12 U.S.C. § 1831o — Prompt corrective action

Page 1161 TITLE 12—BANKS AND BANKING § 1831o ‘‘(I) amortization of principal and interest oc- curs over a period of not more than 30 years; ‘‘(II) the minimum maturity for repayment of principal is not less than 7 years; and ‘‘(III) timely payment of all principal and in- terest, in accordance with the terms of the loan, occurs for a period of not less than 1 year; and ‘‘(iv) that meets any other underwriting charac- teristics that the appropriate Federal banking agency may establish, consistent with the pur- poses of the minimum acceptable capital require- ments to maintain the safety and soundness of fi- nancial institutions. ‘‘(2) SALE PURSUANT TO PRO RATA LOSS SHARING AR- RANGEMENTS.—Not later than the expiration of the 120-day period beginning on the date of this Act [Dec. 12, 1991], each Federal banking agency shall amend the regulations and guidelines of the agency estab- lishing minimum acceptable capital levels to provide that any loan fully secured by a first lien on a multi- family housing property that is sold subject to a pro rata loss sharing arrangement by an institution sub- ject to the jurisdiction of the agency shall be treated as sold to the extent that loss is incurred by the pur- chaser of the loan. For purposes of this paragraph, the term ‘pro rata loss sharing arrangement’ means an agreement providing that the purchaser of a loan shares in any loss incurred on the loan with the sell- ing institution on a pro rata basis. ‘‘(3) SALE PURSUANT TO OTHER ARRANGEMENTS FOR LOSS.—Not later than the expiration of the 180-day period beginning on the date of the enactment of this Act [Dec. 12, 1991], each Federal banking agency shall amend the regulations and guidelines of the agency establishing minimum acceptable capital levels to take into account other loss sharing arrangements, in connection with the sale by an institution subject to the jurisdiction of the agency of any loan that is fully secured by a first lien on multifamily housing property, for purposes of determining the extent to which such loans shall be treated as sold. For pur- poses of this paragraph, the term ‘other loss sharing arrangement’ means an agreement providing that the purchaser of a loan shares in any loss incurred on the loan with the selling institution on other than a pro rata basis. ‘‘(c) APPROPRIATE FEDERAL BANKING AGENCY.—For purposes of this section, the term ‘Federal banking agency’ means the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Cor- poration, the Comptroller of the Currency, and the Di- rector of the Office of Thrift Supervision.’’ [Pub. L. 102–233, title VI, § 619, Dec. 12, 1991, 105 Stat. 1791, provided that: ‘‘The amendments made by this title [amending section 1441a of this title and enacting provisions set out as notes under this section and sec- tion 1441a of this title] shall not apply to any eligible residential property or eligible condominium property of the Resolution Trust Corporation, that is subject to an agreement for sale entered into by the Corporation before the date of the enactment of this Act [Dec. 12, 1991].’’] § 1831o. Prompt corrective action (a) Resolving problems to protect Deposit Insur- ance Fund (1) Purpose The purpose of this section is to resolve the problems of insured depository institutions at the least possible long-term loss to the De- posit Insurance Fund. (2) Prompt corrective action required Each appropriate Federal banking agency and the Corporation (acting in the Corpora- tion’s capacity as the insurer of depository in- stitutions under this chapter) shall carry out the purpose of this section by taking prompt corrective action to resolve the problems of insured depository institutions. (b) Definitions For purposes of this section: (1) Capital categories (A) Well capitalized An insured depository institution is ‘‘well capitalized’’ if it significantly exceeds the required minimum level for each relevant capital measure. (B) Adequately capitalized An insured depository institution is ‘‘ade- quately capitalized’’ if it meets the required minimum level for each relevant capital measure. (C) Undercapitalized An insured depository institution is ‘‘undercapitalized’’ if it fails to meet the re- quired minimum level for any relevant cap- ital measure. (D) Significantly undercapitalized An insured depository institution is ‘‘sig- nificantly undercapitalized’’ if it is signifi- cantly below the required minimum level for any relevant capital measure. (E) Critically undercapitalized An insured depository institution is ‘‘criti- cally undercapitalized’’ if it fails to meet any level specified under subsection (c)(3)(A). (2) Other definitions (A) Average (i) In general The ‘‘average’’ of an accounting item (such as total assets or tangible equity) during a given period means the sum of that item at the close of business on each business day during that period divided by the total number of business days in that period. (ii) Agency may permit weekly averaging for certain institutions In the case of insured depository institu- tions that have total assets of less than $300,000,000 and normally file reports of condition reflecting weekly (rather than daily) averages of accounting items, the appropriate Federal banking agency may provide that the ‘‘average’’ of an account- ing item during a given period means the sum of that item at the close of business on the relevant business day each week during that period divided by the total number of weeks in that period. (B) Capital distribution The term ‘‘capital distribution’’ means— (i) a distribution of cash or other prop- erty by any insured depository institution or company to its owners made on account of that ownership, but not including— (I) any dividend consisting only of shares of the institution or company or rights to purchase such shares; or Page 1162 TITLE 12—BANKS AND BANKING § 1831o (II) any amount paid on the deposits of a mutual or cooperative institution that the appropriate Federal banking agency determines is not a distribution for pur- poses of this section; (ii) a payment by an insured depository institution or company to repurchase, re- deem, retire, or otherwise acquire any of its shares or other ownership interests, in- cluding any extension of credit to finance an affiliated company’s acquisition of those shares or interests; or (iii) a transaction that the appropriate Federal banking agency or the Corpora- tion determines, by order or regulation, to be in substance a distribution of capital to the owners of the insured depository insti- tution or company. (C) Capital restoration plan The term ‘‘capital restoration plan’’ means a plan submitted under subsection (e)(2). (D) Company The term ‘‘company’’ has the same mean- ing as in section 1841 of this title. (E) Compensation The term ‘‘compensation’’ includes any payment of money or provision of any other thing of value in consideration of employ- ment. (F) Relevant capital measure The term ‘‘relevant capital measure’’ means the measures described in subsection (c). (G) Required minimum level The term ‘‘required minimum level’’ means, with respect to each relevant capital measure, the minimum acceptable capital level specified by the appropriate Federal banking agency by regulation. (H) Senior executive officer The term ‘‘senior executive officer’’ has the same meaning as the term ‘‘executive