12 USC 1464 - Federal savings associations

U.S Code last checked for updates: Nov 23, 2024

§ 1464.

Federal savings associations

(a)

In general

In order to provide thrift institutions for the deposit of funds and for the extension of credit for homes and other goods and services, the Comptroller of the Currency is authorized, under such regulations as the Comptroller of the Currency may prescribe—

(1)

to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings associations (including Federal savings banks), and

(2)

to issue charters therefor,

giving primary consideration of the best practices of thrift institutions in the United States. The lending and investment powers conferred by this section are intended to encourage such institutions to provide credit for housing safely and soundly.

(b)

Deposits and related powers

(1)

Deposit accounts

(A)

Subject to the terms of its charter and regulations of the Comptroller of the Currency, a Federal savings association may—

(i)

raise funds through such deposit, share, or other accounts, including demand deposit accounts (hereafter in this section referred to as “accounts”); and

(ii)

issue passbooks, certificates, or other evidence of accounts.

(B)

A Federal savings association may not permit any overdraft (including an intraday overdraft) on behalf of an affiliate, or incur any such overdraft in such savings association’s account at a Federal reserve bank or Federal home loan bank on behalf of an affiliate.

All savings accounts and demand accounts shall have the same priority upon liquidation. Holders of accounts and obligors of a Federal savings association shall, to such extent as may be provided by its charter or by regulations of the Comptroller of the Currency, be members of the savings association, and shall have such voting rights and such other rights as are thereby provided.

(C)

A Federal savings association may require not less than 14 days notice prior to payment of savings accounts if the charter of the savings association or the regulations of the Comptroller of the Currency so provide.

(D)

If a Federal savings association does not pay all withdrawals in full (subject to the right of the association, where applicable, to require notice), the payment of withdrawals from accounts shall be subject to such rules and procedures as may be prescribed by the savings association’s charter or by regulation of the Comptroller of the Currency. Except as authorized in writing by the Comptroller of the Currency, any Federal savings association that fails to make full payment of any withdrawal when due shall be deemed to be in an unsafe or unsound condition.

(E)

Accounts may be subject to check or to withdrawal or transfer on negotiable or transferable or other order or authorization to the Federal savings association, as the Comptroller of the Currency may by regulation provide.

(F)

A Federal savings association may establish remote service units for the purpose of crediting savings or demand accounts, debiting such accounts, crediting payments on loans, and the disposition of related financial transactions, as provided in regulations prescribed by the Comptroller of the Currency.

(2)

Other liabilities

(3)

Loans from State housing finance agencies

(A)

In general

(B)

Interest rate

(4)

Mutual capital certificates

In accordance with regulations issued by the Comptroller of the Currency, mutual capital certificates may be issued and sold directly to subscribers or through underwriters. Such certificates may be included in calculating capital for the purpose of subsection (t) to the extent permitted by the Comptroller of the Currency. The issuance of certificates under this paragraph does not constitute a change of control or ownership under this chapter or any other law unless there is in fact a change in control or reorganization. Regulations relating to the issuance and sale of mutual capital certificates shall provide that such certificates—

(A)

are subordinate to all savings accounts, savings certificates, and debt obligations;

(B)

constitute a claim in liquidation on the general reserves, surplus, and undivided profits of the Federal savings association remaining after the payment in full of all savings accounts, savings certificates, and debt obligations;

(C)

are entitled to the payment of dividends; and

(D)

may have a fixed or variable dividend rate.

(c)

Loans and investments

To the extent specified in regulations of the Comptroller, a Federal savings association may invest in, sell, or otherwise deal in the following loans and other investments:

(1)

Loans or investments without percentage of assets limitation

Without limitation as a percentage of assets, the following are permitted:

(A)

Account loans

(B)

Residential real property loans

(C)

United States Government securities

(D)

Federal home loan bank and Federal National Mortgage Association securities

(E)

Federal Home Loan Mortgage Corporation instruments

(F)

Other Government securities

(G)

Deposits

(H)

State securities

(I)

Purchase of insured loans

(J)

Home improvement and manufactured home loans

(K)

Insured loans to finance the purchase of fee simple

(L)

Loans to financial institutions, brokers, and dealers

Loans to—

(i)

financial institutions with respect to which the United States or an agency or instrumentality thereof has any function of examination or supervision, or

(ii)

any broker or dealer registered with the Securities and Exchange Commission,

which are secured by loans, obligations, or investments in which the Federal savings association has the statutory authority to invest directly.

(M)

Liquidity investments

(N)

Investment in the national housing partnership corporation, partnerships, and joint ventures

(O)

Certain HUD insured or guaranteed investments

Loans that are secured by mortgages—

(i)

insured under title X of the National Housing Act [12 U.S.C. 1749aa et seq.],1

 See References in Text note below.

(ii)

guaranteed under title IV of the Housing and Urban Development Act of 1968, under part B of the National Urban Policy and New Community Development Act of 1970 [42 U.S.C. 4511 et seq.], or under section 802 of the Housing and Community Development Act of 1974 [42 U.S.C. 1440].

(P)

State housing corporation investments

Obligations of and loans to any State housing corporation, if—

(i)

such obligations or loans are secured directly, or indirectly through an agent or fiduciary, by a first lien on improved real estate which is insured under the provisions of the National Housing Act [12 U.S.C. 1701 et seq.], and

(ii)

in the event of default, the holder of the obligations or loans has the right directly, or indirectly through an agent or fiduciary, to cause to be subject to the satisfaction of such obligations or loans the real estate described in the first lien or the insurance proceeds under the National Housing Act.

(Q)

Investment companies

A Federal savings association may invest in, redeem, or hold shares or certificates issued by any open-end management investment company which—

(i)

is registered with the Securities and Exchange Commission under the Investment Company Act of 1940 [15 U.S.C. 80a–1 et seq.], and

(ii)

the portfolio of which is restricted by such management company’s investment policy (changeable only if authorized by shareholder vote) solely to investments that a Federal savings association by law or regulation may, without limitation as to percentage of assets, invest in, sell, redeem, hold, or otherwise deal in.

