12 U.S.C. § 2279bb–6 — Supervisory actions applicable to level III
submitted 35 years ago by Pub. L. 92-181 to r/title-12-BANKS-AND-BANKING · 438 words · no verdicts yet
A Level III Corporation must follow a capital-restoration plan and faces tighter dividend rules. The Director may limit obligations or growth, prohibit dividends, require capital, restrict risky activities, or appoint a conservator; failure to obtain or follow a plan causes Level IV classification.
(a)(1) A Level III Corporation* must timely submit and, after approval, carry out a capital-restoration plan. (2)(A) It may not pay dividends that would cause Level IV status, and may pay other dividends only with the Director’s advance approval. (B) Approval is allowed only if the Director* finds the payment will promptly improve the Corporation’s ability to meet the risk-based and minimum levels, support long-term safety and soundness, or otherwise serve the public interest. (3) The Director must immediately classify it Level IV if it is Level III and either does not submit an approved plan or fails, in good faith, to make reasonable efforts to follow the plan and schedule. (b) In addition, the Director may at any time, while it is Level III: (1) limit increases in or order reductions of obligations, including off-balance-sheet obligations; (2) limit or prohibit asset growth or require asset contraction; (3) prohibit dividends; (4) require enough new capital in any form to reach Level II; (5) require termination, reduction, or modification of an activity creating excessive risk; or (6) appoint a conservator consistent with this chapter. (c) This section took effect January 1, 1992.
If the Corporation* is classified as within level III, the Corporation shall, within the time period determined by the Director*, submit to the Director a capital restoration plan and, after approval, carry out the plan.
If the Corporation is classified as within level III, the Corporation—
may not make any payment of dividends that would result in the Corporation being reclassified as within level IV; and
may make any other payment of dividends only if the Director approves the payment before the payment.
If the Corporation is classified as within level III, the Director may approve a payment of dividends by the Corporation only if the Director determines that the payment (i) will enhance the ability of the Corporation to meet the risk-based capital level and the minimum capital level promptly, (ii) will contribute to the long-term safety and soundness of the Corporation, or (iii) is otherwise in the public interest.
The Director shall immediately reclassify the Corporation as within level IV if—
the Corporation is classified as within level III; and
the Corporation does not submit a capital restoration plan that is approved by the Director; or
the Director determines that the Corporation has failed to make, in good faith, reasonable efforts necessary to comply with such a capital restoration plan and fulfill the schedule for the plan approved by the Director.
In addition to any other actions taken by the Director (including actions under subsection (a)), the Director may, at any time, take any of the following actions if the Corporation is classified as within level III:
Limit any increase in, or order the reduction of, any obligations of the Corporation, including off-balance sheet obligations.
Limit or prohibit the growth of the assets of the Corporation or require contraction of the assets of the Corporation.
Prohibit the Corporation from making any payment of dividends.
Require the Corporation to acquire new capital in any form and in any amount sufficient to provide for the reclassification of the Corporation as within level II.
Require the Corporation to terminate, reduce, or modify any activity that the Director determines creates excessive risk to the Corporation.
Appoint a conservator for the Corporation consistent with this chapter.
This section shall take effect on January 1, 1992.
Source credit: (Pub. L. 92–181, title VIII, § 8.37, as added Pub. L. 102–237, title V, § 503(b)(2), Dec. 13, 1991, 105 Stat. 1876.)
- 1991Enacted · Pub. L. 92-181 · 105 Stat. 1876
A history note hasn’t been published yet. The record shows enactment by Pub. L. 92-181 on 1991-12-13.
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