of- ficer’’ in section 375b of this title. (I) Subordinated debt The term ‘‘subordinated debt’’ means debt subordinated to the claims of general credi- tors. (c) Capital standards (1) Relevant capital measures (A) In general Except as provided in subparagraph (B)(ii), the capital standards prescribed by each ap- propriate Federal banking agency shall in- clude— (i) a leverage limit; and (ii) a risk-based capital requirement. (B) Other capital measures An appropriate Federal banking agency may, by regulation— (i) establish any additional relevant cap- ital measures to carry out the purpose of this section; or (ii) rescind any relevant capital measure required under subparagraph (A) upon de- termining (with the concurrence of the other Federal banking agencies) that the measure is no longer an appropriate means for carrying out the purpose of this sec- tion. (2) Capital categories generally Each appropriate Federal banking agency shall, by regulation, specify for each relevant capital measure the levels at which an insured depository institution is well capitalized, ade- quately capitalized, undercapitalized, and sig- nificantly undercapitalized. (3) Critical capital (A) Agency to specify level (i) Leverage limit Each appropriate Federal banking agen- cy shall, by regulation, in consultation with the Corporation, specify the ratio of tangible equity to total assets at which an insured depository institution is critically undercapitalized. (ii) Other relevant capital measures The agency may, by regulation, specify for 1 or more other relevant capital meas- ures, the level at which an insured deposi- tory institution is critically undercapital- ized. (B) Leverage limit range The level specified under subparagraph (A)(i) shall require tangible equity in an amount— (i) not less than 2 percent of total assets; and (ii) except as provided in clause (i), not more than 65 percent of the required min- imum level of capital under the leverage limit. (C) FDIC’s concurrence required The appropriate Federal banking agency shall not, without the concurrence of the Corporation, specify a level under subpara- graph (A)(i) lower than that specified by the Corporation for State nonmember insured banks. (d) Provisions applicable to all institutions (1) Capital distributions restricted (A) In general An insured depository institution shall make no capital distribution if, after mak- ing the distribution, the institution would be undercapitalized. (B) Exception Notwithstanding subparagraph (A), the ap- propriate Federal banking agency may per- mit, after consultation with the Corpora- tion, an insured depository institution to re- purchase, redeem, retire, or otherwise ac- quire shares or ownership interests if the re- purchase, redemption, retirement, or other acquisition— (i) is made in connection with the issuance of additional shares or obliga- tions of the institution in at least an equivalent amount; and (ii) will reduce the institution’s financial obligations or otherwise improve the insti- tution’s financial condition. Page 1163 TITLE 12—BANKS AND BANKING § 1831o (2) Management fees restricted An insured depository institution shall pay no management fee to any person having con- trol of that institution if, after making the payment, the institution would be under- capitalized. (e) Provisions applicable to undercapitalized in- stitutions (1) Monitoring required Each appropriate Federal banking agency shall— (A) closely monitor the condition of any undercapitalized insured depository institu- tion; (B) closely monitor compliance with cap- ital restoration plans, restrictions, and re- quirements imposed under this section; and (C) periodically review the plan, restric- tions, and requirements applicable to any undercapitalized insured depository institu- tion to determine whether the plan, restric- tions, and requirements are achieving the purpose of this section. (2) Capital restoration plan required (A) In general Any undercapitalized insured depository institution shall submit an acceptable cap- ital restoration plan to the appropriate Fed- eral banking agency within the time allowed by the agency under subparagraph (D). (B) Contents of plan The capital restoration plan shall— (i) specify— (I) the steps the insured depository in- stitution will take to become adequately capitalized; (II) the levels of capital to be attained during each year in which the plan will be in effect; (III) how the institution will comply with the restrictions or requirements then in effect under this section; and (IV) the types and levels of activities in which the institution will engage; and (ii) contain such other information as the appropriate Federal banking agency may require. (C) Criteria for accepting plan The appropriate Federal banking agency shall not accept a capital restoration plan unless the agency determines that— (i) the plan— (I) complies with subparagraph (B); (II) is based on realistic assumptions, and is likely to succeed in restoring the institution’s capital; and (III) would not appreciably increase the risk (including credit risk, interest- rate risk, and other types of risk) to which the institution is exposed; and (ii) if the insured depository institution is undercapitalized, each company having control of the institution has— (I) guaranteed that the institution will comply with the plan until the institu- tion has been adequately capitalized on average during each of 4 consecutive cal- endar quarters; and (II) provided appropriate assurances of performance. (D) Deadlines for submission and review of plans The appropriate Federal banking agency shall by regulation establish deadlines that— (i) provide insured depository institu- tions with reasonable time to submit cap- ital restoration plans, and generally re- quire an institution to submit a plan not later than 45 days after the institution be- comes undercapitalized; (ii) require the agency to act on capital restoration plans expeditiously, and gen- erally not later than 60 days after the plan is submitted; and (iii) require the agency to submit a copy of any plan approved by the agency to the Corporation before the end of the 45-day period beginning on the date such approval is granted. (E) Guarantee liability limited (i) In general The aggregate liability under subpara- graph (C)(ii) of all companies having con- trol of an insured depository institution shall be the lesser of— (I) an amount equal to 5 percent of the institution’s total assets at the time the institution became undercapitalized; or (II) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all cap- ital standards applicable with respect to such institution as of the time the insti- tution fails to comply with a plan under this subsection. (ii) Certain affiliates not affected This paragraph may not be construed as— (I) requiring any company not having control of an undercapitalized insured depository institution to guarantee, or otherwise be liable on, a capital restora- tion plan; (II) requiring any person other than an insured depository institution to submit a capital restoration plan; or (III) affecting compliance by brokers, dealers, government securities brokers, and government securities dealers with the financial responsibility requirements of the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.] and regulations and orders thereunder. (3) Asset growth restricted An undercapitalized