(R)

Mortgage-backed securities

Investments in securities that—

(i)

are offered and sold pursuant to section 4(5) of the Securities Act of 1933; ¹ or

(ii)

are mortgage related securities (as defined in section 3(a)(41) of the Securities Exchange Act of 1934) [15 U.S.C. 78c(a)(41)],

subject to such regulations as the Comptroller may prescribe, including regulations prescribing minimum size of the issue (at the time of initial distribution) or minimum aggregate sales price, or both.

(S)

Small business related securities

(T)

Credit card loans

(U)

Educational loans

(2)

Loans or investments limited to a percentage of assets or capital

The following loans or investments are permitted, but only to the extent specified:

(A)

Commercial and other loans

(B)

Nonresidential real property loans

(i)

In general

(ii)

Exception

The Comptroller may permit a savings association to exceed the limitation set forth in clause (i) if the Comptroller determines that the increased authority—

(I)

poses no significant risk to the safe and sound operation of the association, and

(II)

is consistent with prudent operating practices.

(iii)

Monitoring

(C)

Investments in personal property

(D)

Consumer loans and certain securities

(3)

Loans or investments limited to 5 percent of assets

The following loans or investments are permitted, but not to exceed 5 percent of assets of a Federal savings association for each subparagraph:

(A)

Community development investments

(B)

Nonconforming loans

(C)

Construction loans without security

Loans—

(i)

the principal purpose of which is to provide financing with respect to what is or is expected to become primarily residential real estate; and

(ii)

with respect to which the association—

(I)

relies substantially on the borrower’s general credit standing and projected future income for repayment, without other security; or

(II)

relies on other assurances for repayment, including a guarantee or similar obligation of a third party.

The aggregate amount of such investments shall not exceed the greater of the Federal savings association’s capital or 5 percent of its assets.

(4)

Other loans and investments

The following additional loans and other investments to the extent authorized below:

(A)

Business development credit corporations

(B)

Service corporations

(C)

Foreign assistance investments

(D)

Small business investment companies

(E)

Bankers’ banks

(F)

New Markets Venture Capital companies

(5)

Transition rule for savings associations acquiring banks

(A)

In general

(B)

Extension

(6)

Definitions

For purposes of this subsection, the following definitions shall apply:

(A)

Residential property

(B)

Loans

(d)

Regulatory authority

(1)

In general

(A)

Enforcement

(B)

Ancillary provisions

(i)

In making examinations of savings associations, examiners appointed by the appropriate Federal banking agency shall have power to make such examinations of the affairs of all affiliates of such savings associations as shall be necessary to disclose fully the relations between such savings associations and their affiliates and the effect of such relations upon such savings associations. For purposes of this subsection, the term “affiliate” has the same meaning as in section 2(b) of the Banking Act of 1933 [12 U.S.C. 221a(b)], except that the term “member bank” in section 2(b) shall be deemed to refer to a savings association.

(ii)

In the course of any examination of any savings association, upon request by the appropriate Federal banking agency, prompt and complete access shall be given to all savings association officers, directors, employees, and agents, and to all relevant books, records, or documents of any type.

(iii)

Upon request made in the course of supervision or oversight of any savings association, for the purpose of acting on any application or determining the condition of any savings association, including whether operations are being conducted safely, soundly, or in compliance with charters, laws, regulations, directives, written agreements, or conditions imposed in writing in connection with the granting of an application or other request, the appropriate Federal banking agency shall be given prompt and complete access to all savings association officers, directors, employees, and agents, and to all relevant books, records, or documents of any type.

(iv)

If prompt and complete access upon request is not given as required in this subsection, the appropriate Federal banking agency may apply to the United States district court for the judicial district (or the United States court in any territory) in which the principal office of the institution is located, or in which the person denying such access resides or carries on business, for an order requiring that such information be promptly provided.

(v)

In connection with examinations of savings associations and affiliates thereof, the appropriate Federal banking agency may—

(I)

administer oaths and affirmations and examine and to ² take and preserve testimony under oath as to any matter in respect of the affairs or ownership of any such savings association or affiliate, and

(II)

issue subpoenas and, for the enforcement thereof, apply to the United States district court for the judicial district (or the United States court in any territory) in which the principal office of the savings association or affiliate is located, or in which the witness resides or carries on business.

Such courts shall have jurisdiction and power to order and require compliance with any such subpoena.

(vi)

In any proceeding under this section, the appropriate Federal banking agency may administer oaths and affirmations, take depositions, and issue subpenas. The Comptroller may prescribe regulations with respect to any such proceedings. The attendance of witnesses and the production of documents provided for in this subsection may be required from any place in any State or in any territory at any designated place where such proceeding is being conducted.

(vii)

Any party to a proceeding under this section may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district (or the United States court in any territory) in which such proceeding is being conducted, or where the witness resides or carries on business, for enforcement of any subpoena issued pursuant to this subsection or section 10(c) of the Federal Deposit Insurance Act [12 U.S.C. 1820(c)], and such courts shall have jurisdiction and power to order and require compliance therewith. Witnesses subpoenaed under this section shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States. All expenses of the appropriate Federal banking agency in connection with this section shall be considered as nonadministrative expenses. Any court having jurisdiction of any proceeding instituted under this section by a savings association, or a director or officer thereof, may allow to any such party reasonable expenses and attorneys’ fees. Such expenses and fees shall be paid by the savings association.

(2)

Conservatorships and receiverships

(A)

Grounds for appointing conservator or receiver for insured savings association

(B)

Power of appointment; judicial review

(C)

Replacement

(D)

Court action

(E)

Powers

(i)

In general

(ii)

FDIC as conservator or receiver

(F)

Disclosure requirement for those acting on behalf of conservator

(3)

Regulations

(A)

In general

(B)

FDIC as conservator or receiver

(4)

Refusal to comply with demand

(5)

“Savings association” defined

(6)

Compliance with monetary transaction recordkeeping and report requirements

(A)

Compliance procedures required

(B)

Examinations of savings associations to include review of compliance procedures

(i)

In general

(ii)

Exam report requirement

(C)

Order to comply with requirements

If the appropriate Federal banking agency determines that a savings association—

(i)

has failed to establish and maintain the procedures described in subparagraph (A); or

(ii)

has failed to correct any problem with the procedures maintained by such association which was previously reported to the association by the appropriate Federal banking agency,

the appropriate Federal banking agency shall issue an order under section 8 of the Federal Deposit Insurance Act [12 U.S.C. 1818] requiring such association to cease and desist from its violation of this paragraph or regulations prescribed under this paragraph.

