12 U.S.C. § 5394 — Prohibition on taxpayer funding

Page 1913 TITLE 12—BANKS AND BANKING § 5394 § 5393. Ban on certain activities by senior execu- tives and directors (a) Prohibition authority The Board of Governors or, if the covered fi- nancial company was not supervised by the Board of Governors, the Corporation, may exer- cise the authority provided by this section. (b) Authority to issue order The appropriate agency described in sub- section (a) may take any action authorized by subsection (c), if the agency determines that— (1) a senior executive or a director of the covered financial company, prior to the ap- pointment of the Corporation as receiver, has, directly or indirectly— (A) violated— (i) any law or regulation; (ii) any cease-and-desist order which has become final; (iii) any condition imposed in writing by a Federal agency in connection with any action on any application, notice, or re- quest by such company or senior execu- tive; or (iv) any written agreement between such company and such agency; (B) engaged or participated in any unsafe or unsound practice in connection with any financial company; or (C) committed or engaged in any act, omission, or practice which constitutes a breach of the fiduciary duty of such senior executive or director; (2) by reason of the violation, practice, or breach described in any subparagraph of para- graph (1), such senior executive or director has received financial gain or other benefit by rea- son of such violation, practice, or breach and such violation, practice, or breach contributed to the failure of the company; and (3) such violation, practice, or breach— (A) involves personal dishonesty on the part of such senior executive or director; or (B) demonstrates willful or continuing dis- regard by such senior executive or director for the safety or soundness of such company. (c) Authorized actions (1) In general The appropriate agency for a financial com- pany, as described in subsection (a), may serve upon a senior executive or director described in subsection (b) a written notice of the inten- tion of the agency to prohibit any further par- ticipation by such person, in any manner, in the conduct of the affairs of any financial company for a period of time determined by the appropriate agency to be commensurate with such violation, practice, or breach, pro- vided such period shall be not less than 2 years. (2) Procedures The due process requirements and other pro- cedures under section 8(e) of the Federal De- posit Insurance Act (12 U.S.C. 1818(e)) shall apply to actions under this section as if the covered financial company were an insured de- pository institution and the senior executive or director were an institution-affiliated party, as those terms are defined in that Act [12 U.S.C. 1811 et seq.]. (d) Regulations The Corporation and the Board of Governors, in consultation with the Council, shall jointly prescribe rules or regulations to administer and carry out this section, including rules, regula- tions, or guidelines to further define the term senior executive for the purposes of this section. (Pub. L. 111–203, title II, § 213, July 21, 2010, 124 Stat. 1517.) Editorial Notes REFERENCES IN TEXT The Federal Deposit Insurance Act, referred to in subsec. (c)(2), is act Sept. 21, 1950, ch. 967, § 2, 64 Stat. 873, which is classified generally to chapter 16 (§ 1811 et seq.) of this title. The terms ‘‘insured depository insti- tution’’ and ‘‘institution-affiliated party’’ are defined in section 3 of the Act, which is classified to section 1813 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1811 of this title and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. § 5394. Prohibition on taxpayer funding (a) Liquidation required All financial companies put into receivership under this subchapter shall be liquidated. No taxpayer funds shall be used to prevent the liq- uidation of any financial company under this subchapter. (b) Recovery of funds All funds expended in the liquidation of a fi- nancial company under this subchapter shall be recovered from the disposition of assets of such financial company, or shall be the responsibility of the financial sector, through assessments. (c) No losses to taxpayers Taxpayers shall bear no losses from the exer- cise of any authority under this subchapter. (Pub. L. 111–203, title II, § 214, July 21, 2010, 124 Stat. 1518.) Editorial Notes REFERENCES IN TEXT This subchapter, referred to in text, was in the origi- nal ‘‘this title’’, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. Page 1914 TITLE 12—BANKS AND BANKING § 5401 1 See References in Text note below. 1 See References in Text note below. 