insured depository in- stitution shall not permit its average total as- sets during any calendar quarter to exceed its average total assets during the preceding cal- endar quarter unless— (A) the appropriate Federal banking agen- cy has accepted the institution’s capital res- toration plan; (B) any increase in total assets is con- sistent with the plan; and Page 1164 TITLE 12—BANKS AND BANKING § 1831o (C) the institution’s ratio of tangible eq- uity to assets increases during the calendar quarter at a rate sufficient to enable the in- stitution to become adequately capitalized within a reasonable time. (4) Prior approval required for acquisitions, branching, and new lines of business An undercapitalized insured depository in- stitution shall not, directly or indirectly, ac- quire any interest in any company or insured depository institution, establish or acquire any additional branch office, or engage in any new line of business unless— (A) the appropriate Federal banking agen- cy has accepted the insured depository insti- tution’s capital restoration plan, the institu- tion is implementing the plan, and the agen- cy determines that the proposed action is consistent with and will further the achieve- ment of the plan; or (B) the Board of Directors determines that the proposed action will further the purpose of this section. (5) Discretionary safeguards The appropriate Federal banking agency may, with respect to any undercapitalized in- sured depository institution, take actions de- scribed in any subparagraph of subsection (f)(2) if the agency determines that those ac- tions are necessary to carry out the purpose of this section. (f) Provisions applicable to significantly under- capitalized institutions and undercapitalized institutions that fail to submit and imple- ment capital restoration plans (1) In general This subsection shall apply with respect to any insured depository institution that— (A) is significantly undercapitalized; or (B) is undercapitalized and— (i) fails to submit an acceptable capital restoration plan within the time allowed by the appropriate Federal banking agency under subsection (e)(2)(D); or (ii) fails in any material respect to im- plement a plan accepted by the agency. (2) Specific actions authorized The appropriate Federal banking agency shall carry out this section by taking 1 or more of the following actions: (A) Requiring recapitalization Doing 1 or more of the following: (i) Requiring the institution to sell enough shares or obligations of the insti- tution so that the institution will be ade- quately capitalized after the sale. (ii) Further requiring that instruments sold under clause (i) be voting shares. (iii) Requiring the institution to be ac- quired by a depository institution holding company, or to combine with another in- sured depository institution, if 1 or more grounds exist for appointing a conservator or receiver for the institution. (B) Restricting transactions with affiliates (i) Requiring the institution to comply with section 371c of this title as if subsection (d)(1) of that section (exempting trans- actions with certain affiliated institutions) did not apply. (ii) Further restricting the institution’s transactions with affiliates. (C) Restricting interest rates paid (i) In general Restricting the interest rates that the institution pays on deposits to the pre- vailing rates of interest on deposits of comparable amounts and maturities in the region where the institution is located, as determined by the agency. (ii) Retroactive restrictions prohibited This subparagraph does not authorize the agency to restrict interest rates paid on time deposits made before (and not re- newed or renegotiated after) the agency acted under this subparagraph. (D) Restricting asset growth Restricting the institution’s asset growth more stringently than subsection (e)(3), or requiring the institution to reduce its total assets. (E) Restricting activities Requiring the institution or any of its sub- sidiaries to alter, reduce, or terminate any activity that the agency determines poses excessive risk to the institution. (F) Improving management Doing 1 or more of the following: (i) New election of directors Ordering a new election for the institu- tion’s board of directors. (ii) Dismissing directors or senior execu- tive officers Requiring the institution to dismiss from office any director or senior execu- tive officer who had held office for more than 180 days immediately before the in- stitution became undercapitalized. Dis- missal under this clause shall not be con- strued to be a removal under section 1818 of this title. (iii) Employing qualified senior executive officers Requiring the institution to employ qualified senior executive officers (who, if the agency so specifies, shall be subject to approval by the agency). (G) Prohibiting deposits from correspondent banks Prohibiting the acceptance by the institu- tion of deposits from correspondent deposi- tory institutions, including renewals and rollovers of prior deposits. (H) Requiring prior approval for capital dis- tributions by bank holding company Prohibiting any bank holding company having control of the insured depository in- stitution from making any capital distribu- tion without the prior approval of the Board of Governors of the Federal Reserve System. (I) Requiring divestiture Doing one or more of the following: Page 1165 TITLE 12—BANKS AND BANKING § 1831o (i) Divestiture by the institution Requiring the institution to divest itself of or liquidate any subsidiary if the agency determines that the subsidiary is in danger of becoming insolvent and poses a signifi- cant risk to the institution, or is likely to cause a significant dissipation of the insti- tution’s assets or earnings. (ii) Divestiture by parent company of non- depository affiliate Requiring any company having control of the institution to divest itself of or liq- uidate any affiliate other than an insured depository institution if the appropriate Federal banking agency for that company determines that the affiliate is in danger of becoming insolvent and poses a signifi- cant risk to the institution, or is likely to cause a significant dissipation of the insti- tution’s assets or earnings. (iii) Divestiture of institution Requiring any company having control of the institution to divest itself of the in- stitution if the appropriate Federal bank- ing agency for that company determines that divestiture would improve the insti- tution’s financial condition and future prospects. (J) Requiring other action Requiring the institution to take any other action that the agency determines will better carry out the purpose of this section than any of the actions described in this paragraph. (3) Presumption in favor of certain actions In complying with paragraph (2), the agency shall take the following actions, unless the agency determines that the actions would not further the purpose of this section: (A) The action described in clause (i) or (iii) of paragraph (2)(A) (relating to requir- ing the sale of shares or obligations, or re- quiring the institution to be acquired by or combine with another institution). (B) The action described in paragraph (2)(B)(i) (relating to restricting transactions with affiliates). (C) The action described in paragraph (2)(C) (relating to restricting interest rates). (4) Senior executive officers’ compensation