(7)

Regulation and examination of savings association service companies, subsidiaries, and service providers

(A)

General examination and regulatory authority

(B)

Examination by other banking agencies

(C)

Applicability of section 8 of the Federal Deposit Insurance Act

(D)

Service performed by contract or otherwise

Notwithstanding subparagraph (A), if a savings association, a subsidiary thereof, or any savings and loan affiliate or entity, as identified by section 8(b)(9) ¹ of the Federal Deposit Insurance Act [12 U.S.C. 1818(b)(9)], that is regularly examined or subject to examination by the appropriate Federal banking agency, causes to be performed for itself, by contract or otherwise, any service authorized under this chapter or, in the case of a State savings association, any applicable State law, whether on or off its premises—

(i)

such performance shall be subject to regulation and examination by the appropriate Federal banking agency to the same extent as if such services were being performed by the savings association on its own premises; and

(ii)

the savings association shall notify the appropriate Federal banking agency of the existence of the service relationship not later than 30 days after the earlier of—

(I)

the date on which the contract is entered into; or

(II)

the date on which the performance of the service is initiated.

(E)

Administration by the Comptroller and the Corporation

(8)

Definitions

For purposes of this section—

(A)

the term “service company” means—

(i)

any corporation—

(I)

that is organized to perform services authorized by this chapter or, in the case of a corporation owned in part by a State savings association, authorized by applicable State law; and

(II)

all of the capital stock of which is owned by 1 or more insured savings associations; and

(ii)

any limited liability company—

(I)

that is organized to perform services authorized by this chapter or, in the case of a company, 1 of the members of which is a State savings association, authorized by applicable State law; and

(II)

all of the members of which are 1 or more insured savings associations;

(B)

the term “limited liability company” means any company, partnership, trust, or similar business entity organized under the law of a State (as defined in section 3 of the Federal Deposit Insurance Act [12 U.S.C. 1813]) that provides that a member or manager of such company is not personally liable for a debt, obligation, or liability of the company solely by reason of being, or acting as, a member or manager of such company; and

(C)

the terms “State savings association” and “subsidiary” have the same meanings as in section 3 of the Federal Deposit Insurance Act.

(e)

Character and responsibility

A charter may be granted only—

(1)

to persons of good character and responsibility,

(2)

if in the judgment of the Comptroller a necessity exists for such an institution in the community to be served,

(3)

if there is a reasonable probability of its usefulness and success, and

(4)

if the association can be established without undue injury to properly conducted existing local thrift and home financing institutions.

(f)

Federal home loan bank membership

(g)

Preferred shares

(h)

Discriminatory State and local taxation prohibited

(i)

Conversions

(1)

In general

(2)

Authority of Comptroller

(A)

No savings association may convert from the mutual to the stock form, or from the stock form to the mutual form, except in accordance with the regulations of the Comptroller.

(B)

Any aggrieved person may obtain review of a final action of the Comptroller which approves or disapproves a plan of conversion pursuant to this subsection only by complying with the provisions of section 1467a(j) of this title within the time limit and in the manner therein prescribed, which provisions shall apply in all respects as if such final action were an order the review of which is therein provided for, except that such time limit shall commence upon publication of notice of such final action in the Federal Register or upon the giving of such general notice of such final action as is required by or approved under regulations of the Comptroller, whichever is later.

(C)

Any Federal savings association may change its designation from a Federal savings association to a Federal savings bank, or the reverse.

(3)

Conversion to State association

(A)

Any Federal savings association may convert itself into a savings association or savings bank organized pursuant to the laws of the State in which the principal office of such Federal savings association is located if—

(i)

the State permits the conversion of any savings association or savings bank of such State into a Federal savings association;

(ii)

such conversion of a Federal savings association into such a State savings association is determined—

(I)

upon the vote in favor of such conversion cast in person or by proxy at a special meeting of members or stockholders called to consider such action, specified by the law of the State in which the home office of the Federal savings association is located, as required by such law for a State-chartered institution to convert itself into a Federal savings association, but in no event upon a vote of less than 51 percent of all the votes cast at such meeting, and

(II)

upon compliance with other requirements reciprocally equivalent to the requirements of such State law for the conversion of a State-chartered institution into a Federal savings association;

(iii)

notice of the meeting to vote on conversion shall be given as herein provided and no other notice thereof shall be necessary; the notice shall expressly state that such meeting is called to vote thereon, as well as the time and place thereof; and such notice shall be mailed, postage prepaid, at least 30 and not more than 60 days prior to the date of the meeting, to the Comptroller and to each member or stockholder of record of the Federal savings association at the member’s or stockholder’s last address as shown on the books of the Federal savings association;

(iv)

when a mutual savings association is dissolved after conversion, the members or shareholders of the savings association will share on a mutual basis in the assets of the association in exact proportion to their relative share or account credits;

(v)

when a stock savings association is dissolved after conversion, the stockholders will share on an equitable basis in the assets of the association; and

(vi)

such conversion shall be effective upon the date that all the provisions of this chapter shall have been fully complied with and upon the issuance of a new charter by the State wherein the savings association is located.

(B)

(i)

The act of conversion constitutes consent by the institution to be bound by all the requirements that the Comptroller may impose under this chapter.

(ii)

The savings association shall upon conversion and thereafter be authorized to issue securities in any form currently approved at the time of issue by the Comptroller for issuance by similar savings associations in such State.

(iii)

If the insurance of accounts is terminated in connection with such conversion, the notice and other action shall be taken as provided by law and regulations for the termination of insurance of accounts.

(4)

Savings bank activities

(A)

To the extent authorized by the Comptroller, but subject to section 18(m)(3) of the Federal Deposit Insurance Act [12 U.S.C. 1828(m)(3)]—

(i)

any Federal savings bank chartered as such prior to October 15, 1982, may continue to make any investment or engage in any activity not otherwise authorized under this section, to the degree it was permitted to do so as a Federal savings bank prior to October 15, 1982; and

(ii)

any Federal savings bank in existence on August 9, 1989, and formerly organized as a mutual savings bank under State law may continue to make any investment or engage in any activity not otherwise authorized under this section, to the degree it was authorized to do so as a mutual savings bank under State law.

