12 U.S.C. § 1790d — Prompt corrective action

Page 943 TITLE 12—BANKS AND BANKING § 1790d (including any employee of the National Cred- it Union Central Liquidity Facility) with re- spect to compensation, terms, conditions, or privileges of employment because the em- ployee (or any person acting pursuant to the request of the employee) provided information to the Administration or the Attorney General regarding any possible violation of any law or regulation by— (A) any credit union or the Administra- tion; (B) any director, officer, committee mem- ber, or employee of any credit union; or (C) any officer or employee of the Adminis- tration. (b) Enforcement Any employee or former employee who be- lieves he has been discharged or discriminated against in violation of subsection (a) may file a civil action in the appropriate United States dis- trict court before the close of the 2-year period beginning on the date of such discharge or dis- crimination. The complainant shall also file a copy of the complaint initiating such action with the Board. (c) Remedies If the district court determines that a viola- tion of subsection (a) has occurred, it may order the credit union or the Administration which committed the violation— (1) to reinstate the employee to his former position, (2) to pay compensatory damages, or (3) take other appropriate actions to remedy any past discrimination. (d) Limitations The protections of this section shall not apply to any employee who— (1) deliberately causes or participates in the alleged violation of law or regulation, or (2) knowingly or recklessly provides sub- stantially false information to such an agency or the Attorney General. (June 26, 1934, ch. 750, title II, § 213, as added Pub. L. 101–73, title IX, § 932(b), Aug. 9, 1989, 103 Stat. 494; amended Pub. L. 102–242, title II, § 251(b)(1), (2), Dec. 19, 1991, 105 Stat. 2332, 2333; Pub. L. 102–550, title XVI, § 1604(d), Oct. 28, 1992, 106 Stat. 4084.) Editorial Notes AMENDMENTS 1992—Subsec. (a)(2). Pub. L. 102–550 substituted, in subpar. (A), ‘‘union or the’’ for ‘‘union the’’ and in sub- par. (B), ‘‘committee member, or employee of any cred- it union’’ for ‘‘or employee of any depository institu- tion or any such bank’’. 1991—Subsec. (a). Pub. L. 102–242, § 251(b)(1), sub- stituted ‘‘In general’’ for ‘‘Prohibition against discrimi- nation against whistleblowers’’ in heading and amend- ed text generally. Prior to amendment, text read as fol- lows: ‘‘No federally insured credit union may discharge or otherwise discriminate against any employee with respect to compensation, terms, conditions, or privi- leges of employment because the employee (or any per- son acting pursuant to the request of the employee) provided information to the Board or to the Attorney General regarding a possible violation of any law or regulation by the credit union or any of its officers, di- rectors, or employees.’’ Subsec. (c). Pub. L. 102–242, § 251(b)(2), inserted ‘‘or the Administration’’ after ‘‘the credit union’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1992 AMENDMENT Amendment by Pub. L. 102–550 effective as if included in the Federal Deposit Insurance Corporation Improve- ment Act of 1991, Pub. L. 102–242, as of Dec. 19, 1991, see section 1609(a) of Pub. L. 102–550, set out as a note under section 191 of this title. EFFECTIVE DATE OF 1991 AMENDMENT Pub. L. 102–242, title II, § 251(b)(3), Dec. 19, 1991, 105 Stat. 2333, provided that: ‘‘Paragraph (2) of section 213(a) of the Federal Credit Union Act [12 U.S.C. 1790b(a)(2)] (as added under the amendment made by paragraph (1)) shall be treated as having taken effect on January 1, 1987, and for purposes of any cause of ac- tion arising under such paragraph (as so effective) be- fore the date of the enactment of this Act [Dec. 19, 1991], the 2-year period referred to in section 213(b) of such Act shall be deemed to begin on such date of en- actment.’’ § 1790c. Reward for information leading to recov- eries or civil penalties The Board may pay rewards in connection with an offense affecting an insured credit union, under the same circumstances and sub- ject to the same limitations that a Federal banking agency may pay rewards under section 1831j of this title in connection with an offense affecting a depository institution insured by the Federal Deposit Insurance Corporation. (June 26, 1934, ch. 750, title II, § 214, as added Pub. L. 101–73, title IX, § 933(b), Aug. 9, 1989, 103 Stat. 496.) § 1790d. Prompt corrective action (a) Resolving problems to protect Fund (1) Purpose The purpose of this section is to resolve the problems of insured credit unions at the least possible long-term loss to the Fund. (2) Prompt corrective action required The Board shall carry out the purpose of this section by taking prompt corrective action to resolve the problems of insured credit unions. (b) Regulations required (1) Insured credit unions (A) In general The Board shall, by regulation, prescribe a system of prompt corrective action for in- sured credit unions that is— (i) consistent with this section; and (ii) comparable to section 1831o of this title. (B) Cooperative character of credit unions The Board shall design the system re- quired under subparagraph (A) to take into account that credit unions are not-for-profit cooperatives that— (i) do not issue capital stock; (ii) must rely on retained earnings to build net worth; and (iii) have boards of directors that consist primarily of volunteers. Page 944 TITLE 12—BANKS AND BANKING § 1790d (2) New credit unions (A) In general In addition to regulations under paragraph (1), the Board shall, by regulation, prescribe a system of prompt corrective action that shall apply to new credit unions in lieu of this section and the regulations prescribed under paragraph (1). (B) Criteria for alternative system The Board shall design the system pre- scribed under subparagraph (A)— (i) to carry out the purpose of this sec- tion; (ii) to recognize that credit unions (as cooperatives that do not issue capital stock) initially have no net worth, and give new credit unions reasonable time to accumulate net worth; (iii) to create adequate incentives for new credit unions to become adequately capitalized by the time that they either— (I) have been in operation for more than 10 years; or (II) have more than $10,000,000 in total assets; (iv) to impose appropriate restrictions and requirements on new credit unions that do not make sufficient progress to- ward becoming adequately capitalized; and (v) to prevent evasion of the purpose of this section. (c) Net worth categories (1) In general For purposes of this section the following definitions shall apply: (A) Well capitalized An insured credit union is ‘‘well capital- ized’’ if— (i) it has a net worth ratio of not less than 7 percent; and (ii) it meets any applicable risk-based net worth requirement under subsection (d). (B) Adequately capitalized An insured credit union is ‘‘adequately capitalized’’ if— (i) it has a net worth ratio of not less than 6 percent; and (ii) it meets any applicable risk-based net worth requirement under subsection (d). (C) Undercapitalized An insured credit union is ‘‘undercapital- ized’’ if— (i) it has a net worth ratio of less than 6 percent; or (ii) it fails to meet any applicable risk- based net worth requirement under sub- section (d). (D) Significantly undercapitalized An insured credit union is ‘‘significantly undercapitalized’’— (i) if it has a net worth ratio of less than 4 percent; or (ii) if— (I) it has a net worth ratio of less than 5 percent; and (II) it— (aa) fails to submit an acceptable net worth restoration plan within the time allowed under subsection (f); or (bb) materially fails to implement a net worth restoration plan accepted by the Board. (E) Critically undercapitalized An insured credit union is ‘‘critically undercapitalized’’ if it has a net worth ratio of less than 2 percent (or such higher net worth ratio, not to exceed 3 percent, as the Board may specify by regulation). (2) Adjusting net worth levels (A) In general If, for purposes of section 1831o(c) of this title, the Federal banking agencies increase or decrease the required minimum level for the leverage limit (as those terms are used in section 1831o of this title), the Board may, by regulation, and subject to subparagraph (B) of this paragraph, correspondingly in- crease or decrease 1 or more of the net worth ratios specified in subparagraphs (A) through (D) of paragraph (1) of this sub- section in an amount that is equal to not more than the difference between the re- quired minimum level most recently estab- lished by the Federal banking agencies and 4 percent of total assets (with respect to insti- tutions regulated by those agencies). (B) Determinations required The Board may increase or decrease net worth ratios under subparagraph (A) only if the Board— (i) determines, in consultation with the Federal banking agencies, that the reason for the increase or decrease in the