re- stricted (A) In general The insured depository institution shall not do any of the following without the prior written approval of the appropriate Federal banking agency: (i) Pay any bonus to any senior execu- tive officer. (ii) Provide compensation to any senior executive officer at a rate exceeding that officer’s average rate of compensation (ex- cluding bonuses, stock options, and profit- sharing) during the 12 calendar months preceding the calendar month in which the institution became undercapitalized. (B) Failing to submit plan The appropriate Federal banking agency shall not grant any approval under subpara- graph (A) with respect to an institution that has failed to submit an acceptable capital restoration plan. (5) Discretion to impose certain additional re- strictions The agency may impose 1 or more of the re- strictions prescribed by regulation under sub- section (i) if the agency determines that those restrictions are necessary to carry out the purpose of this section. (6) Consultation with other regulators Before the agency or Corporation makes a determination under paragraph (2)(I) with re- spect to an affiliate that is a broker, dealer, government securities broker, government se- curities dealer, investment company, or in- vestment adviser, the agency or Corporation shall consult with the Securities and Ex- change Commission and, in the case of any other affiliate which is subject to any finan- cial responsibility or capital requirement, any other appropriate regulator of such affiliate with respect to the proposed determination of the agency or the Corporation and actions pur- suant to such determination. (g) More stringent treatment based on other su- pervisory criteria (1) In general If the appropriate Federal banking agency determines (after notice and an opportunity for hearing) that an insured depository insti- tution is in an unsafe or unsound condition or, pursuant to section 1818(b)(8) of this title, deems the institution to be engaging in an un- safe or unsound practice, the agency may— (A) if the institution is well capitalized, reclassify the institution as adequately cap- italized; (B) if the institution is adequately capital- ized (but not well capitalized), require the institution to comply with 1 or more provi- sions of subsections (d) and (e), as if the in- stitution were undercapitalized; or (C) if the institution is undercapitalized, take any 1 or more actions authorized under subsection (f)(2) as if the institution were significantly undercapitalized. (2) Contents of plan Any plan required under paragraph (1) shall specify the steps that the insured depository institution will take to correct the unsafe or unsound condition or practice. Capital res- toration plans shall not be required under paragraph (1)(B). (h) Provisions applicable to critically under- capitalized institutions (1) Activities restricted Any critically undercapitalized insured de- pository institution shall comply with restric- tions prescribed by the Corporation under sub- section (i). (2) Payments on subordinated debt prohibited (A) In general A critically undercapitalized insured de- pository institution shall not, beginning 60 days after becoming critically undercapital- Page 1166 TITLE 12—BANKS AND BANKING § 1831o ized, make any payment of principal or in- terest on the institution’s subordinated debt. (B) Exceptions The Corporation may make exceptions to subparagraph (A) if— (i) the appropriate Federal banking agency has taken action with respect to the insured depository institution under paragraph (3)(A)(ii); and (ii) the Corporation determines that the exception would further the purpose of this section. (C) Limited exemption for certain subordi- nated debt Until July 15, 1996, subparagraph (A) shall not apply with respect to any subordinated debt outstanding on July 15, 1991, and not ex- tended or otherwise renegotiated after July 15, 1991. (D) Accrual of interest Subparagraph (A) does not prevent unpaid interest from accruing on subordinated debt under the terms of that debt, to the extent otherwise permitted by law. (3) Conservatorship, receivership, or other ac- tion required (A) In general The appropriate Federal banking agency shall, not later than 90 days after an insured depository institution becomes critically undercapitalized— (i) appoint a receiver (or, with the con- currence of the Corporation, a conser- vator) for the institution; or (ii) take such other action as the agency determines, with the concurrence of the Corporation, would better achieve the pur- pose of this section, after documenting why the action would better achieve that purpose. (B) Periodic redeterminations required Any determination by an appropriate Fed- eral banking agency under subparagraph (A)(ii) to take any action with respect to an insured depository institution in lieu of ap- pointing a conservator or receiver shall cease to be effective not later than the end of the 90-day period beginning on the date that the determination is made and a con- servator or receiver shall be appointed for that institution under subparagraph (A)(i) unless the agency makes a new determina- tion under subparagraph (A)(ii) at the end of the effective period of the prior determina- tion. (C) Appointment of receiver required if other action fails to restore capital (i) In general Notwithstanding subparagraphs (A) and (B), the appropriate Federal banking agen- cy shall appoint a receiver for the insured depository institution if the institution is critically undercapitalized on average dur- ing the calendar quarter beginning 270 days after the date on which the institu- tion became critically undercapitalized. (ii) Exception Notwithstanding clause (i), the appro- priate Federal banking agency may con- tinue to take such other action as the agency determines to be appropriate in lieu of such appointment if— (I) the agency determines, with the concurrence of the Corporation, that (aa) the insured depository institution has positive net worth, (bb) the insured de- pository institution has been in substan- tial compliance with an approved capital restoration plan which requires con- sistent improvement in the institution’s capital since the date of the approval of the plan, (cc) the insured depository in- stitution is profitable or has an upward trend in earnings the agency projects as sustainable, and (dd) the insured deposi- tory institution is reducing the ratio of nonperforming loans to total loans; and (II) the head of the appropriate Federal banking agency and the Chairperson of the Board of Directors both certify that the institution is viable and not ex- pected to fail. (i) Restricting activities of critically under- capitalized institutions To carry out the purpose of this section, the Corporation shall, by regulation or order— (1) restrict the activities of any critically undercapitalized insured depository institu- tion; and (2) at a minimum, prohibit any such institu- tion from doing any of the following without the Corporation’s prior written approval: (A) Entering into any material transaction other than in the usual course of business, including any investment, expansion, acqui- sition, sale of assets, or other similar action with respect to which the depository institu- tion is required to provide notice to the ap- propriate Federal banking agency. (B) Extending credit for any highly lever- aged