(B)

The authority conferred by this paragraph may be utilized by any Federal savings association that acquires, by merger or consolidation, a Federal savings bank enjoying grandfather rights hereunder.

(5)

(A)

In general

(B)

Conditions of conversion

The authority in subparagraph (A) shall apply only if each resulting national or State bank—

(i)

will meet all financial, management, and capital requirements applicable to the resulting national or State bank; and

(ii)

if more than 1 national or State bank results from a conversion under this subparagraph, has received approval from the Federal Deposit Insurance Corporation under section 5(a) of the Federal Deposit Insurance Act [12 U.S.C. 1815(a)].

(C)

No merger application under FDIA required

(D)

Definitions

(6)

Limitation on certain conversions by Federal savings associations

(j)

Subscription for shares

(k)

Depository of public money

(l)

Retirement accounts

(m)

Branching

(1)

In general

(A)

No savings association incorporated under the laws of the District of Columbia or organized in the District or doing business in the District shall establish any branch or move its principal office or any branch without the Director’s 4

 So in original. Probably should be “Comptroller’s”.

prior written approval.

(B)

No savings association shall establish any branch in the District of Columbia or move its principal office or any branch in the District without the Director’s ⁴ prior written approval.

(2)

“Branch” defined

(n)

Trusts

(1)

Permits

(2)

Segregation of assets

(3)

Prohibitions

(4)

Separate lien

(5)

Deposits

(6)

Oaths and affidavits

(7)

Certain loans prohibited

(8)

Factors to be considered

In reviewing applications for permission to exercise the powers enumerated in this section, the Comptroller may consider—

(A)

the amount of capital of the applying Federal savings association,

(B)

whether or not such capital is sufficient under the circumstances of the case,

(C)

the needs of the community to be served, and

(D)

any other facts and circumstances that seem to it proper.

The Comptroller may grant or refuse the application accordingly, except that no permit shall be issued to any association having capital less than the capital required by State law of State banks, trust companies, and corporations exercising such powers.

(9)

Surrender of charter

(A)

Any Federal savings association may surrender its right to exercise the powers granted under this subsection, and have returned to it any securities which it may have deposited with the State authorities, by filing with the Comptroller a certified copy of a resolution of its board of directors indicating its intention to surrender its right.

(B)

Upon receipt of such resolution, the Comptroller, if satisfied that such Federal savings association has been relieved in accordance with State law of all duties as trustee, executor, administrator, guardian or other fiduciary, may in the Director’s ⁴ discretion, issue to such association a certificate that such association is no longer authorized to exercise the powers granted by this subsection.

(C)

Upon the issuance of such a certificate by the Comptroller, such Federal savings association (i) shall no longer be subject to the provisions of this section or the regulations of the Comptroller made pursuant thereto, (ii) shall be entitled to have returned to it any securities which it may have deposited with State authorities, and (iii) shall not exercise thereafter any of the powers granted by this section without first applying for and obtaining a new permit to exercise such powers pursuant to the provisions of this section.

(D)

The Comptroller may prescribe regulations necessary to enforce compliance with the provisions of this subsection.

(10)

Revocation

(A)

In addition to the authority conferred by other law, if, in the opinion of the Comptroller, a Federal savings association is unlawfully or unsoundly exercising, or has unlawfully or unsoundly exercised, or has failed for a period of 5 consecutive years to exercise, the powers granted by this subsection or otherwise fails or has failed to comply with the requirements of this subsection, the Comptroller may issue and serve upon the association a notice of intent to revoke the authority of the association to exercise the powers granted by this subsection. The notice shall contain a statement of the facts constituting the alleged unlawful or unsound exercise of powers, or failure to exercise powers, or failure to comply, and shall fix a time and place at which a hearing will be held to determine whether an order revoking authority to exercise such powers should issue against the association.

(B)

Such hearing shall be conducted in accordance with the provisions of subsection (d)(1)(B), and subject to judicial review as therein provided, and shall be fixed for a date not earlier than 30 days and not later than 60 days after service of such notice unless the Comptroller sets an earlier or later date at the request of any Federal savings association so served.

(C)

Unless the Federal savings association so served shall appear at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the revocation order. In the event of such consent, or if upon the record made at any such hearing, the Comptroller shall find that any allegation specified in the notice of charges has been established, the Comptroller may issue and serve upon the association an order prohibiting it from accepting any new or additional trust accounts and revoking authority to exercise any and all powers granted by this subsection, except that such order shall permit the association to continue to service all previously accepted trust accounts pending their expeditious divestiture or termination.

(D)

A revocation order shall become effective not earlier than the expiration of 30 days after service of such order upon the association so served (except in the case of a revocation order issued upon consent, which shall become effective at the time specified therein), and shall remain effective and enforceable, except to such extent as it is stayed, modified, terminated, or set aside by action of the Comptroller or a reviewing court.

(o)

Conversion of State savings banks

(1)

Subject to the provisions of this subsection and under regulations of the Comptroller, the Comptroller may authorize the conversion of a State-chartered savings bank into a Federal savings bank, if such conversion is not in contravention of State law, and provide for the organization, incorporation, operation, examination, and regulation of such institution.

(2)

(A)

Any Federal savings bank chartered pursuant to this subsection shall continue to be insured by the Deposit Insurance Fund.

(B)

The Comptroller shall notify the Corporation of any application under this chapter for conversion to a Federal charter by an institution insured by the Corporation, shall consult with the Corporation before disposing of the application, and shall notify the Corporation of the determination of the Comptroller with respect to such application.

(C)

Notwithstanding any other provision of law, if the Corporation determines that conversion into a Federal stock savings bank or the chartering of a Federal stock savings bank is necessary to prevent the default of a savings bank it insures or to reopen a savings bank in default that it insured, or if the Corporation determines, with the concurrence of the Comptroller, that severe financial conditions exist that threaten the stability of a savings bank insured by the Corporation and that such a conversion or charter is likely to improve the financial condition of such savings bank, the Corporation shall provide the Comptroller with a certificate of such determination, the reasons therefor in conformance with the requirements of this chapter, and the bank shall be converted or chartered by the Comptroller, pursuant to the regulations thereof, from the time the Corporation issues the certificate.

