12 USC 1828 - Regulations governing insured depository institutions

U.S Code last checked for updates: Nov 22, 2024

§ 1828.

Regulations governing insured depository institutions

(a)

Representations of deposit insurance

(1)

Insured depository institutions

(A)

In general

(B)

Statement to be included

(2)

Regulations

(3)

Penalties

(4)

False advertising, misuse of FDIC names, and misrepresentation to indicate insured status

(A)

Prohibition on false advertising and misuse of FDIC names

No person may represent or imply that any deposit liability, obligation, certificate, or share is insured or guaranteed by the Corporation, if such deposit liability, obligation, certificate, or share is not insured or guaranteed by the Corporation—

(i)

by using the terms “Federal Deposit”, “Federal Deposit Insurance”, “Federal Deposit Insurance Corporation”, any combination of such terms, or the abbreviation “FDIC” as part of the business name or firm name of any person, including any corporation, partnership, business trust, association, or other business entity; or

(ii)

by using such terms or any other terms, sign, or symbol as part of an advertisement, solicitation, or other document.

(B)

Prohibition on misrepresentations of insured status

No person may knowingly misrepresent—

(i)

that any deposit liability, obligation, certificate, or share is insured, under this chapter, if such deposit liability, obligation, certificate, or share is not so insured; or

(ii)

the extent to which or the manner in which any deposit liability, obligation, certificate, or share is insured under this chapter, if such deposit liability, obligation, certificate, or share is not so insured, to the extent or in the manner represented.

(C)

Authority of the appropriate Federal banking agency

(D)

Corporation authority if the appropriate Federal banking agency fails to follow recommendation

(i)

Recommendation

(ii)

Agency response

(E)

Additional authority

In addition to its authority under subparagraphs (C) and (D), for purposes of this paragraph, the Corporation shall have, in the same manner and to the same extent as with respect to a State nonmember insured bank—

(i)

jurisdiction over—

(I)

any person other than a person for which another agency is the appropriate Federal banking agency or any institution-affiliated party thereof; and

(II)

any person that aids or abets a violation of this paragraph by a person described in subclause (I); and

(ii)

for purposes of enforcing the requirements of this paragraph, the authority of the Corporation under—

(I)

section 1820(c) of this title to conduct investigations; and

(II)

subsections (b), (c), (d) and (i) of section 1818 of this title to conduct enforcement actions.

(F)

Other actions preserved

(b)

Payment of dividends by defaulting depository institutions

(c)

Merger transactions; consent of banking agencies; emergency approval; notice; uniform standards; antitrust actions; review de novo; limitations; report to Congress; money laundering; applicability

(1)

Except with the prior written approval of the responsible agency, which shall in every case referred to in this paragraph be the Corporation, no insured depository institution shall—

(A)

merge or consolidate with any noninsured bank or institution;

(B)

assume liability to pay any deposits (including liabilities which would be “deposits” except for the proviso in section 1813(l)(5) of this title) made in, or similar liabilities of, any noninsured bank or institution; or

(C)

transfer assets to any noninsured bank or institution in consideration of the assumption of liabilities for any portion of the deposits made in such insured depository institution.

(2)

No insured depository institution shall merge or consolidate with any other insured depository institution or, either directly or indirectly, acquire the assets of, or assume liability to pay any deposits made in, any other insured depository institution except with the prior written approval of the responsible agency, which shall be—

(A)

the Comptroller of the Currency if the acquiring, assuming, or resulting bank is to be a national bank or a Federal savings association;

(B)

the Board of Governors of the Federal Reserve System if the acquiring, assuming, or resulting bank is to be a State member bank; and

(C)

the Corporation if the acquiring, assuming, or resulting bank is to be a State nonmember insured bank or a State savings association.