transaction. (C) Amending the institution’s charter or bylaws, except to the extent necessary to carry out any other requirement of any law, regulation, or order. (D) Making any material change in ac- counting methods. (E) Engaging in any covered transaction (as defined in section 371c(b) of this title). (F) Paying excessive compensation or bo- nuses. (G) Paying interest on new or renewed li- abilities at a rate that would increase the institution’s weighted average cost of funds to a level significantly exceeding the pre- vailing rates of interest on insured deposits in the institution’s normal market areas. (j) Certain Government-controlled institutions exempted Subsections (e) through (i) (other than para- graph (3) of subsection (e)) shall not apply— (1) to an insured depository institution for which the Corporation or the Resolution Trust Corporation is conservator; or (2) to a bridge depository institution, none of the voting securities of which are owned by a Page 1167 TITLE 12—BANKS AND BANKING § 1831o person or agency other than the Corporation or the Resolution Trust Corporation. (k) Reviews required when Deposit Insurance Fund incurs losses (1) In general If the Deposit Insurance Fund incurs a mate- rial loss with respect to an insured depository institution on or after July 1, 1993, the inspec- tor general of the appropriate Federal banking agency shall— (A) make a written report to that agency reviewing the agency’s supervision of the in- stitution (including the agency’s implemen- tation of this section), which shall— (i) ascertain why the institution’s prob- lems resulted in a material loss to the De- posit Insurance Fund; and (ii) make recommendations for pre- venting any such loss in the future; and (B) provide a copy of the report to— (i) the Comptroller General of the United States; (ii) the Corporation (if the agency is not the Corporation); (iii) in the case of a State depository in- stitution, the appropriate State banking supervisor; and (iv) upon request by any Member of Con- gress, to that Member. (2) Material loss incurred For purposes of this subsection: (A) Loss incurred The Deposit Insurance Fund incurs a loss with respect to an insured depository insti- tution— (i) if the Corporation provides any assist- ance under section 1823(c) of this title with respect to that institution; and— (I) it is not substantially certain that the assistance will be fully repaid not later than 24 months after the date on which the Corporation initiated the as- sistance; or (II) the institution ceases to repay the assistance in accordance with its terms; or (ii) if the Corporation is appointed re- ceiver of the institution, and it is or be- comes apparent that the present value of the outlays of the Deposit Insurance Fund with respect to that institution will exceed the present value of receivership dividends or other payments on the claims held by the Corporation. (B) Material loss defined The term ‘‘material loss’’ means any esti- mated loss in excess of— (i) $200,000,000, if the loss occurs during the period beginning on January 1, 2010, and ending on December 31, 2011; (ii) $150,000,000, if the loss occurs during the period beginning on January 1, 2012, and ending on December 31, 2013; and (iii) $50,000,000, if the loss occurs on or after January 1, 2014, provided that if the inspector general of a Federal banking agency certifies to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Finan- cial Services of the House of Representa- tives that the number of projected failures of depository institutions that would re- quire material loss reviews for the fol- lowing 12 months will be greater than 30 and would hinder the effectiveness of its oversight functions, then the definition of ‘‘material loss’’ shall be $75,000,000 for a duration of 1 year from the date of the cer- tification. (3) Deadline for report The inspector general of the appropriate Federal banking agency shall comply with paragraph (1) expeditiously, and in any event (except with respect to paragraph (1)(B)(iv)) as follows: (A) If the institution is described in para- graph (2)(A)(i), during the 6-month period be- ginning on the earlier of— (i) the date on which the institution ceases to repay assistance under section 1823(c) of this title in accordance with its terms, or (ii) the date on which it becomes appar- ent that the assistance will not be fully re- paid during the 24-month period described in paragraph (2)(A)(i). (B) If the institution is described in para- graph (2)(A)(ii), during the 6-month period beginning on the date on which it becomes apparent that the present value of the out- lays of the Deposit Insurance Fund with re- spect to that institution will exceed the present value of receivership dividends or other payments on the claims held by the Corporation. (4) Public disclosure required (A) In general The appropriate Federal banking agency shall disclose any report on losses required under this subsection, upon request under section 552 of title 5 without excising— (i) any portion under section 552(b)(5) of that title; or (ii) any information about the insured depository institution under paragraph (4) (other than trade secrets) or paragraph (8) of section 552(b) of that title. (B) Exception Subparagraph (A) does not require the agency to disclose the name of any customer of the insured depository institution (other than an institution-affiliated party), or in- formation from which such a person’s iden- tity could reasonably be ascertained. (5) 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 each Federal bank- ing agency shall— (i) identify losses that the Inspector General estimates have been incurred by the Deposit Insurance Fund during that 6- month period, with respect to the insured Page 1168 TITLE 12—BANKS AND BANKING § 1831o depository institutions supervised by the Federal banking agency; (ii) for each loss incurred by the Deposit Insurance Fund that is not a material loss, determine— (I) the grounds identified by the Fed- eral banking agency or State bank su- pervisor for appointing the Corporation as receiver under section 1821(c)(5) of this title; 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 appropriate Federal banking agency and to Congress on the results of any de- termination by the Inspector General, in- cluding— (I) an identification of any loss that warrants an in-depth review, together with the reasons why such review is war- ranted, or, if the Inspector General de- termines that no review is warranted, an explanation of such determination; and (II) for each loss identified under sub- clause (I) that warrants an in-depth re- view, the date by which such review, and a report on such review prepared in a manner consistent with reports under paragraph (1)(A), will be completed and submitted to the Federal banking agen- cy and Congress. (B) Deadline for semiannual report The Inspector General of each Federal banking agency shall— (i) submit each report required under paragraph (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 paragraph (A) to any Member of Congress, upon request. (6) GAO review The Comptroller General of the United States shall, under such conditions as the Comptroller General determines to be appro- priate, review reports made under paragraph (1) and recommend improvements in the super- vision of insured depository institutions (in- cluding the implementation