(D)

A bank may be converted under subparagraph (C) only if the board of trustees of the bank—

(i)

has specified in writing that the bank is in danger of closing or is closed, or that severe financial conditions exist that threaten the stability of the bank and a conversion is likely to improve the financial condition of the bank; and

(ii)

has requested in writing that the Corporation use the authority of subparagraph (C).

(E)

(i)

Before making a determination under subparagraph (D), the Corporation shall consult the State bank supervisor of the State in which the bank in danger of closing is chartered. The State bank supervisor shall be given a reasonable opportunity, and in no event less than 48 hours, to object to the use of the provisions of subparagraph (D).

(ii)

If the State supervisor objects during such period, the Corporation may use the authority of subparagraph (D) only by an affirmative vote of three-fourths of the Board of Directors. The Board of Directors shall provide the State supervisor, as soon as practicable, with a written certification of its determination.

(3)

A Federal savings bank chartered under this subsection shall have the same authority with respect to investments, operations, and activities, and shall be subject to the same restrictions, including those applicable to branching and discrimination, as would apply to it if it were chartered as a Federal savings bank under any other provision of this chapter.

(p)

Conversions

(1)

Notwithstanding any other provision of law, and consistent with the purposes of this chapter, the Comptroller may authorize (or in the case of a Federal savings association, require) the conversion of any mutual savings association or Federal mutual savings bank that is insured by the Corporation into a Federal stock savings association or Federal stock savings bank, or charter a Federal stock savings association or Federal stock savings bank to acquire the assets of, or merge with such a mutual institution under the regulations of the Comptroller.

(2)

Authorizations under this subsection may be made only—

(A)

if the Comptroller has determined that severe financial conditions exist which threaten the stability of an association and that such authorization is likely to improve the financial condition of the association,

(B)

when the Corporation has contracted to provide assistance to such association under section 13 of the Federal Deposit Insurance Act [12 U.S.C. 1823], or

(C)

to assist an institution in receivership.

(3)

A Federal savings bank chartered under this subsection shall have the same authority with respect to investments, operations and activities, and shall be subject to the same restrictions, including those applicable to branching and discrimination, as would apply to it if it were chartered as a Federal savings bank under any other provision of this chapter, and may engage in any investment, activity, or operation that the institution it acquired was engaged in if that institution was a Federal savings bank, or would have been authorized to engage in had that institution converted to a Federal charter.

(q)

Tying arrangements

(1)

A savings association may not in any manner extend credit, lease, or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition or requirement—

(A)

that the customer shall obtain additional credit, property, or service from such savings association, or from any service corporation or affiliate of such association, other than a loan, discount, deposit, or trust service;

(B)

that the customer provide additional credit, property, or service to such association, or to any service corporation or affiliate of such association, other than those related to and usually provided in connection with a similar loan, discount, deposit, or trust service; and

(C)

that the customer shall not obtain some other credit, property, or service from a competitor of such association, or from a competitor of any service corporation or affiliate of such association, other than a condition or requirement that such association shall reasonably impose in connection with credit transactions to assure the soundness of credit.

(2)

(A)

Any person may sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by reason of a violation of paragraph (1), under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity and under the rules governing such proceedings.

(B)

Upon the execution of proper bond against damages for an injunction improvidently granted and a showing that the danger of irreparable loss or damage is immediate, a preliminary injunction may issue.

(3)

Any person injured by a violation of paragraph (1) may bring an action in any district court of the United States in which the defendant resides or is found or has an agent, without regard to the amount in controversy, or in any other court of competent jurisdiction, and shall be entitled to recover three times the amount of the damages sustained, and the cost of suit, including a reasonable attorney’s fee. Any such action shall be brought within 4 years from the date of the occurrence of the violation.

(4)

Nothing contained in this subsection affects in any manner the right of the United States or any other party to bring an action under any other law of the United States or of any State, including any right which may exist in addition to specific statutory authority, challenging the legality of any act or practice which may be proscribed by this subsection. No regulation or order issued by the Board under this subsection shall in any manner constitute a defense to such action.

(5)

For purposes of this subsection, the term “loan” includes obligations and extensions or advances of credit.

(6)

Exceptions.—

The Board may, by regulation or order, permit such exceptions to the prohibitions of this subsection as the Board in 5

 So in original. Probably should be preceded by a comma.

consultation with the Comptroller and the Corporation, considers will not be contrary to the purposes of this subsection and which conform to exceptions granted by the Board pursuant to section 1972 of this title.

(r)

Out-of-State branches

(1)

No Federal savings association may establish, retain, or operate a branch outside the State in which the Federal savings association has its home office, unless the association qualifies as a domestic building and loan association under section 7701(a)(19) of the Internal Revenue Code of 1986 [26 U.S.C. 7701(a)(19)] or meets the asset composition test imposed by subparagraph (C) of that section on institutions seeking so to qualify, or qualifies as a qualified thrift lender, as determined under section 1467a(m) of this title. No out-of-State branch so established shall be retained or operated unless the total assets of the Federal savings association attributable to all branches of the Federal savings association in that State would qualify the branches as a whole, were they otherwise eligible, for treatment as a domestic building and loan association under section 7701(a)(19) or as a qualified thrift lender, as determined under section 1467a(m) of this title, as applicable.

(2)

The limitations of paragraph (1) shall not apply if—

(A)

the branch results from a transaction authorized under section 13(k) of the Federal Deposit Insurance Act [12 U.S.C. 1823(k)];

(B)

the branch was authorized for the Federal savings association prior to October 15, 1982;

(C)

the law of the State where the branch is located, or is to be located, would permit establishment of the branch if the association was a savings association or savings bank chartered by the State in which its home office is located; or

(D)

the branch was operated lawfully as a branch under State law prior to the association’s conversion to a Federal charter.

(3)

The Comptroller of the Currency, for good cause shown, may allow Federal savings associations up to 2 years to comply with the requirements of this subsection.

(s)

Minimum capital requirements

(1)

In general

Consistent with the purposes of section 908 of the International Lending Supervision Act of 1983 [12 U.S.C. 3907] and the capital requirements established pursuant to such section by the appropriate Federal banking agencies (as defined in section 903(1) of such Act [12 U.S.C. 3902(1)]), the Comptroller of the Currency shall require all savings associations to achieve and maintain adequate capital by—

(A)

establishing minimum levels of capital for savings associations; and

(B)

using such other methods as the Comptroller of the Currency determines to be appropriate.

