure that the regulated entities operate in a safe and sound manner. (d) Authority to require temporary increase (1) In general Notwithstanding subsections (a) and (b) and any minimum capital level established pursu- ant to subsection (c), the Director may, by order, increase the minimum capital level for a regulated entity on a temporary basis, when the Director determines that such an increase is necessary and consistent with the pruden- tial regulation and the safe and sound oper- ations of a regulated entity. (2) Rescission The Director shall rescind any temporary minimum capital level established under para- graph (1) when the Director determines that the circumstances or facts no longer justify the temporary minimum capital level. (3) Regulations required The Director shall issue regulations estab- lishing— (A) standards for the imposition of a tem- porary increase in minimum capital under paragraph (1); (B) the standards and procedures that the Director will use to make the determination referred to in paragraph (2); and (C) a reasonable time frame for periodic re- view of any temporary increase in minimum capital for the purpose of making the deter- mination referred to in paragraph (2). (e) Authority to establish additional capital and reserve requirements for particular purposes The Director may, at any time by order or reg- ulation, establish such capital or reserve re- Page 1690 TITLE 12—BANKS AND BANKING § 4613 quirements with respect to any product or activ- ity of a regulated entity, as the Director con- siders appropriate to ensure that the regulated entity operates in a safe and sound manner, with sufficient capital and reserves to support the risks that arise in the operations and manage- ment of the regulated entity. (f) Periodic review The Director shall periodically review the amount of core capital maintained by the enter- prises, the amount of capital retained by the Federal Home Loan Banks, and the minimum capital levels established for such regulated en- tities pursuant to this section. (Pub. L. 102–550, title XIII, § 1362, Oct. 28, 1992, 106 Stat. 3975; Pub. L. 110–289, div. A, title I, § 1111, July 30, 2008, 122 Stat. 2676.) Editorial Notes AMENDMENTS 2008—Subsec. (a). Pub. L. 110–289, § 1111(1), substituted ‘‘Enterprises’’ for ‘‘In general’’ in heading. Subsecs. (b) to (f). Pub. L. 110–289, § 1111(2), added sub- secs. (b) to (f) and struck out former subsec. (b) which related to minimum capital level during transition pe- riod. § 4613. Critical capital levels (a) Enterprises For purposes of this subchapter, the critical capital level for each enterprise shall be the sum of— (1) 1.25 percent of the aggregate on-balance sheet assets of the enterprise, as determined in accordance with generally accepted ac- counting principles; (2) 0.25 percent of the unpaid principal bal- ance of outstanding mortgage-backed securi- ties and substantially equivalent instruments issued or guaranteed by the enterprise that are not included in paragraph (1); and (3) 0.25 percent of other off-balance sheet ob- ligations of the enterprise not included in paragraph (2) (excluding commitments in ex- cess of 50 percent of the average dollar amount of the commitments outstanding each quarter over the preceding 4 quarters), except that the Director shall adjust such percentage to re- flect differences in the credit risk of such obli- gations in relation to the instruments in- cluded in paragraph (2). (b) Federal Home Loan Banks (1) In general For purposes of this subchapter, the critical capital level for each Federal Home Loan Bank shall be such amount of capital as the Director shall, by regulation, require. (2) Consideration of other critical capital levels In establishing the critical capital level under paragraph (1) for the Federal Home Loan Banks, the Director shall take due con- sideration of the critical capital level estab- lished under subsection (a) for the enterprises, with such modifications as the Director deter- mines to be appropriate to reflect the dif- ference in operations between the banks and the enterprises. (Pub. L. 102–550, title XIII, § 1363, Oct. 28, 1992, 106 Stat. 3976; Pub. L. 110–289, div. A, title I, § 1141(a), July 30, 2008, 122 Stat. 2730.) Editorial Notes AMENDMENTS 2008—Pub. L. 110–289 designated existing provisions as subsec. (a), inserted heading, and added subsec. (b). Statutory Notes and Related Subsidiaries REGULATIONS Pub. L. 110–289, div. A, title I, § 1141(b), July 30, 2008, 122 Stat. 2730, 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 pursuant to section 1363(b) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [12 U.S.C. 4613(b)] (as added by this section) estab- lishing the critical capital level under such section.’’ § 4614. Capital classifications (a) Enterprises For purposes of this subchapter, the Director shall classify the enterprises according to the following capital classifications: (1) Adequately capitalized An enterprise shall be classified as ade- quately capitalized if the enterprise— (A) maintains an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise under section 4611 of this title; and (B) maintains an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise under section 4612 of this title. (2) Undercapitalized An enterprise shall be classified as under- capitalized if— (A) the enterprise— (i) does not maintain an amount of total capital that is equal to or exceeds the risk- based capital level established for the en- terprise; and (ii) maintains an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise; or (B) the enterprise is otherwise classified as undercapitalized under subsection (b)(1) of this section. (3) Significantly undercapitalized An enterprise shall be classified as signifi- cantly undercapitalized if— (A) the enterprise— (i) does not maintain an amount of total capital that is equal to or exceeds the risk- based capital level established for the en- terprise; (ii) does not maintain an amount of core capital that is equal to or exceeds the min- imum capital level established for the en- terprise; and (iii) maintains an amount of core capital that is equal to or exceeds the critical cap- ital level established for the enterprise under section 4613 of this title; or