12 U.S.C. § 4513b — Prudential management and operations

Page 1649 TITLE 12—BANKS AND BANKING § 4513b Subsec. (a)(3). Pub. L. 110–289, § 1118, added par. (3). Subsec. (f). Pub. L. 110–289, § 1201, added subsec. (f). 1998—Subsec. (b)(9) to (12). Pub. L. 105–276, which di- rected the amendment of subsec. (b) by redesignating pars. (9) to (11) as (10) to (12), respectively, and adding a new par. (9) which read ‘‘default loss protection levels under section 1454(a)(2)(D) of this title;’’ was repealed by Pub. L. 105–277, effective upon enactment of Pub. L. 105–276. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–277, div. A, § 122, Oct. 21, 1998, 112 Stat. 2681–546, provided that the amendment made by section 122 is effective upon enactment of Pub. L. 105–276 (Oct. 21, 1998). § 4513a. Federal Housing Finance Oversight Board (a) In general There is established the Federal Housing Fi- nance Oversight Board, which shall advise the Director with respect to overall strategies and policies in carrying out the duties of the Direc- tor under this chapter. (b) Limitations The Board may not exercise any executive au- thority, and the Director may not delegate to the Board any of the functions, powers, or duties of the Director. (c) Composition The Board shall be comprised of 4 members, of whom— (1) 1 member shall be the Secretary of the Treasury; (2) 1 member shall be the Secretary of Hous- ing and Urban Development; (3) 1 member shall be the Chairman of the Securities and Exchange Commission; and (4) 1 member shall be the Director, who shall serve as the Chairperson of the Board. (d) Meetings (1) In general The Board shall meet upon notice by the Di- rector, but in no event shall the Board meet less frequently than once every 3 months. (2) Special meetings Either the Secretary of the Treasury, the Secretary of Housing and Urban Development, or the Chairman of the Securities and Ex- change Commission may, upon giving written notice to the Director, require a special meet- ing of the Board. (e) Testimony On an annual basis, the Board shall testify be- fore Congress regarding— (1) the safety and soundness of the regulated entities; (2) any material deficiencies in the conduct of the operations of the regulated entities; (3) the overall operational status of the reg- ulated entities; (4) an evaluation of the performance of the regulated entities in carrying out their respec- tive missions; (5) operations, resources, and performance of the Agency; and (6) such other matters relating to the Agen- cy and its fulfillment of its mission, as the Board determines appropriate. (Pub. L. 102–550, title XIII, § 1313A, as added Pub. L. 110–289, div. A, title I, § 1103(a), July 30, 2008, 122 Stat. 2665.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (a), was in the original ‘‘this title’’, meaning title XIII of Pub. L. 102–550, Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. § 4513b. Prudential management and operations standards (a) Standards The Director shall establish standards, by reg- ulation or guideline, for each regulated entity relating to— (1) adequacy of internal controls and infor- mation systems taking into account the na- ture and scale of business operations; (2) independence and adequacy of internal audit systems; (3) management of interest rate risk expo- sure; (4) management of market risk, including standards that provide for systems that accu- rately measure, monitor, and control market risks and, as warranted, that establish limita- tions on market risk; (5) adequacy and maintenance of liquidity and reserves; (6) management of asset and investment portfolio growth; (7) investments and acquisitions of assets by a regulated entity, to ensure that they are consistent with the purposes of this chapter and the authorizing statutes; (8) overall risk management processes, in- cluding adequacy of oversight by senior man- agement and the board of directors and of processes and policies to identify, measure, monitor, and control material risks, including reputational risks, and for adequate, well-test- ed business resumption plans for all major sys- tems with remote site facilities to protect against disruptive events; (9) management of credit and counterparty risk, including systems to identify concentra- tions of credit risk and prudential limits to re- strict exposure of the regulated entity to a single counterparty or groups of related counterparties; (10) maintenance of adequate records, in ac- cordance with consistent accounting policies and practices that enable the Director to evaluate the financial condition of the regu- lated entity; and (11) such other operational and management standards as the Director determines to be ap- propriate. (b) Failure to meet standards (1) Plan requirement (A) In general If the Director determines that a regulated entity fails to meet any standard established under subsection (a)— Page 1650 TITLE 12—BANKS AND BANKING § 4514 (i) if such standard is established by reg- ulation, the Director shall