of this section). (l) Implementation (1) Regulations and other actions Each appropriate Federal banking agency shall prescribe such regulations (in consulta- tion with the other Federal banking agencies), issue such orders, and take such other actions as are necessary to carry out this section. (2) Written determination and concurrence re- quired Any determination or concurrence by an ap- propriate Federal banking agency or the Cor- poration required under this section shall be written. (m) Other authority not affected This section does not limit any authority of an appropriate Federal banking agency, the Cor- poration, or a State to take action in addition to (but not in derogation of) that required under this section. (n) Administrative review of dismissal orders (1) Timely petition required A director or senior executive officer dis- missed pursuant to an order under subsection (f)(2)(F)(ii) may obtain review of that order by filing a written petition for reinstatement with the appropriate Federal banking agency not later than 10 days after receiving notice of the dismissal. (2) Procedure (A) Hearing required The agency shall give the petitioner an op- portunity to— (i) submit written materials in support of the petition; and (ii) appear, personally or through coun- sel, before 1 or more members of the agen- cy or designated employees of the agency. (B) Deadline for hearing The agency shall— (i) schedule the hearing referred to in subparagraph (A)(ii) promptly after the pe- tition is filed; and (ii) hold the hearing not later than 30 days after the petition is filed, unless the petitioner requests that the hearing be held at a later time. (C) Deadline for decision Not later than 60 days after the date of the hearing, the agency shall— (i) by order, grant or deny the petition; (ii) if the order is adverse to the peti- tioner, set forth the basis for the order; and (iii) notify the petitioner of the order. (3) Standard for review of dismissal orders The petitioner shall bear the burden of prov- ing that the petitioner’s continued employ- ment would materially strengthen the insured depository institution’s ability— (A) to become adequately capitalized, to the extent that the order is based on the in- stitution’s capital level or failure to submit or implement a capital restoration plan; and (B) to correct the unsafe or unsound condi- tion or unsafe or unsound practice, to the extent that the order is based on subsection (g)(1). (o) Transition rules for savings associations Subsections (e)(2), (f), and (h) shall not apply before July 1, 1994, to any insured savings asso- ciation if— (1) before December 19, 1991— (A) the savings association had submitted a plan meeting the requirements of section 1464(t)(6)(A)(ii) of this title; and (B) the Director of the Office of Thrift Su- pervision had accepted the plan; (2) the plan remains in effect; and (3) the savings association remains in com- pliance with the plan or is operating under a written agreement with the appropriate Fed- eral banking agency. (Sept. 21, 1950, ch. 967, § 2[38], as added Pub. L. 102–242, title I, § 131(a), Dec. 19, 1991, 105 Stat. Page 1169 TITLE 12—BANKS AND BANKING § 1831o 2253; amended Pub. L. 102–550, title XVI, § 1603(d)(1), Oct. 28, 1992, 106 Stat. 4079; Pub. L. 103–325, title VI, § 602(a)(64), Sept. 23, 1994, 108 Stat. 2291; Pub. L. 104–208, div. A, title II, § 2704(d)(14)(AA)–(CC), Sept. 30, 1996, 110 Stat. 3009–494; Pub. L. 104–316, title I, § 106(d), Oct. 19, 1996, 110 Stat. 3831; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 8(a)(36)–(39), Feb. 15, 2006, 119 Stat. 3615; Pub. L. 110–289, div. A, title VI, § 1604(b)(1)(D), July 30, 2008, 122 Stat. 2829; Pub. L. 111–203, title IX, § 987, July 21, 2010, 124 Stat. 1936.) Editorial Notes REFERENCES IN TEXT The Securities Exchange Act of 1934, referred to in subsec. (e)(2)(E)(ii)(III), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see sec- tion 78a of Title 15 and Tables. AMENDMENTS 2010—Subsec. (k). Pub. L. 111–203, § 987(b), substituted ‘‘Reviews’’ for ‘‘Review’’ and ‘‘losses’’ for ‘‘material loss’’ in heading. Subsec. (k)(2)(B). Pub. L. 111–203, § 987(a)(1), added subpar. (B) and struck out former subpar. (B). Prior to amendment, text read as follows: ‘‘A loss is material if it exceeds the greater of— ‘‘(i) $25,000,000; or ‘‘(ii) 2 percent of the institution’s total assets at the time the Corporation initiated assistance under section 1823(c) of this title or was appointed re- ceiver.’’ Subsec. (k)(4)(A). Pub. L. 111–203, § 987(a)(2), sub- stituted ‘‘any report on losses required under this sub- section,’’ for ‘‘the report’’ in introductory provisions. Subsec. (k)(5). Pub. L. 111–203, § 987(a)(5), added par. (5). Former par. (5) redesignated (6). Subsec. (k)(6). Pub. L. 111–203, § 987(a)(3), (4), redesig- nated par. (5) as (6) and struck out former par. (6). Prior to amendment, par. (6) related to transition rule during the period beginning on July 1, 1993, and ending on June 30, 1997. 2008—Subsec. (j)(2). Pub. L. 110–289 substituted ‘‘bridge depository institution’’ for ‘‘bridge bank’’. 2006—Subsec. (a). Pub. L. 109–173, § 8(a)(37), sub- stituted ‘‘Fund’’ for ‘‘funds’’ in heading. Pub. L. 109–171 repealed Pub. L. 104–208, § 2704(d)(14)(AA). See 1996 Amendment note below. Subsec. (a)(1). Pub. L. 109–173, § 8(a)(36), substituted ‘‘the Deposit Insurance Fund’’ for ‘‘the deposit insur- ance fund’’. Subsec. (k)(1). Pub. L. 109–173, § 8(a)(38)(A), sub- stituted ‘‘the Deposit Insurance Fund’’ for ‘‘a deposit insurance fund’’ in introductory provisions. Pub. L. 109–171 repealed Pub. L. 104–208, § 2704(d)(14)(BB)(i). See 1996 Amendment note below. Subsec. (k)(1)(A)(i). Pub. L. 109–173, § 8(a)(36), sub- stituted ‘‘the Deposit Insurance Fund’’ for ‘‘the deposit insurance fund’’. Subsec. (k)(2)(A). Pub. L. 109–173, § 8(a)(38)(B), sub- stituted ‘‘The Deposit Insurance Fund’’ for ‘‘A deposit insurance fund’’ in introductory provisions. Pub. L. 109–171 repealed Pub. L. 104–208, § 2704(d)(14)(BB)(ii). See 1996 Amendment note below. Subsec. (k)(2)(A)(ii). Pub. L. 109–173, § 8(a)(38)(C), sub- stituted ‘‘the outlays of the Deposit Insurance Fund’’ for ‘‘the deposit insurance fund’s outlays’’. Subsec. (k)(3)(B). Pub. L. 109–173, § 8(a)(38)(C), sub- stituted ‘‘the outlays of the Deposit Insurance Fund’’ for ‘‘the deposit insurance fund’s outlays’’. Subsec. (o). Pub. L. 109–173, § 8(a)(39), struck out head- ing and text of par. (1) and designation and heading of par. (2), redesignated former subpars. (A) to (C) of par. (2) as pars. (1) to (3), respectively, and former cls. (i) and (ii) of par. (2)(A) as subpars. (A) and (B) of par. (1), respectively, and realigned margins. Prior to amend- ment, text of par. (1) read as follows: ‘‘(A) IN GENERAL.—In implementing this section, the appropriate Federal banking agency (and, to the extent applicable, the Corporation) shall exercise the same care as if the Savings Association Insurance Fund (rather than the Resolution Trust Corporation) bore the cost of resolving the problems of insured savings associations described in clauses (i) and (ii)(II) of sec- tion 1441a(b)(3)(A) of this title. ‘‘(B) REPORTS.—Subparagraph (A) does not require re- ports under subsection (k) of this section.’’ Pub. L. 109–171 repealed Pub. L. 104–208, § 2704(d)(14)(CC). See 1996 Amendment note below. 