required minimum level for the leverage limit also justifies the adjustment in net worth ra- tios; and (ii) determines that the resulting net worth ratios are sufficient to carry out the purpose of this section. (C) Transition period required If the Board increases any net worth ratio under this paragraph, the Board shall give insured credit unions a reasonable period of time to meet the increased ratio. (d) Risk-based net worth requirement for com- plex credit unions (1) In general The regulations required under subsection (b)(1) shall include a risk-based net worth re- quirement for insured credit unions that are complex, as defined by the Board based on the portfolios of assets and liabilities of credit unions. (2) Standard The Board shall design the risk-based net worth requirement to take account of any ma- terial risks against which the net worth ratio required for an insured credit union to be ade- quately capitalized may not provide adequate protection. Page 945 TITLE 12—BANKS AND BANKING § 1790d (e) Earnings-retention requirement applicable to credit unions that are not well capitalized (1) In general An insured credit union that is not well cap- italized shall annually set aside as net worth an amount equal to not less than 0.4 percent of its total assets. (2) Board’s authority to decrease earnings-re- tention requirement (A) In general The Board may, by order, decrease the 0.4 percent requirement in paragraph (1) with respect to a credit union to the extent that the Board determines that the decrease— (i) is necessary to avoid a significant re- demption of shares; and (ii) would further the purpose of this sec- tion. (B) Periodic review required The Board shall periodically review any order issued under subparagraph (A). (f) Net worth restoration plan required (1) In general Each insured credit union that is under- capitalized shall submit an acceptable net worth restoration plan to the Board within the time allowed under this subsection. (2) Assistance to small credit unions The Board (or the staff of the Board) shall, upon timely request by an insured credit union with total assets of less than $10,000,000, and subject to such regulations or guidelines as the Board may prescribe, assist that credit union in preparing a net worth restoration plan. (3) Deadlines for submission and review of plans The Board shall, by regulation, establish deadlines for submission of net worth restora- tion plans under this subsection that— (A) provide insured credit unions with rea- sonable time to submit net worth restora- tion plans; and (B) require the Board to act on net worth restoration plans expeditiously. (4) Failure to submit acceptable plan within time allowed (A) Failure to submit any plan If an insured credit union fails to submit a net worth restoration plan within the time allowed under paragraph (3), the Board shall— (i) promptly notify the credit union of that failure; and (ii) give the credit union a reasonable op- portunity to submit a net worth restora- tion plan. (B) Submission of unacceptable plan If an insured credit union submits a net worth restoration plan within the time al- lowed under paragraph (3), and the Board de- termines that the plan is not acceptable, the Board shall— (i) promptly notify the credit union of why the plan is not acceptable; and (ii) give the credit union a reasonable op- portunity to submit a revised plan. (5) Accepting plan The Board may accept a net worth restora- tion plan only if the Board determines that the plan is based on realistic assumptions and is likely to succeed in restoring the net worth of the credit union. (g) Restrictions on undercapitalized credit unions (1) Restriction on asset growth An insured credit union that is undercapital- ized shall not generally permit its average total assets to increase, unless— (A) the Board has accepted the net worth restoration plan of the credit union for that action; (B) any increase in total assets is con- sistent with the net worth restoration plan; and (C) the net worth ratio of the credit union increases at a rate that is consistent with the net worth restoration plan. (2) Restriction on member business loans Notwithstanding section 1757a(a) of this title, an insured credit union that is under- capitalized may not make any increase in the total amount of member business loans (as de- fined in section 1757a(c) of this title) out- standing at that credit union at any one time, until such time as the credit union becomes adequately capitalized. (h) More