12 U.S.C. § 5467 — Examination of and enforcement actions against financial institutions subject to standards for designated activities

(a) Examination. The appropriate financial regulator^* is authorized to examine a financial institution^* subject to the standards prescribed under section 5464(a) of this title for a designated activity^*. The examination may determine—

(1) the nature and scope of the designated activities in which the financial institution engages;

(2) the financial and operational risks those designated activities may pose to the safety and soundness of the financial institution;

(3) the financial and operational risks those designated activities may pose to other financial institutions, critical markets, or the broader financial system;

(4) the resources available to the financial institution and its ability to monitor and control the risks described in paragraphs (2) and (3); and

(5) whether the financial institution complies with this subchapter and the rules and orders prescribed under section 5464(a) of this title.

This section uses terms such as “appropriate financial regulator,” “financial institution,” “designated activity,” “Council,” “insured depository institution,” and “appropriate Federal banking agency” without defining them.

(b) Enforcement. To enforce this subchapter and the rules and orders prescribed under this section, a financial institution subject to the standards prescribed under section 5464(a) of this title for a designated activity is subject to subsections (b) through (n) of section 1818 of this title. The appropriate financial regulator has authority under those provisions in the same manner and to the same extent as it would have if the financial institution were an insured depository institution and the appropriate financial regulator were the appropriate Federal banking agency for that insured depository institution.

(c) Technical assistance. The Board of Governors shall consult with the appropriate financial regulators and provide any technical assistance they may require. The purpose is to ensure that the rules and orders prescribed under this subchapter are interpreted and applied as consistently and uniformly as practicable.

(d) Delegation.

(1) Examination.

(A) Request to Board of Governors. The appropriate financial regulator may request that the Board of Governors conduct or participate in an examination of a financial institution subject to the standards prescribed under section 5464(a) of this title for a designated activity. The request may be made to assess the institution’s compliance with—

(i) this subchapter; or

(ii) the rules or orders prescribed under this subchapter.

(B) Examination by Board of Governors. After receiving an appropriate written request, the Board of Governors will conduct the examination under the terms and conditions that the Board of Governors and the appropriate financial regulator mutually agree to.

(2) Enforcement.

(A) Request to Board of Governors. The appropriate financial regulator may request that the Board of Governors enforce this subchapter or the rules or orders prescribed under this subchapter against a financial institution subject to the standards prescribed under section 5464(a) of this title for a designated activity.

(B) Enforcement by Board of Governors. After receiving an appropriate written request, the Board of Governors shall decide whether an enforcement action is warranted. If it is warranted, the Board shall enforce compliance with this subchapter or the rules or orders prescribed under this subchapter. For that enforcement, the financial institution is subject to subsections (b) through (n) of section 1818 of this title, and the Board of Governors has authority under those provisions in the same manner and to the same extent as it would have if the financial institution were an insured depository institution and the Board of Governors were the appropriate Federal banking agency for that insured depository institution.

(e) Back-up authority of the Board of Governors.

(1) Examination and enforcement. Despite any other provision of law, the Board of Governors may—

(A) conduct an examination of the type described in subsection (a) of any financial institution subject to the standards prescribed under section 5464(a) of this title for a designated activity; and

(B) enforce this subchapter or any rules or orders prescribed under this subchapter against any financial institution subject to those standards for a designated activity.

(2) Limitations.

(A) Examination. The Board of Governors may exercise the authority described in paragraph (1)(A) only if it has—

(i) reasonable cause to believe that a financial institution is not complying with this subchapter or the rules or orders prescribed under this subchapter with respect to a designated activity;

(ii) notified the appropriate financial regulator and the Council in writing of that belief, including supporting documentation;

(iii) requested that the appropriate financial regulator promptly examine the financial institution;

(iv) either—

(I) not been given a reasonable opportunity to participate in an examination of the financial institution by the appropriate financial regulator within 30 days after the date of the Board’s notification under clause (ii); or

(II) had reasonable cause to believe that the institution’s noncompliance with this subchapter or the rules or orders prescribed under this subchapter poses a substantial risk to other financial institutions, critical markets, or the broader financial system. In that case, the Board of Governors must give the appropriate financial regulator a reasonable opportunity to participate in the examination; and

(v) obtained the Council’s approval by an affirmative vote of a majority of the Council.

(B) Enforcement. The Board of Governors may exercise the authority described in paragraph (1)(B) only if it has—

(i) reasonable cause to believe that a financial institution is not complying with this subchapter or the rules or orders prescribed under this subchapter with respect to a designated activity;

(ii) notified the appropriate financial regulator and the Council in writing of that belief, including supporting documentation, and recommended that the appropriate financial regulator take one or more specific enforcement actions against the financial institution;

(iii) either—

(I) not been notified in writing by the appropriate financial regulator that an enforcement action recommended by the Board of Governors against the financial institution had begun within 60 days after the date of the notification under clause (ii); or

(II) had reasonable cause to believe that the institution’s noncompliance with this subchapter or the rules or orders prescribed under this subchapter poses significant liquidity, credit^*, operational, or other risks to the financial markets or to the financial stability of the United States. In that case, the Board of Governors must notify the appropriate financial regulator of the Board’s enforcement action; and

(iv) obtained the Council’s approval by an affirmative vote of a majority of the Council.

(3) Enforcement provisions. To take an enforcement action under paragraph (1), the financial institution is subject to subsections (b) through (n) of section 1818 of this title, and the Board of Governors has authority under those provisions in the same manner and to the same extent as it would have if the financial institution were an insured depository institution and the Board of Governors were the appropriate Federal banking agency for that insured depository institution.