1996—Subsec. (a). Pub. L. 104–208, § 2704(d)(14)(AA), which directed substitution of ‘‘fund’’ for ‘‘funds’’ in heading, was repealed by Pub. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amend- ment note above. Subsec. (k)(1). Pub. L. 104–208, § 2704(d)(14)(BB)(i), which directed substitution of ‘‘the Deposit Insurance Fund’’ for ‘‘a deposit insurance fund’’, was repealed by Pub. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above. Subsec. (k)(2)(A). Pub. L. 104–208, § 2704(d)(14)(BB)(ii), which directed substitution of ‘‘The Deposit Insurance Fund’’ for ‘‘A deposit insurance fund’’ in introductory provisions and ‘‘the outlays of the Deposit Insurance Fund’’ for ‘‘the deposit insurance fund’s outlays’’ in cl. (ii), was repealed by Pub. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above. Subsec. (k)(5). Pub. L. 104–316 amended heading and text of par. (5) generally. Prior to amendment, text read as follows: ‘‘The General Accounting Office shall annually— ‘‘(A) review reports made under paragraph (1) and recommend improvements in the supervision of in- sured depository institutions (including the imple- mentation of this section); and ‘‘(B) verify the accuracy of 1 or more of those re- ports.’’ Subsec. (o). Pub. L. 104–208, § 2704(d)(14)(CC), which di- rected the amendment of subsec. (o) by striking par. (1) and the par. designation and heading of par. (2), redes- ignating subpars. (A) to (C) as pars. (1) to (3), respec- tively, and cls. (i) and (ii) as subpars. (A) and (B), re- spectively, and realigning margins, was repealed by Pub. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above. 1994—Subsec. (f)(6). Pub. L. 103–325 substituted ‘‘Com- mission’’ for ‘‘Commisssion’’. 1992—Subsec. (e)(2)(D)(i). Pub. L. 102–550, § 1603(d)(1)(A), struck out ‘‘and’’ after semicolon at end. Subsec. (f)(6). Pub. L. 102–550, § 1603(d)(1)(B), (D), in heading substituted ‘‘other regulators’’ for ‘‘functional regulators’’ and in text substituted ‘‘appropriate regu- lator’’ for ‘‘functional regulator (as defined in section 1841(s) of this title)’’. Subsec. (g)(1)(B). Pub. L. 102–550, § 1603(d)(1)(C), sub- stituted ‘‘capitalized (but not well capitalized)’’ for ‘‘capitalized’’. 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 OF 2006 AMENDMENT Amendment by Pub. L. 109–173 effective Mar. 31, 2006, see section 8(b) of Pub. L. 109–173, set out as a note under section 1813 of this title. Amendment by Pub. L. 109–171 effective no later than the first day of the first calendar quarter that begins after the end of the 90-day period beginning Feb. 8, 2006, Page 1170 TITLE 12—BANKS AND BANKING § 1831o see section 2102(c) of Pub. L. 109–171, set out as a Merger of BIF and SAIF note under section 1821 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104–208 effective Jan. 1, 1999, if no insured depository institution is a savings asso- ciation on that date, see section 2704(c) of Pub. L. 104–208, formerly set out as a note under section 1821 of this title. 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, ex- cept that where amendment is to any provision of law added or amended by Pub. L. 102–242 effective after Dec. 19, 1992, then amendment by Pub. L. 102–550 effective on effective date of amendment by Pub. L. 102–242, see sec- tion 1609 of Pub. L. 102–550, set out as a note under sec- tion 191 of this title. EFFECTIVE DATE Section effective 1 year after Dec. 19, 1991, see section 131(f) of Pub. L. 102–242, set out as an Effective Date of 1991 Amendment note under section 1464 of this title. REGULATIONS Pub. L. 102–242, title I, § 131(b), Dec. 19, 1991, 105 Stat. 2266, provided that: ‘‘Each appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) (and the Corporation, acting in the Corporation’s capacity as insurer of de- pository institutions under that Act [12 U.S.C. 1811 et seq.]) shall, after notice and opportunity for comment, promulgate final regulations under section 38 of the Federal Deposit Insurance Act [12 U.S.C. 1831o] (as added by subsection (a)) not later than 9 months after the date of enactment of this Act [Dec. 19, 1991], and those regulations shall become effective not later than 1 year after that date of enactment.’’ SUPPLEMENTARY LEVERAGE RATIO FOR CUSTODIAL BANKS Pub. L. 115–174, title IV, § 402, May 24, 2018, 132 Stat. 1359, provided that: ‘‘(a) DEFINITION.—In this section, the term ‘custodial bank’ means any depository institution holding com- pany predominantly engaged in custody, safekeeping, and asset servicing activities, including any insured de- pository institution subsidiary of such a holding com- pany. ‘‘(b) REGULATIONS.— ‘‘(1) DEFINITION.—In this subsection, the term ‘cen- tral bank’ means— ‘‘(A) the Federal Reserve System; ‘‘(B) the European Central Bank; and ‘‘(C) central banks of member countries of the Organisation for Economic Co-operation and Devel- opment, if— ‘‘(i) the member country has been assigned a zero percent risk weight under sections 3.32, 217.32, and 324.32 of title 12, Code of Federal Regu- lations, or any successor regulation; and ‘‘(ii) the sovereign debt of such member country is not in default or has not been in default during the previous 5 years. ‘‘(2) REGULATIONS.—The appropriate Federal bank- ing agencies shall promulgate regulations to amend sections 3.10, 217.10, and 324.10 of title 12, Code of Fed- eral Regulations, to specify that— ‘‘(A) subject to subparagraph (B), funds of a cus- todial bank that are deposited with a central bank shall not be taken into account when calculating the supplementary leverage ratio as applied to the custodial bank; and ‘‘(B) with respect to the funds described in sub- paragraph (A), any amount that exceeds the total value of deposits of the custodial bank that are linked to fiduciary or custodial and safekeeping ac- counts shall be taken into account when calcu- lating the supplementary leverage ratio as applied to the custodial bank. ‘‘(c) RULE OF CONSTRUCTION.—Nothing in subsection (b) shall be construed to limit the authority of the ap- propriate Federal banking agencies to tailor or adjust the supplementary leverage ratio or any other leverage ratio for any company that is not a custodial bank.’’ [For definitions of terms used in section 402 of Pub. L. 115–174, set out above, see section 2 of Pub. L. 115–174, set out as a Definitions note under section 5365 of this title.] DEPOSIT OF INSURANCE PROCEEDS Pub. L. 105–18, title V, § 50003, June 12, 1997, 111 Stat. 211, provided that: ‘‘(a) IN GENERAL.—The appropriate Federal banking agency may, by order, permit an insured depository in- stitution to subtract from the institution’s total as- sets, in calculating compliance with the leverage limit prescribed under section 38 of the Federal Deposit In- surance Act [12 U.S.C. 1831o], an amount not exceeding the qualifying amount attributable to insurance pro- ceeds, if the agency determines that— ‘‘(1) the institution— ‘‘(A) had its principal place of business within an area in which the President, pursuant to section 401 of the Robert T. Stafford Disaster Relief and Emer- gency Assistance Act [42 U.S.C. 5170], has deter- mined, on or after February 28, 1997, that a major disaster exists, or within an area determined to be eligible for disaster relief under other Federal law by reason of damage related to the 1997 flooding of the Red River of the North, the Minnesota River, and the tributaries of such rivers, on the day before the date of any such determination; ‘‘(B) derives more than 60 percent of its total de- posits from persons who normally reside within, or whose principal place of business is normally with- in, areas of intense devastation caused by the major disaster; ‘‘(C) was adequately capitalized (as defined in sec- tion 38 of the Federal Deposit Insurance Act) before the major disaster; and ‘‘(D) has an acceptable plan for managing the in- crease in its total assets and total deposits; and ‘‘(2) the subtraction is consistent with the purpose of section 38 of the Federal Deposit Insurance Act. ‘‘(b) TIME LIMIT ON EXCEPTIONS.