require the reg- ulated entity to submit an acceptable plan to the Director within the time allowed under subparagraph (C); and (ii) if such standard is established by guideline, the Director may require the regulated entity to submit a plan de- scribed in clause (i). (B) Contents Any plan required under subparagraph (A) shall specify the actions that the regulated entity will take to correct the deficiency. If the regulated entity is undercapitalized, the plan may be a part of the capital restoration plan for the regulated entity under section 4622 of this title. (C) Deadlines for submission and review The Director shall by regulation establish deadlines that— (i) provide the regulated entities with reasonable time to submit plans required under subparagraph (A), and generally re- quire a regulated entity to submit a plan not later than 30 days after the Director determines that the entity fails to meet any standard established under subsection (a); and (ii) require the Director to act on plans expeditiously, and generally not later than 30 days after the plan is submitted. (2) Required order upon failure to submit or implement plan If a regulated entity fails to submit an ac- ceptable plan within the time allowed under paragraph (1)(C), or fails in any material re- spect to implement a plan accepted by the Di- rector, the following shall apply: (A) Required correction of deficiency The Director shall, by order, require the regulated entity to correct the deficiency. (B) Other authority The Director may, by order, take one or more of the following actions until the defi- ciency is corrected: (i) Prohibit the regulated entity from permitting its average total assets (as such term is defined in section 4516(b) of this title) during any calendar quarter to exceed its average total assets during the preceding calendar quarter, or restrict the rate at which the average total assets of the entity may increase from one calendar quarter to another. (ii) Require the regulated entity— (I) in the case of an enterprise, to in- crease its ratio of core capital to assets. (II) in the case of a Federal Home Loan Bank, to increase its ratio of total cap- ital (as such term is defined in section 1426(a)(5) of this title) to assets. (iii) Require the regulated entity to take any other action that the Director deter- mines will better carry out the purposes of this section than any of the actions de- scribed in this subparagraph. (3) Mandatory restrictions In complying with paragraph (2), the Direc- tor shall take one or more of the actions de- scribed in clauses (i) through (iii) of paragraph (2)(B) if— (A) the Director determines that the regu- lated entity fails to meet any standard pre- scribed under subsection (a); (B) the regulated entity has not corrected the deficiency; and (C) during the 18-month period before the date on which the regulated entity first failed to meet the standard, the entity un- derwent extraordinary growth, as defined by the Director. (c) Other enforcement authority not affected The authority of the Director under this sec- tion is in addition to any other authority of the Director. (Pub. L. 102–550, title XIII, § 1313B, as added Pub. L. 110–289, div. A, title I, § 1108, July 30, 2008, 122 Stat. 2672.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (a)(7), was in the original ‘‘this title’’, meaning title XIII of Pub. L. 102–550, Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. § 4514. Authority to require reports by regulated entities (a) Regular and special reports (1) Regular reports The Director may require, by general or spe- cific orders, a regulated entity to submit reg- ular reports, including financial statements determined on a fair value basis, on the condi- tion (including financial condition), manage- ment, activities, or operations of the regu- lated entity, as the Director considers appro- priate (in addition to the annual and quarterly reports required under section 1723a(k) of this title and section 1456(c) of this title). (2) Special reports The Director may also require, by general or specific orders, a regulated entity to submit special reports on any of the topics specified in paragraph (1) or any other relevant topics, if, in the judgment of the Director, such re- ports are necessary to carry out the purposes of this chapter. (3) Limitation The Director may not require the inclusion, in any report pursuant to paragraph (1) or (2), of any information that is not reasonably ob- tainable by the regulated entity. (4) Notice and declaration The Director shall notify the regulated enti- ty, a reasonable period in advance of the date for submission of any report under this sub- section, of any specific information to be con- tained in the report and the date for the sub- mission of the report. Each report under this subsection shall contain a declaration by the president, vice president, treasurer, or any other officer designated by the board of direc- tors of the regulated entity to make such dec-