(3)

Notice of any proposed transaction for which approval is required under paragraph (1) or (2) (referred to hereafter in this subsection as a “merger transaction”) shall, unless the responsible agency finds that it must act immediately in order to prevent the probable default of one of the banks or savings associations involved, be published—

(A)

prior to the granting of approval of such transaction,

(B)

in a form approved by the responsible agency,

(C)

at appropriate intervals during a period at least as long as the period allowed for furnishing reports under paragraph (4) of this subsection, and

(D)

in a newspaper of general circulation in the community or communities where the main offices of the banks or savings associations involved are located, or, if there is no such newspaper in any such community, then in the newspaper of general circulation published nearest thereto.

(4)

Reports on competitive factors.—

(A)

Request for report.—

In the interests of uniform standards and subject to subparagraph (B), before acting on any application for approval of a merger transaction, the responsible agency shall—

(i)

request a report on the competitive factors involved from the Attorney General of the United States; and

(ii)

provide a copy of the request to the Corporation (when the Corporation is not the responsible agency).

(B)

Furnishing of report.—

The report requested under subparagraph (A) shall be furnished by the Attorney General to the responsible agency—

(i)

not later than 30 calendar days after the date on which the Attorney General received the request; or

(ii)

not later than 10 calendar days after such date, if the requesting agency advises the Attorney General that an emergency exists requiring expeditious action.

(C)

Exceptions.—

A responsible agency may not be required to request a report under subparagraph (A) if—

(i)

the responsible agency finds that it must act immediately in order to prevent the probable failure of 1 of the insured depository institutions involved in the merger transaction; or

(ii)

the merger transaction involves solely an insured depository institution and 1 or more of the affiliates of such depository institution.

(5)

The responsible agency shall not approve—

(A)

any proposed merger transaction which would result in a monopoly, or which would be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the business of banking in any part of the United States, or

(B)

any other proposed merger transaction whose effect in any section of the country may be substantially to lessen competition, or to tend to create a monopoly, or which in any other manner would be in restraint of trade, unless it finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.

In every case, the responsible agency shall take into consideration the financial and managerial resources and future prospects of the existing and proposed institutions, the convenience and needs of the community to be served, and the risk to the stability of the United States banking or financial system.

(6)

The responsible agency shall immediately notify the Attorney General of any approval by it pursuant to this subsection of a proposed merger transaction. If the agency has found that it must act immediately to prevent the probable failure of one of the insured depository institutions involved, or if the proposed merger transaction is solely between an insured depository institution and 1 or more of its affiliates, and the report on the competitive factors has been dispensed with, the transaction may be consummated immediately upon approval by the agency. If the agency has advised the Attorney General under paragraph (4)(B)(ii) of the existence of an emergency requiring expeditious action and has requested a report on the competitive factors within 10 days, the transaction may not be consummated before the fifth calendar day after the date of approval by the agency. In all other cases, the transaction may not be consummated before the thirtieth calendar day after the date of approval by the agency or, if the agency has not received any adverse comment from the Attorney General of the United States relating to competitive factors, such shorter period of time as may be prescribed by the agency with the concurrence of the Attorney General, but in no event less than 15 calendar days after the date of approval.

(7)

(A)

Any action brought under the antitrust laws arising out of a merger transaction shall be commenced prior to the earliest time under paragraph (6) at which a merger transaction approved under paragraph (5) might be consummated. The commencement of such an action shall stay the effectiveness of the agency’s approval unless the court shall otherwise specifically order. In any such action, the court shall review de novo the issues presented.

(B)

In any judicial proceeding attacking a merger transaction approved under paragraph (5) on the ground that the merger transaction alone and of itself constituted a violation of any antitrust laws other than section 2 of title 15, the standards applied by the court shall be identical with those that the banking agencies are directed to apply under paragraph (5).

(C)

Upon the consummation of a merger transaction in compliance with this subsection and after the termination of any antitrust litigation commenced within the period prescribed in this paragraph, or upon the termination of such period if no such litigation is commenced therein, the transaction may not thereafter be attacked in any judicial proceeding on the ground that it alone and of itself constituted a violation of any antitrust laws other than section 2 of title 15, but nothing in this subsection shall exempt any bank or savings association resulting from a merger transaction from complying with the antitrust laws after the consummation of such transaction.