stringent treatment based on other su- pervisory criteria With respect to the exercise of authority by the Board under regulations comparable to sec- tion 1831o(g) of this title— (1) the Board may not reclassify an insured credit union into a lower net worth category, or treat an insured credit union as if it were in a lower net worth category, for reasons not pertaining to the safety and soundness of that credit union; and (2) the Board may not delegate its authority to reclassify an insured credit union into a lower net worth category or to treat an in- sured credit union as if it were in a lower net worth category. (i) Action required regarding critically under- capitalized credit unions (1) In general The Board shall, not later than 90 days after the date on which an insured credit union be- comes critically undercapitalized— (A) appoint a conservator or liquidating agent for the credit union; or (B) take such other action as the Board de- termines would better achieve the purpose of this section, after documenting why the ac- tion would better achieve that purpose. (2) Periodic redeterminations required Any determination by the Board under para- graph (1)(B) to take any action with respect to an insured credit union in lieu of appointing a conservator or liquidating agent shall cease to be effective not later than the end of the 180- Page 946 TITLE 12—BANKS AND BANKING § 1790d day period beginning on the date on which the determination is made, and a conservator or liquidating agent shall be appointed for that credit union under paragraph (1)(A), unless the Board makes a new determination under para- graph (1)(B) before the end of the effective pe- riod of the prior determination. (3) Appointment of liquidating agent required if other action fails to restore net worth (A) In general Notwithstanding paragraphs (1) and (2), the Board shall appoint a liquidating agent for an insured credit union if the credit union is critically undercapitalized on aver- age during the calendar quarter beginning 18 months after the date on which the credit union became critically undercapitalized. (B) Exception Notwithstanding subparagraph (A), the Board may continue to take such other ac- tion as the Board determines to be appro- priate in lieu of appointment of a liquidating agent if— (i) the Board determines that— (I) the insured credit union has been in substantial compliance with an approved net worth restoration plan that requires consistent improvement in the net worth of the credit union since the date of the approval of the plan; and (II) the insured credit union has posi- tive net income or has an upward trend in earnings that the Board projects as sustainable; and (ii) the Board certifies that the credit union is viable and not expected to fail. (4) Nondelegation (A) In general Except as provided in subparagraph (B), the Board may not delegate the authority of the Board under this subsection. (B) Exception The Board may delegate the authority of the Board under this subsection with respect to an insured credit union that has less than $5,000,000 in total assets, if the Board per- mits the credit union to appeal any adverse action to the Board. (j) Reviews required when share insurance fund experiences losses (1) In general If the Fund incurs a material loss with re- spect to an insured credit union, the Inspector General of the Board shall— (A) submit to the Board a written report reviewing the supervision of the credit union by the Administration (including the imple- mentation of this section by the Administra- tion), which shall include— (i) a description of the reasons why the problems of the credit union resulted in a material loss to the Fund; and (ii) recommendations for preventing any such loss in the future; and (B) submit a copy of the report under sub- paragraph (A) to— (i) the Comptroller General of the United States; (ii) the Corporation; (iii) in the case of a report relating to a State credit union, the appropriate State supervisor; and (iv) to any Member of Congress, upon re- quest. (2) Material loss defined For purposes of determining whether the Fund has incurred a material loss with respect to an insured credit union, a loss is material if it exceeds the sum of— (A) $25,000,000; and (B) an amount equal to 10 percent of the total assets of the credit union on the date on which the Board initiated assistance under section 1788 of this title or was ap- pointed liquidating agent. (3) Public disclosure required (A) In general The Board shall disclose a report under this subsection, upon request under section 552 of title 5, without excising— (i) any portion under section 552(b)(5) of title 5; or (ii) any information about the insured credit union (other than trade secrets) under section 552(b)(8) of title 5. (B) Rule of construction Subparagraph (A) may not be construed as requiring the agency to disclose the name of any customer of the insured credit union (other than an institution-affiliated party), or information from which the identity of such customer could reasonably be ascertained. (4) Losses that are not material (A) Semiannual report For the 6-month period ending on March 31, 2010, and each 6-month period thereafter, the Inspector General of the Board shall— (i) identify any losses that the Inspector General estimates were incurred by the Fund during such 6-month period, with re- spect to insured credit unions; (ii) for each loss to the Fund that is not a material loss, determine— (I) the grounds identified by the Board or the State official having jurisdiction over a State credit union for appointing the Board as the liquidating agent for any Federal or State credit union; and (II) whether any unusual cir- cumstances exist that might warrant an in-depth review of the loss; and (iii) prepare and submit a written report to the Board and to Congress on the re- sults of the determinations of the Inspec- tor General that includes— (I) an identification of any loss that warrants an in-depth review, and the reasons such review is warranted, or if the Inspector General determines that no review is warranted, an explanation of such determination; and (II) for each loss identified in subclause (I) that warrants an in-depth review, the Page 947 TITLE 12—BANKS AND BANKING § 1790d date by which such review, and a report on the review prepared in a manner con- sistent with reports under paragraph (1)(A), will be completed. (B) Deadline for semiannual report The Inspector General of the Board shall— (i) submit each report required under subparagraph (A) expeditiously, and not later than 90 days after the end of the 6- month period covered by the report; and (ii) provide a copy of the report required under subparagraph (A) to any Member of Congress, upon request. (5) GAO review The Comptroller General of the United States shall, under such conditions as the Comptroller General determines to be appro- priate— (A) review each report made under para- graph (1), including the extent to which the Inspector General of the Board complied with the requirements under section 419 of title 5 with respect to each such report; and (B) recommend improvements to the su- pervision of insured credit unions (including improvements relating to the implementa- tion of this section). (k) Appeals process Material supervisory determinations, includ- ing decisions to require prompt corrective ac- tion, made pursuant to this section by Adminis- tration officials other than the Board may be appealed to the Board pursuant to the inde- pendent appellate process required by section 4806 of this title (or, if the Board so specifies, pursuant to separate procedures prescribed by regulation). (l) Consultation and cooperation with State cred- it union supervisors (1) In general In implementing this section, the Board shall consult and seek to work cooperatively with State officials having jurisdiction over State-chartered insured credit unions. (2) Evaluating net worth restoration plan In evaluating any net worth restoration plan submitted by a State-chartered insured credit union, the Board shall seek the views of the State official having jurisdiction over the credit union. (3) Deciding whether to appoint conservator or liquidating agent With respect to any decision by the Board on whether to appoint a conservator or liqui- dating agent for a State-chartered insured credit union— (A) the Board shall— (i) seek the views of the State official having jurisdiction over the credit union; and (ii) give that official an opportunity to take the proposed action; (B) the Board shall, upon timely request of an official referred to in subparagraph (A), promptly provide the official with— (i) a written statement of the reasons for the proposed action; and (ii) reasonable time to respond to that statement; (C) if the official referred to in subpara- graph (A) makes a timely written response that disagrees with the proposed action and gives reasons for that disagreement, the Board shall not appoint