—Any exception made under this section shall expire not later than February 28, 1999. ‘‘(c) DEFINITIONS.—For purposes of this section: ‘‘(1) APPROPRIATE FEDERAL BANKING AGENCY.—The term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act [12 U.S.C. 1813]. ‘‘(2) INSURED DEPOSITORY INSTITUTION.—The term ‘insured depository institution’ has the same mean- ing as in section 3 of the Federal Deposit Insurance Act. ‘‘(3) LEVERAGE LIMIT.—The term ‘leverage limit’ has the same meaning as in section 38 of the Federal De- posit Insurance Act [12 U.S.C. 1831o]. ‘‘(4) QUALIFYING AMOUNT ATTRIBUTABLE TO INSUR- ANCE PROCEEDS.—The term ‘qualifying amount attrib- utable to insurance proceeds’ means the amount (if any) by which the institution’s total assets exceed the institution’s average total assets during the cal- endar quarter ending before the date of any deter- mination referred to in subsection (a)(1)(A), because of the deposit of insurance payments or governmental assistance made with respect to damage caused by, or other costs resulting from, the major disaster.’’ Similar provisions were contained in the following prior acts: Pub. L. 103–76, § 3, Aug. 12, 1993, 107 Stat. 753. Pub. L. 102–485, § 4, Oct. 23, 1992, 106 Stat. 2772. TRANSITION RULE REGARDING CURRENT DIRECTORS AND SENIOR EXECUTIVE OFFICERS Pub. L. 102–242, title I, § 131(e), Dec. 19, 1991, 105 Stat. 2267, provided that: Page 1171 TITLE 12—BANKS AND BANKING § 1831p–1 ‘‘(1) DISMISSAL FROM OFFICE.—Section 38(f)(2)(F)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1831o(f)(2)(F)(ii)] (as added by subsection (a)) shall not apply with respect to— ‘‘(A) any director whose current term as a director commenced on or before the date of enactment of this Act [Dec. 19, 1991] and has not been extended— ‘‘(i) after that date of enactment, or ‘‘(ii) to evade section 38(f)(2)(F)(ii); or ‘‘(B) any senior executive officer who accepted em- ployment in his or her current position on or before the date of enactment of this Act and whose contract of employment has not been renewed or renegoti- ated— ‘‘(i) after that date of enactment, or ‘‘(ii) to evade section 38(f)(2)(F)(ii). ‘‘(2) RESTRICTING COMPENSATION.—Section 38(f)(4) of the Federal Deposit Insurance Act [12 U.S.C. 1831o(f)(4)] (as added by subsection (a)) shall not apply with re- spect to any senior executive officer who accepted em- ployment in his or her current position on or before the date of enactment of this Act [Dec. 19, 1991] and whose contract of employment has not been renewed or re- negotiated— ‘‘(A) after that date of enactment, or ‘‘(B) to evade section 38(f)(4).’’ § 1831o–1. Source of strength (a) Holding companies The appropriate Federal banking agency for a bank holding company or savings and loan hold- ing company shall require the bank holding company or savings and loan holding company to serve as a source of financial strength for any subsidiary of the bank holding company or sav- ings and loan holding company that is a deposi- tory institution. (b) Other companies If an insured depository institution is not the subsidiary of a bank holding company or savings and loan holding company, the appropriate Fed- eral banking agency for the insured depository institution shall require any company that di- rectly or indirectly controls the insured deposi- tory institution to serve as a source of financial strength for such institution. (c) Authority of State insurance regulator (1) In general The provisions of section 1844(g) of this title shall apply to a savings and loan holding com- pany that is an insurance company, an affil- iate of an insured depository institution that is an insurance company, and to any other company that is an insurance company and that directly or indirectly controls an insured depository institution, to the same extent as the provisions of that section apply to a bank holding company that is an insurance com- pany. (2) Rule of construction Requiring a bank holding company that is an insurance company, a savings and loan holding company that is an insurance com- pany, an affiliate of an insured depository in- stitution that is an insurance company, or any other company that is an insurance company and that directly or indirectly controls an in- sured depository institution to serve as a source of financial strength under this section shall be deemed an action of the Board that requires a bank holding company to provide funds or other assets to a subsidiary deposi- tory institution for purposes of section 1844(g) of this title. (d) Reports The appropriate Federal banking agency for an insured depository institution described in subsection (b) may, from time to time, require the company, or a company that directly or in- directly controls the insured depository institu- tion, to submit a report, under oath, for the pur- poses of— (1) assessing the ability of such company to comply with the requirement under subsection (b); and (2) enforcing the compliance of such com- pany with the requirement under subsection (b). (e) Rules Not later than 1 year after the transfer date, as defined in section 5411 of this title, the appro- priate Federal banking agencies shall jointly issue final rules to carry out this section. (f) Definition In this section, the term ‘‘source of financial strength’’ means the ability of a company that directly or indirectly owns or controls an in- sured depository institution to provide financial assistance to such insured depository institution in the event of the financial distress of the in- sured depository institution. (Sept. 21, 1950, ch. 967, § 2[38A], as added Pub. L. 111–203, title VI, § 616(d), July 21, 2010, 124 Stat. 1616; amended Pub. L. 114–113, div. O, title VII, § 706(a), Dec. 18, 2015, 129 Stat. 3029.) Editorial Notes AMENDMENTS 2015—Subsecs. (c) to (f). Pub. L. 114–113 added subsec. (c) and redesignated former subsecs. (c) to (e) as (d) to (f), respectively. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on the transfer date, see section 616(e) of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1467a of this title. § 1831p. Transferred Editorial Notes CODIFICATION Section, act Sept. 21, 1950, ch. 967, § 2[39], as added Dec. 19, 1991, Pub. L. 102–242, title II, § 228, 105 Stat. 2308, which related to notice of branch closure, was renum- bered section 2[42] of act Sept. 21, 1950, by Pub. L. 102–550, title XI, § 1602(a), Oct. 28, 1992, 106 Stat. 4079, and transferred to section 1831r–1 of this title. § 1831p–1. Standards for safety and soundness (a) Operational and managerial standards Each appropriate Federal banking agency shall, for all insured depository institutions, prescribe— (1) standards relating to— (A) internal controls, information sys- tems, and internal audit systems, in accord- ance with section 1831m of this title;