12 USC 5467 - Examination of and enforcement actions against financial institutions subject to standards for designated activities

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

§ 5467.

Examination of and enforcement actions against financial institutions subject to standards for designated activities

(a)

Examination

The appropriate financial regulator is authorized to examine a financial institution subject to the standards prescribed under section 5464(a) of this title for a designated activity in order to determine the following:

(1)

The nature and scope of the designated activities engaged in by the financial institution.

(2)

The financial and operational risks the designated activities engaged in by the financial institution may pose to the safety and soundness of the financial institution.

(3)

The financial and operational risks the designated activities engaged in by the financial institution may pose to other financial institutions, critical markets, or the broader financial system.

(4)

The resources available to and the capabilities of the financial institution to monitor and control the risks described in paragraphs (2) and (3).

(5)

The financial institution’s compliance with this subchapter and the rules and orders prescribed under section 5464(a) of this title.

(b)

Enforcement

(c)

Technical assistance

(d)

Delegation

(1)

Examination

(A)

Request to Board of Governors

The appropriate financial regulator may request the Board of Governors to conduct or participate in an examination of a financial institution subject to the standards prescribed under section 5464(a) of this title for a designated activity in order to assess the compliance of such financial institution with—

(i)

this subchapter; or

(ii)

the rules or orders prescribed under this subchapter.

(B)

Examination by Board of Governors

(2)

Enforcement

(A)

Request to Board of Governors

(B)

Enforcement by Board of Governors

(e)

Back-up authority of the Board of Governors

(1)

Examination and enforcement

Notwithstanding any other provision of law, the Board of Governors may—

(A)

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

(B)

enforce the provisions of this subchapter or any rules or orders prescribed under this subchapter against any financial institution that is subject to the standards prescribed under section 5464(a) of this title for a designated activity.

(2)

Limitations

(A)

Examination

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

(i)

reasonable cause to believe that a financial institution is not in compliance with this subchapter or the rules or orders prescribed under this subchapter with respect to a designated activity;

(ii)

notified, in writing, the appropriate financial regulator and the Council of its belief under clause (i) with supporting documentation included;

(iii)

requested the appropriate financial regulator to conduct a prompt examination of the financial institution;

(iv)

either—

(I)

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

(II)

reasonable cause to believe that the financial institution’s noncompliance with this subchapter or the rules or orders prescribed under this subchapter poses a substantial risk to other financial institutions, critical markets, or the broader financial system, subject to the Board of Governors affording the appropriate financial regulator a reasonable opportunity to participate in the examination; and

(v)

obtained the approval of the Council upon an affirmative vote by a majority of the Council.

(B)

Enforcement

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

(i)

reasonable cause to believe that a financial institution is not in compliance with this subchapter or the rules or orders prescribed under this subchapter with respect to a designated activity;

(ii)

notified, in writing, the appropriate financial regulator and the Council of its belief under clause (i) with supporting documentation included and with a recommendation that the appropriate financial regulator take 1 or more specific enforcement actions against the financial institution;

(iii)

either—

(I)

not been notified, in writing, by the appropriate financial regulator of the commencement of an enforcement action recommended by the Board of Governors against the financial institution within 60 days from the date of the notification under clause (ii); or

(II)

reasonable cause to believe that the financial institution’s noncompliance with this subchapter or the rules or orders prescribed under this subchapter poses significant liquidity, credit, operational, or other risks to the financial markets or to the financial stability of the United States, subject to the Board of Governors notifying the appropriate financial regulator of the Board’s enforcement action; and

(iv)

obtained the approval of the Council upon an affirmative vote by a majority of the Council.

(3)

Enforcement provisions

(Pub. L. 111–203, title VIII, § 808, July 21, 2010, 124 Stat. 1816.)

cite as: 12 USC 5467