(2)

Minimum capital levels may be determined by Comptroller of the Currency case-by-case

(3)

Unsafe or unsound practice

(4)

Directive to increase capital

(A)

Plan may be required

(B)

Enforcement of plan

(5)

Plan taken into account in other proceedings

The appropriate Federal banking agency may—

(A)

consider a savings association’s progress in adhering to any plan required under paragraph (4) whenever such association or any affiliate of such association (including any company which controls such association) seeks the approval of the appropriate Federal banking agency for any proposal which would have the effect of diverting earnings, diminishing capital, or otherwise impeding such association’s progress in meeting the minimum level of capital required by the appropriate Federal banking agency; and

(B)

disapprove any proposal referred to in subparagraph (A) if the appropriate Federal banking agency determines that the proposal would adversely affect the ability of the association to comply with such plan.

(t)

Capital standards

(1)

In general

(A)

Requirement for standards to be prescribed

The appropriate Federal banking agency shall, by regulation, prescribe and maintain uniformly applicable capital standards for savings associations. Those standards shall include—

(i)

a leverage limit;

(ii)

a tangible capital requirement; and

(iii)

a risk-based capital requirement.

(B)

Compliance

(C)

Stringency

(2)

Content of standards

(A)

Leverage limit

(B)

Tangible capital requirement

(C)

Risk-based capital requirement

(3)

[Repealed].

(4)

[Repealed].

(5)

Separate capitalization required for certain subsidiaries

(A)

In general

(B)

Exception for agency activities

(C)

Other exceptions

Subparagraph (A) shall not apply with respect to any of the following:

(i)

Mortgage banking subsidiaries

(ii)

Subsidiary insured depository institutions

A savings association’s investments in and extensions of credit to a subsidiary—

(I)

that is itself an insured depository institution or a company the sole investment of which is an insured depository institution, and

(II)

that was acquired by the parent insured depository institution prior to May 1, 1989.

(iii)

Certain Federal savings banks

Any Federal savings association existing as a Federal savings association on August 9, 1989—

(I)

that was chartered prior to October 15, 1982, as a savings bank or a cooperative bank under State law; or

(II)

that acquired its principal assets from an association that was chartered prior to October 15, 1982, as a savings bank or a cooperative bank under State law.

(D)

Repealed. Pub. L. 111–203, title III, § 369(5)(L)(iii)(II), July 21, 2010, 124 Stat. 1562

(E)

Consolidation of subsidiaries not separately capitalized

(6)

Consequences of failing to comply with capital standards

(A)

[Reserved].

(B)

On or after January 1, 1991

On or after January 1, 1991, the appropriate Federal banking agency—

(i)

shall prohibit any asset growth by any savings association not in compliance with capital standards, except as provided in subparagraph (C); and

(ii)

shall require any savings association not in compliance with capital standards to comply with a capital directive issued by the appropriate Federal banking agency (which may include such restrictions, including restrictions on the payment of dividends and on compensation, as the appropriate Federal banking agency determines to be appropriate).

(C)

Limited growth exception

The appropriate Federal banking agency may permit any savings association that is subject to subparagraph (B) to increase its assets in an amount not exceeding the amount of net interest credited to the savings association’s deposit liabilities if—

(i)

the savings association obtains the prior approval of the appropriate Federal banking agency;

(ii)

any increase in assets is accompanied by an increase in tangible capital in an amount not less than 6 percent of the increase in assets (or, in the discretion of the appropriate Federal banking agency if the leverage limit then applicable is less than 6 percent, in an amount equal to the increase in assets multiplied by the percentage amount of the leverage limit);

(iii)

any increase in assets is accompanied by an increase in capital not less in percentage amount than required under the risk-based capital standard then applicable;

(iv)

any increase in assets is invested in low-risk assets, such as first mortgage loans secured by 1- to 4-family residences and fully secured consumer loans; and

(v)

the savings association’s ratio of core capital to total assets is not less than the ratio existing on January 1, 1991.

(D)

Additional restrictions in case of excessive risks or rates

(E)

Failure to comply with plan, regulation, or order

(F)

Effect on other regulatory authority

(7)

Exemption from certain sanctions

(A)

Application for exemption

(B)

Effect of grant of exemption

(C)

Standards for approval or disapproval

(i)

Approval

The appropriate Federal banking agency may approve an application for an exemption if the appropriate Federal banking agency determines that—

(I)

such exemption would pose no significant risk to the Deposit Insurance Fund;

(II)

the savings association’s management is competent;

(III)

the savings association is in substantial compliance with all applicable statutes, regulations, orders, and supervisory agreements and directives; and

(IV)

the savings association’s management has not engaged in insider dealing, speculative practices, or any other activities that have jeopardized the association’s safety and soundness or contributed to impairing the association’s capital.

(ii)

Denial or revocation of approval

The appropriate Federal banking agency shall deny any application submitted under clause (i) and revoke any prior approval granted with respect to any such application if the appropriate Federal banking agency determines that the association’s failure to meet any capital standards prescribed under paragraph (1) is accompanied by—

(I)

a pattern of consistent losses;

(II)

substantial dissipation of assets;

(III)

evidence of imprudent management or business behavior;

(IV)

a material violation of any Federal law, any law of any State to which such association is subject, or any applicable regulation; or

(V)

any other unsafe or unsound condition or activity, other than the failure to meet such capital standards.

(D)

Submission of plan required

Any application submitted under subparagraph (A) shall be accompanied by a plan which—

(i)

meets the requirements of paragraph (6)(A)(ii); and

(ii)

is acceptable to the appropriate Federal banking agency.

(E)

Failure to comply with plan

(F)

Exemption not available with respect to unsafe or unsound practices

(8)

[Repealed].

(9)

Definitions

For purposes of this subsection—

(A)

Core capital

(B)

Tangible capital

(C)

Total assets

(10)

Use of Comptroller’s definitions

(A)

In general

(B)

Special rule

(u)

Limits on loans to one borrower

(1)

In general

(2)

Special rules

(A)

Notwithstanding paragraph (1), a savings association may make loans to one borrower under one of the following clauses:

(i)

For any purpose, not to exceed $500,000.