(D)

In any action brought under the antitrust laws arising out of a merger transaction approved by a Federal supervisory agency pursuant to this subsection, such agency, and any State banking supervisory agency having jurisdiction within the State involved, may appear as a part of its own motion and as of right, and be represented by its counsel.

(8)

For the purposes of this subsection, the term “antitrust laws” means the Act of July 2, 1890 (the Sherman Antitrust Act), the Act of October 15, 1914 (the Clayton Act), and any other Acts in pari materia.

(9)

Each of the responsible agencies shall include in its annual report to the Congress a description of each merger transaction approved by it during the period covered by the report, along with—

(A)

the name and total resources of each bank or savings association involved;

(B)

whether a report was submitted by the Attorney General under paragraph (4), and, if so, a summary by the Attorney General of the substance of such report; and

(C)

a statement by the responsible agency of the basis for its approval.

(10)

Until June 30, 1976, the responsible agency shall not grant any approval required by law which has the practical effect of permitting a conversion from the mutual to the stock form of organization, including approval of any application pending on the date of enactment of this subsection, except that this sentence shall not be deemed to limit now or hereafter the authority of the responsible agency to grant approvals in cases where the responsible agency finds that it must act in order to maintain the safety, soundness, and stability of an insured depository institution. The responsible agency may by rule, regulation, or otherwise and under such civil penalties (which shall be cumulative to any other remedies) as it may prescribe take whatever action it deems necessary or appropriate to implement or enforce this subsection.

(11)

Money laundering.—

In every case, the responsible agency, shall take into consideration the effectiveness of any insured depository institution involved in the proposed merger transaction in combatting money laundering activities, including in overseas branches.

(12)

The provisions of this subsection do not apply to any merger transaction involving a foreign bank if no party to the transaction is principally engaged in business in the United States.

(13)

(A)

Except as provided in subparagraph (B), the responsible agency may not approve an application for an interstate merger transaction if the resulting insured depository institution (including all insured depository institutions which are affiliates of the resulting insured depository institution), upon consummation of the transaction, would control more than 10 percent of the total amount of deposits of insured depository institutions in the United States.

(B)

Subparagraph (A) shall not apply to an interstate merger transaction that involves 1 or more insured depository institutions in default or in danger of default, or with respect to which the Corporation provides assistance under section 1823 of this title.

(C)

In this paragraph—

(i)

the term “interstate merger transaction” means a merger transaction involving 2 or more insured depository institutions that have different home States and that are not affiliates; and

(ii)

the term “home State” means—

(I)

with respect to a national bank, the State in which the main office of the bank is located;

(II)

with respect to a State bank or State savings association, the State by which the State bank or State savings association is chartered; and

(III)

with respect to a Federal savings association, the State in which the home office (as defined by the regulations of the Director of the Office of Thrift Supervision, or, on and after the transfer date,1

 See References in Text note below.

the Comptroller of the Currency) of the Federal savings association is located.

(d)

Branch banks

(1)

No State nonmember insured bank shall establish and operate any new domestic branch unless it shall have the prior written consent of the Corporation, and no State nonmember insured bank shall move its main office or any such branch from one location to another without such consent. No foreign bank may move any insured branch from one location to another without such consent. The factors to be considered in granting or withholding the consent of the Corporation under this subsection shall be those enumerated in section 1816 of this title.

(2)

No State nonmember insured bank shall establish or operate any foreign branch, except with the prior written consent of the Corporation and upon such conditions and pursuant to such regulations as the Corporation may prescribe from time to time.

(3)

Exclusive authority for additional branches.—

(A)

In general.—

Effective June 1, 1997, a State nonmember bank may not acquire, establish, or operate a branch in any State other than the bank’s home State (as defined in section 1831u(f)(4) ¹ of this title) or a State in which the bank already has a branch unless the acquisition, establishment, or operation of a branch in such State by a State nonmember bank is authorized under this subsection or section 1823(f), 1823(k), or 1831u of this title.