a conservator or liq- uidating agent for the credit union, unless the Board, after considering the views of the official, has determined that— (i) the Fund faces a significant risk of loss with respect to the credit union if a conservator or liquidating agent is not ap- pointed; and (ii) the appointment is necessary to re- duce— (I) the risk that the Fund would incur a loss with respect to the credit union; or (II) any loss that the Fund is expected to incur with respect to the credit union; and (D) the Board may not delegate any deter- mination under subparagraph (C). (m) Corporate credit unions exempted This section does not apply to any insured credit union that— (1) operates primarily for the purpose of serving credit unions; and (2) permits individuals to be members of the credit union only to the extent that applicable law requires that such persons own shares. (n) Other authority not affected This section does not limit any authority of the Board or a State to take action in addition to (but not in derogation of) any action that is required under this section. (o) Definitions For purposes of this section the following defi- nitions shall apply: (1) Federal banking agency The term ‘‘Federal banking agency’’ has the same meaning as in section 1813 of this title. (2) Net worth The term ‘‘net worth’’— (A) with respect to any insured credit union, means the retained earnings balance of the credit union, as determined under generally accepted accounting principles, to- gether with any amounts that were pre- viously retained earnings of any other credit union with which the credit union has com- bined; (B) with respect to any insured credit union, includes, at the Board’s discretion and subject to rules and regulations estab- lished by the Board, assistance provided under section 1788 of this title to facilitate a least-cost resolution consistent with the best interests of the credit union system; and (C) with respect to a low-income credit union, includes secondary capital accounts that are— (i) uninsured; and (ii) subordinate to all other claims against the credit union, including the Page 948 TITLE 12—BANKS AND BANKING § 1790d claims of creditors, shareholders, and the Fund. (3) Net worth ratio The term ‘‘net worth ratio’’ means, with re- spect to a credit union, the ratio of the net worth of the credit union to the total assets of the credit union. (4) New credit union The term ‘‘new credit union’’ means an in- sured credit union that— (A) has been in operation for less than 10 years; and (B) has not more than $10,000,000 in total assets. (June 26, 1934, ch. 750, title II, § 216, as added Pub. L. 105–219, title III, § 301(a), Aug. 7, 1998, 112 Stat. 923; amended Pub. L. 109–351, title V, § 504, title VII, § 726(25), Oct. 13, 2006, 120 Stat. 1975, 2003; Pub. L. 111–203, title IX, § 988(a), July 21, 2010, 124 Stat. 1938; Pub. L. 111–382, § 3, Jan. 4, 2011, 124 Stat. 4135; Pub. L. 117–286, § 4(b)(33), Dec. 27, 2022, 136 Stat. 4346.) Editorial Notes AMENDMENTS 2022—Subsec. (j)(5)(A). Pub. L. 117–286 substituted ‘‘section 419 of title 5’’ for ‘‘section 8L of the Inspector General Act of 1978 (5 U.S.C. App.)’’. 2011—Subsec. (o)(2). Pub. L. 111–382 amended par. (2) generally. Prior to amendment, text read as follows: ‘‘The term ‘net worth’— ‘‘(A) with respect to any insured credit union, means the retained earnings balance of the credit union, as determined under generally accepted ac- counting principles, together with any amounts that were previously retained earnings of any other credit union with which the credit union has combined; and ‘‘(B) with respect to a low-income credit union, in- cludes secondary capital accounts that are— ‘‘(i) uninsured; and ‘‘(ii) subordinate to all other claims against the credit union, including the claims of creditors, shareholders, and the Fund.’’ 2010—Subsec. (j). Pub. L. 111–203 amended subsec. (j) generally. Prior to amendment, text read as follows: ‘‘For purposes of determining whether the Fund has in- curred a material loss with respect to an insured credit union (such that the inspector general of the Board must make a report), a loss is material if it exceeds the sum of— ‘‘(1) $10,000,000; and ‘‘(2) an amount equal to 10 percent of the total as- sets of the credit union at the time at which the Board initiated assistance under section 1788 of this title or was appointed liquidating agent.’’ 