(ii)

To develop domestic residential housing units, not to exceed the lesser of $30,000,000 or 30 percent of the savings association’s unimpaired capital and unimpaired surplus, if—

(I)

the savings association is and continues to be in compliance with the fully phased-in capital standards prescribed under subsection (t);

(II)

the appropriate Federal banking agency, by order, permits the savings association to avail itself of the higher limit provided by this clause;

(III)

loans made under this clause to all borrowers do not, in aggregate, exceed 150 percent of the savings association’s unimpaired capital and unimpaired surplus; and

(IV)

such loans comply with all applicable loan-to-value requirements.

(B)

A savings association’s loans to one borrower to finance the sale of real property acquired in satisfaction of debts previously contracted in good faith shall not exceed 50 percent of the savings association’s unimpaired capital and unimpaired surplus.

(3)

Authority to impose more stringent restrictions

(v)

Reports of condition

(1)

In general

Each association shall make reports of conditions to the appropriate Federal banking agency which shall be in a form prescribed by the appropriate Federal banking agency and shall contain—

(A)

information sufficient to allow the identification of potential interest rate and credit risk;

(B)

a description of any assistance being received by the association, including the type and monetary value of such assistance;

(C)

the identity of all subsidiaries and affiliates of the association;

(D)

the identity, value, type, and sector of investment of all equity investments of the associations and subsidiaries; and

(E)

other information that the appropriate Federal banking agency may prescribe.

(2)

Public disclosure

(A)

Reports required under paragraph (1) and all information contained therein shall be available to the public upon request, unless the appropriate Federal banking agency determines—

(i)

that a particular item or classification of information should not be made public in order to protect the safety or soundness of the institution concerned or institutions concerned, or the Deposit Insurance Fund; or

(ii)

that public disclosure would not otherwise be in the public interest.

(B)

Any determination made by the appropriate Federal banking agency under subparagraph (A) not to permit the public disclosure of information shall be made in writing, and if the appropriate Federal banking agency restricts any item of information for savings institutions generally, the appropriate Federal banking agency shall disclose the reason in detail in the Federal Register.

(C)

The determinations of the appropriate Federal banking agency under subparagraph (A) shall not be subject to judicial review.

(3)

Access by certain parties

(A)

Notwithstanding paragraph (2), the persons described in subparagraph (B) shall not be denied access to any information contained in a report of condition, subject to reasonable requirements of confidentiality. Those requirements shall not prevent such information from being transmitted to the Comptroller General of the United States for analysis.

(B)

The following persons are described in this subparagraph for purposes of subparagraph (A):

(i)

the Chairman and ranking minority member of the Committee on Banking, Housing, and Urban Affairs of the Senate and their designees; and

(ii)

the Chairman and ranking minority member of the Committee on Banking, Finance and Urban Affairs of the House of Representatives and their designees.

(4)

First tier penalties

Any savings association which—

(A)

maintains procedures reasonably adapted to avoid any inadvertent and unintentional error and, as a result of such an error—

(i)

fails to submit or publish any report or information required by the appropriate Federal banking agency under paragraph (1) or (2), within the period of time specified by the appropriate Federal banking agency; or

(ii)

submits or publishes any false or misleading report or information; or

(B)

inadvertently transmits or publishes any report which is minimally late,

shall be subject to a penalty of not more than $2,000 for each day during which such failure continues or such false or misleading information is not corrected. The savings association shall have the burden of proving by a preponderence 7

 So in original. Probably should be “preponderance”.

of the evidence that an error was inadvertent and unintentional and that a report was inadvertently transmitted or published late.

(5)

Second tier penalties

Any savings association which—

(A)

(B)

submits or publishes any false or misleading report or information,

in a manner not described in paragraph (4) shall be subject to a penalty of not more than $20,000 for each day during which such failure continues or such false or misleading information is not corrected.

(6)

Third tier penalties

(7)

Assessment

(8)

Hearing

(w)

Forfeiture of franchise for money laundering or cash transaction reporting offenses

(1)

In general

(A)

Conviction of title 18 offense

(I)

Duty to notify

(II)

Notice of termination; pretermination hearing

(B)

Conviction of title 31 offenses

(C)

Judicial review

(2)

Factors to be considered

In determining whether a franchise shall be forfeited under paragraph (1), the Comptroller shall take into account the following factors:

(A)

The extent to which directors or senior executive officers of the savings association knew of, were 8

 So in original. Probably should be “or were”.

involved in, the commission of the money laundering offense of which the association was found guilty.

(B)

The extent to which the offense occurred despite the existence of policies and procedures within the savings association which were designed to prevent the occurrence of any such offense.

(C)

The extent to which the savings association has fully cooperated with law enforcement authorities with respect to the investigation of the money laundering offense of which the association was found guilty.

(D)

The extent to which the savings association has implemented additional internal controls (since the commission of the offense of which the savings association was found guilty) to prevent the occurrence of any other money laundering offense.

(E)

The extent to which the interest of the local community in having adequate deposit and credit services available would be threatened by the forfeiture of the franchise.

(3)

Successor liability

(4)

“Senior executive officer” defined

(x)