1 See References in Text note below. SUBCHAPTER III—TRANSFER OF POWERS TO THE COMPTROLLER OF THE CUR- RENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS § 5401. Purposes The purposes of this title 1 are— (1) to provide for the safe and sound oper- ation of the banking system of the United States; (2) to preserve and protect the dual system of Federal and State-chartered depository in- stitutions; (3) to ensure the fair and appropriate super- vision of each depository institution, regard- less of the size or type of charter of the deposi- tory institution; and (4) to streamline and rationalize the super- vision of depository institutions and the hold- ing companies of depository institutions. (Pub. L. 111–203, title III, § 301, July 21, 2010, 124 Stat. 1520.) Editorial Notes REFERENCES IN TEXT This title, referred to in text, is title III of Pub. L. 111–203, July 21, 2010, 124 Stat. 1520, known as the En- hancing Financial Institution Safety and Soundness Act of 2010, which enacted this subchapter and sections 4b and 16 of this title, amended sections 1, 11, 248, 461, 481, 482, 1438, 1462, 1462a, 1463, to 1464, 1466a, 1467, 1467a, 1468, 1468a, to 1468b, 1470, 1701c, 1701p–1, 1708, 1757, 1785, 1786, 1787, 1812, 1813, 1817, 1818, 1820, 1821, 1823, 1828, 1829, 1831e, 1831j, 1833b, 1833e, 1834, 1841, 1843, 1844, 1861, 1867, 1881, 1882, 1884, 1972, 2709, 2902, 2905, 3206 to 3208, 3332, 4515, and 4517 of this title, section 906 of Title 2, The Congress, sections 78c, 78l, 78o–5, and 78w of Title 15, Commerce and Trade, sections 212, 657, 981, 982, 1006, 1014, and 1032 of Title 18, Crimes and Criminal Proce- dure, sections 321 and 714 of Title 31, Money and Fi- nance, section 41501 of Title 34, Crime Control and Law Enforcement, sections 4003 and 8105 of Title 42, The Public Health and Welfare, and section 3502 of Title 44, Public Printing and Documents, repealed section 1441a of this title, enacted provisions set out as notes under sections 1, 16, 1438, 1787, 1812, 1817, and 1821 of this title and section 906 of Title 2, and amended provisions set out as notes under sections 1437, 1463, 1464, 1467a, 1707, 1812, and 1818 of this title. For complete classification of title III to the Code, see Short title note set out under section 5301 of this title and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. § 5402. Definition In this title,1 the term ‘‘transferred employee’’ means, as the context requires, an employee transferred to the Office of the Comptroller of the Currency or the Corporation under section 5432 of this title. (Pub. L. 111–203, title III, § 302, July 21, 2010, 124 Stat. 1520.) Editorial Notes REFERENCES IN TEXT This title, where footnoted in text, is title III of Pub. L. 111–203, July 21, 2010, 124 Stat. 1520, known as the En- hancing Financial Institution Safety and Soundness Act of 2010, which enacted this subchapter and sections 4b and 16 of this title, amended sections 1, 11, 248, 461, 481, 482, 1438, 1462, 1462a, 1463, to 1464, 1466a, 1467, 1467a, 1468, 1468a, to 1468b, 1470, 1701c, 1701p–1, 1708, 1757, 1785, 1786, 1787, 1812, 1813, 1817, 1818, 1820, 1821, 1823, 1828, 1829, 1831e, 1831j, 1833b, 1833e, 1834, 1841, 1843, 1844, 1861, 1867, 1881, 1882, 1884, 1972, 2709, 2902, 2905, 3206 to 3208, 3332, 4515, and 4517 of this title, section 906 of Title 2, The Congress, sections 78c, 78l, 78o–5, and 78w of Title 15, Commerce and Trade, sections 212, 657, 981, 982, 1006, 1014, and 1032 of Title 18, Crimes and Criminal Proce- dure, sections 321 and 714 of Title 31, Money and Fi- nance, section 41501 of Title 34, Crime Control and Law Enforcement, sections 4003 and 8105 of Title 42, The Public Health and Welfare, and section 3502 of Title 44, Public Printing and Documents, repealed section 1441a of this title, enacted provisions set out as notes under sections 1, 16, 1438, 1787, 1812, 1817, and 1821 of this title and section 906 of Title 2, and amended provisions set out as notes under sections 1437, 1463, 1464, 1467a, 1707, 1812, and 1818 of this title. For complete classification of title III to the Code, see Short title note set out under section 5301 of this title and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. PART A—TRANSFER OF POWERS AND DUTIES § 5411. Transfer date (a) Transfer date Except as provided in subsection (b), the term ‘‘transfer date’’ means the date that is 1 year after July 21, 2010. (b) Extension permitted (1) Notice required The Secretary, in consultation with the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Chairman of the Board of Governors, and the Chair- person of the Corporation, may extend the pe- riod under subsection (a) and designate a transfer date that is not later than 18 months after July 21, 2010, if the Secretary transmits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Com- mittee on Financial Services of the House of Representatives— (A) a written determination that com- mencement of the orderly process to imple- ment this title 1 is not feasible by the date that is 1 year after July 21, 2010; (B) an explanation of why an extension is necessary to commence the process of or- derly implementation of this title; 1 (C) the transfer date designated under this subsection; and (D) a description of the steps that will be taken to initiate the process of an orderly and timely implementation of this title 1 within the extended time period.