2006—Subsec. (n). Pub. L. 109–351, § 726(25), inserted ‘‘any action’’ before ‘‘that is required’’. Subsec. (o)(2)(A). Pub. L. 109–351, § 504, inserted ‘‘the’’ before ‘‘retained earnings balance’’ and ‘‘, together with any amounts that were previously retained earn- ings of any other credit union with which the credit union has combined’’ before semicolon. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of this title. EFFECTIVE DATE Pub. L. 105–219, title III, § 301(e), Aug. 7, 1998, 112 Stat. 931, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), section 216 of the Federal Credit Union Act [12 U.S.C. 1790d] (as added by this section) shall become effective 2 years after the date of enactment of this Act [Aug. 7, 1998]. ‘‘(2) RISK-BASED NET WORTH REQUIREMENT.—Section 216(d) of the Federal Credit Union Act (as added by this section) shall become effective on January 1, 2001.’’ REGULATIONS Pub. L. 105–219, title III, § 301(d), Aug. 7, 1998, 112 Stat. 930, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the Board shall— ‘‘(A) publish in the Federal Register proposed regu- lations to implement section 216 of the Federal Credit Union Act [12 U.S.C. 1790d] (as added by subsection (a) of this section) not later than 270 days after the date of enactment of this Act [Aug. 7, 1998]; and ‘‘(B) promulgate final regulations to implement section 216 not later than 18 months after the date of enactment of this Act. ‘‘(2) RISK-BASED NET WORTH REQUIREMENT.— ‘‘(A) ADVANCE NOTICE OF PROPOSED RULEMAKING.— Not later than 180 days after the date of enactment of this Act, the Board shall publish in the Federal Reg- ister an advance notice of proposed rulemaking, as required by section 216(d) of the Federal Credit Union Act, as added by this Act. ‘‘(B) FINAL REGULATIONS.—The Board shall promul- gate final regulations, as required by section 216(d) not later than 2 years after the date of enactment of this Act.’’ CONSULTATION REQUIRED Pub. L. 105–219, title III, § 301(c), Aug. 7, 1998, 112 Stat. 930, provided that: ‘‘In developing regulations to imple- ment section 216 of the Federal Credit Union Act [12 U.S.C. 1790d] (as added by subsection (a) of this sec- tion), the Board shall consult with the Secretary, the Federal banking agencies, and the State officials hav- ing jurisdiction over State-chartered insured credit unions.’’ REPORT TO CONGRESS Pub. L. 105–219, title III, § 301(f), Aug. 7, 1998, 112 Stat. 931, provided that: ‘‘When the Board publishes proposed regulations pursuant to subsection (d)(1)(A) [set out above], or promulgates final regulations pursuant to subsection (d)(1)(B) [set out above], the Board shall submit to the Congress a report that specifically ex- plains— ‘‘(1) how the regulations carry out section 216(b)(1)(B) of the Federal Credit Union Act [12 U.S.C. 1790d(b)(1)(B)] (as added by this section), relating to the cooperative character of credit unions; and ‘‘(2) how the regulations differ from section 38 of the Federal Deposit Insurance Act [12 U.S.C. 1831o], and the reasons for those differences.’’ DEFINITIONS Pub. L. 105–219, § 3, Aug. 7, 1998, 112 Stat. 914, provided that: ‘‘As used in this Act [see Short Title of 1998 Amendment note set out under section 1751 of this title]— ‘‘(1) the term ‘Administration’ means the National Credit Union Administration; ‘‘(2) the term ‘Board’ means the National Credit Union Administration Board; ‘‘(3) the term ‘Federal banking agencies’ has the same meaning as in section 3 of the Federal Deposit Insurance Act [12 U.S.C. 1813]; ‘‘(4) the terms ‘insured credit union’ and ‘State- chartered insured credit union’ have the same mean- ings as in section 101 of the Federal Credit Union Act [12 U.S.C. 1752]; and ‘‘(5) the term ‘Secretary’ means the Secretary of the Treasury.’’ Page 949 TITLE 12—BANKS AND BANKING § 1790e § 1790e. Temporary Corporate Credit Union Sta- bilization Fund (a) Establishment of Stabilization Fund There is hereby created in the Treasury of the United States a fund to be known as the ‘‘Tem- porary Corporate Credit Union Stabilization Fund.’’ The Board will administer the Stabiliza- tion Fund as prescribed by section 1789 of this title. (b) Expenditures from Stabilization Fund Money in the Stabilization Fund shall be available upon requisition by the Board, without fiscal year limitation, for making payments for the purposes described in section 1783(a) of this title, subject to the following additional limita- tions: (1) All payments other than administrative payments shall be connected to the con- servatorship, liquidation, or threatened con- servatorship or liquidation, of a corporate credit union. (2) Prior to authorizing each payment the Board shall— (A) certify that, absent the existence of the Stabilization Fund, the Board would have made the identical payment out of the National Credit Union Share Insurance Fund (Insurance Fund); and (B) report each such certification to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Rep- resentatives. (c) Authority to borrow (1) In general The Stabilization Fund is authorized to bor- row from the Secretary of the Treasury from time-to-time as deemed necessary by the Board. The maximum outstanding amount of all borrowings from the Treasury by the Sta- bilization Fund and the National Credit Union Share Insurance Fund, combined, is limited to the amount provided for in section 1783(d)(1) of this title, including any authorized increases in that amount. (2) Repayment of advances (A) In general The advances made under this section shall be repaid by the Stabilization Fund, and interest on such advance shall be paid, to the General fund of the Treasury. (B) Variable rate of interest The Secretary of the Treasury shall make the first rate determination at the time of the first advance under this section and shall reset the rate again for all advances on each anniversary of the first advance. The interest rate shall be equal to the average market yield on outstanding marketable ob- ligations of the United States with remain- ing periods to maturity equal to 12 months. (3) Repayment schedule The Stabilization Fund shall repay the ad- vances on a first-in, first-out basis, with inter- est on the amount repaid, at times and dates determined by the Board at its discretion. All advances shall be repaid not later than the date of the seventh anniversary of the first ad- vance to the Stabilization Fund, unless the Board extends this final repayment date. The Board shall obtain the concurrence of the Sec- retary of the Treasury on any proposed exten- sion, including the terms and conditions of the extended repayment and any additional ad- vances. (d) Assessment authority (1) Assessments relating to expenditures under subsection (b) In order to make expenditures, as described in subsection (b), the Board may assess a spe- cial premium with respect to each insured credit union in an aggregate amount that is reasonably calculated to make any pending or future expenditure described in subsection (b), which premium shall be due and payable not later than 60 days after the date of the assess- ment. In setting the amount of any assess- ment under this subsection, the Board shall take into consideration any potential impact on credit union earnings that such an assess- ment may have. (2) Special premiums relating to repayments under subsection (c)(3) Not later than 90 days before the scheduled date of each repayment described in sub- section (c)(3), the Board shall set the amount of the upcoming repayment and shall deter- mine whether the Stabilization Fund will have sufficient funds to make the repayment. If the Stabilization Fund is not likely to have suffi- cient funds to make the repayment, the Board shall assess with respect to each insured credit union a special premium, which shall be due and payable not later than 60 days after the date of the assessment, in an aggregate amount calculated to ensure that the Sta- bilization Fund is able to make the required repayment. (3) Computation Any assessment or premium charge for an insured credit union under this subsection shall be stated as a percentage of its insured shares, as represented on the previous call re- port of that insured credit union. The percent- age shall be identical for each insured credit union. Any insured credit union that fails to make timely payment of the assessment or special premium is subject to the procedures and penalties described under subsections (d), (e), and (f) of section 1782 of this title. (e) Distributions from Insurance Fund At the end of any calendar year in which the Stabilization Fund has an outstanding advance from the Treasury, the Insurance Fund is pro- hibited from making the distribution to insured credit unions described in section 1782(c)(3) of this title. In lieu of the distribution described in that section, the Insurance Fund shall make a distribution to the Stabilization Fund of the maximum amount possible that does not reduce the Insurance Fund’s equity ratio below the nor- mal operating level and does not reduce the In- surance Fund’s available assets ratio below 1.0 percent.