Home State citizenship

(June 13, 1933, ch. 64, § 5, 48 Stat. 132; Apr. 27, 1934, ch. 168, §§ 5, 6, 48 Stat. 645, 646; May 28, 1935, ch. 150, § 18, 49 Stat. 297; Aug. 10, 1939, ch. 666, title IX, § 909, 53 Stat. 1402; Aug. 6, 1947, ch. 503, 61 Stat. 786; July 3, 1948, ch. 825, § 1, 62 Stat. 1239; Oct. 20, 1951, ch. 521, title III, § 313(d), 65 Stat. 490; July 14, 1952, ch. 723, § 12, 66 Stat. 604; Aug. 2, 1954, ch. 649, title II, § 204(b), title V, § 503, 68 Stat. 622, 634; Aug. 11, 1955, ch. 783, title I, § 110, 69 Stat. 641; Aug. 7, 1956, ch. 1029, title VI, § 604, 70 Stat. 1114; Pub. L. 85–857, § 13(f), Sept. 2, 1958, 72 Stat. 1264; Pub. L. 86–372, title VIII, § 805, Sept. 23, 1959, 73 Stat. 687; Pub. L. 86–507, § 1(11), June 11, 1960, 74 Stat. 200; Pub. L. 87–70, title IX, § 901, June 30, 1961, 75 Stat. 189; Pub. L. 87–779, § 1, Oct. 9, 1962, 76 Stat. 778; Pub. L. 87–834, § 6(e)(1), Oct. 16, 1962, 76 Stat. 984; Pub. L. 88–560, title IX, §§ 901(a), 902–905, 907, 908, 910, Sept. 2, 1964, 78 Stat. 804–806; Pub. L. 89–117, title II, § 201(b)(3), title XI, § 1110(a)–(c), Aug. 10, 1965, 79 Stat. 465, 507; Pub. L. 89–695, title I, § 101(a), Oct. 16, 1966, 80 Stat. 1028; Pub. L. 90–448, title III, § 304(b), title IV, § 416(c), title VIII, §§ 804(e), 807(m), title XVII, § 1716, Aug. 1, 1968, 82 Stat. 508, 518, 543, 545, 608; Pub. L. 90–505, § 5, Sept. 21, 1968, 82 Stat. 858; Pub. L. 90–575, title I, § 118(b), Oct. 16, 1968, 82 Stat. 1026; Pub. L. 91–152, title IV, § 416(b), Dec. 24, 1969, 83 Stat. 401; Pub. L. 91–351, title VII, §§ 706, 708, 709, July 24, 1970, 84 Stat. 462, 463; Pub. L. 91–609, title VII, § 727(d), title IX, § 907(b), (c), Dec. 31, 1970, 84 Stat. 1803, 1811; Pub. L. 92–318, title I, § 133(c)(3), June 23, 1972, 86 Stat. 270; Pub. L. 93–100, § 5(b), Aug. 16, 1973, 87 Stat. 343; Pub. L. 93–383, title VII, §§ 702–706, title VIII, §§ 802(i)(2), 805(c)(4), Aug. 22, 1974, 88 Stat. 715, 716, 725, 727; Pub. L. 93–449, § 4(d), Oct. 18, 1974, 88 Stat. 1367; Pub. L. 93–495, title I, § 101(e), Oct. 28, 1974, 88 Stat. 1502; Pub. L. 94–60, July 25, 1975, 89 Stat. 301; Pub. L. 94–375, § 22, Aug. 3, 1976, 90 Stat. 1078; Pub. L. 95–128, title IV, §§ 401–405, Oct. 12, 1977, 91 Stat. 1136, 1137; Pub. L. 95–147, § 2(a), Oct. 28, 1977, 91 Stat. 1227; Pub. L. 95–630, title I, §§ 107(a)(3), (c)(3), (d)(3), (e)(3), 111(c), title II, § 208(b), title XII, §§ 1202, 1204, title XVII, § 1701, Nov. 10, 1978, 92 Stat. 3651, 3655, 3659, 3662, 3668, 3675, 3710, 3711, 3714; Pub. L. 96–153, title III, §§ 325, 326, Dec. 21, 1979, 93 Stat. 1121; Pub. L. 96–161, title I, § 102, Dec. 28, 1979, 93 Stat. 1233; Pub. L. 96–221, title III, §§ 304, 307, title IV, §§ 401–404, 407(a), 408, Mar. 31, 1980, 94 Stat. 146, 147, 151, 155, 156, 158–160; Pub. L. 97–320, title I, §§ 112, 114(b), (c), 121, 141(a)(2), (5), title II, § 202(b), title III, §§ 311–313, 321–325, 328–331, 334, 351, title IV, §§ 424(a), (d)(8), (e), 427(a), Oct. 15, 1982, 96 Stat. 1471, 1475, 1479, 1489, 1492, 1496, 1497, 1499–1504, 1507, 1522–1524; Pub. L. 97–457, §§ 2, 12, 14(a)(1), (b), Jan. 12, 1983, 96 Stat. 2507, 2508; Pub. L. 98–440, title I, § 105(a), Oct. 3, 1984, 98 Stat. 1691; Pub. L. 98–620, title IV, § 402(9), Nov. 8, 1984, 98 Stat. 3357; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 99–570, title I, § 1359(b), Oct. 27, 1986, 100 Stat. 3207–27; Pub. L. 100–86, title IV, §§ 406(a), 413(a), title V, § 509(a), Aug. 10, 1987, 101 Stat. 614, 621, 635; Pub. L. 101–73, title III, § 301, Aug. 9, 1989, 103 Stat. 282; Pub. L. 102–242, title I, §§ 131(d), 133(d), title IV, § 441, title V, § 501(c), Dec. 19, 1991, 105 Stat. 2267, 2271, 2381, 2391; Pub. L. 102–310, July 1, 1992, 106 Stat. 276; Pub. L. 102–550, title IX, § 953, title XV, § 1502(b), title XVI, §§ 1603(d)(8), 1606(f)(1)–(3), Oct. 28, 1992, 106 Stat. 3893, 4046, 4080, 4088; Pub. L. 103–325, title II, § 206(a), title III, § 322(b), title IV, § 411(c)(2)(D), Sept. 23, 1994, 108 Stat. 2199, 2227, 2253; Pub. L. 104–208, div. A, title II, §§ 2216(b), 2303(a)–(d), (f), 2704(d)(12)(A), Sept. 30, 1996, 110 Stat. 3009–413, 3009–424, 3009–490; Pub. L. 105–164, § 3(a)(1), Mar. 20, 1998, 112 Stat. 33; Pub. L. 106–102, title VI, § 603, title VII, § 739, Nov. 12, 1999, 113 Stat. 1450, 1480; Pub. L. 106–554, § 1(a)(8) [§ 1(f)], Dec. 21, 2000, 114 Stat. 2763, 2763A–665; Pub. L. 106–569, title XII, § 1201(b)(1), Dec. 27, 2000, 114 Stat. 3032; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 9(e)(1), Feb. 15, 2006, 119 Stat. 3617; Pub. L. 109–351, title IV, §§ 402–404, title VI, § 608(a), Oct. 13, 2006, 120 Stat. 1974, 1983; Pub. L. 111–203, title III, § 369(5), title VI, §§ 610(b), 612(c), 627(a)(2), July 21, 2010, 124 Stat. 1559, 1612, 1613, 1640.)

cite as: 12 USC 1464