(B)

Retention of branches.—

In the case of a State nonmember bank which relocates the main office of such bank from 1 State to another State after May 31, 1997, the bank may retain and operate branches within the State which was the bank’s home State (as defined in section 1831u(f)(4) ¹ of this title) before the relocation of such office only to the extent the bank would be authorized, under this section or any other provision of law referred to in subparagraph (A), to acquire, establish, or commence to operate a branch in such State if—

(i)

the bank had no branches in such State; or

(ii)

the branch resulted from—

(I)

an interstate merger transaction approved pursuant to section 1831u of this title; or

(II)

a transaction after May 31, 1997, pursuant to which the bank received assistance from the Corporation under section 1823(c) of this title.

(4)

State “opt-in” election to permit interstate branching through de novo branches.—

(A)

In general.—

Subject to subparagraph (B), the Corporation may approve an application by an insured State nonmember bank to establish and operate a de novo branch in a State (other than the bank’s home State) in which the bank does not maintain a branch if—

(i)

the law of the State in which the branch is located, or is to be located, would permit establishment of the branch, if the bank were a State bank chartered by such State; and

(ii)

the conditions established in, or made applicable to this paragraph by, subparagraph (B) are met.

(B)

Conditions on establishment and operation of interstate branch.—

(i)

Establishment.—

An application by an insured State nonmember bank to establish and operate a de novo branch in a host State shall be subject to the same requirements and conditions to which an application for a merger transaction is subject under paragraphs (1), (3), and (4) of section 1831u(b) of this title.

(ii)

Operation.—

Subsections (c) and (d)(2) of section 1831u of this title shall apply with respect to each branch of an insured State nonmember bank which is established and operated pursuant to an application approved under this paragraph in the same manner and to the same extent such provisions of such section apply to a branch of a State bank which resulted from a merger transaction under such section 1831u of this title.

(C)

“De novo branch” defined.—

For purposes of this paragraph, the term “de novo branch” means a branch of a State bank which—

(i)

is originally established by the State bank as a branch; and

(ii)

does not become a branch of such bank as a result of—

(I)

the acquisition by the bank of an insured depository institution or a branch of an insured depository institution; or

(II)

the conversion, merger, or consolidation of any such institution or branch.

(D)

“Home state” defined.—

The term “home State” means the State by which a State bank is chartered.

(E)

“Host state” defined.—

The term “host State” means, with respect to a bank, a State, other than the home State of the bank, in which the bank maintains, or seeks to establish and maintain, a branch.

(e)

Indemnity insurance

(f)

Publication of reports

(g)

[Repealed]

(h)

Penalty for failure to timely pay assessments

(1)

In general

(2)

Exception in case of dispute

Paragraph (1) shall not apply if—

(A)

the failure to pay an assessment is due to a dispute between the insured depository institution and the Corporation over the amount of such assessment; and

(B)

the insured depository institution deposits security satisfactory to the Corporation for payment upon final determination of the issue.

(3)

Special rule for small assessment amounts

(4)

Authority to modify or remit penalty

(i)

Reduction or retirement of capital stock, notes, or debentures; conversion of insured Federal depository institutions to insured State banks or noninsured institutions; consent of banking agencies; applicability

(1)

No insured State nonmember bank shall, without the prior consent of the Corporation, reduce the amount or retire any part of its common or preferred capital stock, or retire any part of its capital notes or debentures.

(2)

No insured Federal depository institution shall convert into an insured State depository institution if its capital stock or its surplus will be less than the capital stock or surplus, respectively, of the converting bank at the time of the shareholder’s meeting approving such conversion, without the prior written consent of—

(A)

the Board of Governors of the Federal Reserve System if the resulting bank is to be a State member bank;

(B)

the Corporation if the resulting bank is to be a State nonmember insured bank; and

(C)

the Corporation if the resulting institution is to be an insured State savings association.

(3)

Without the prior written consent of the Corporation, no insured depository institution shall convert into a noninsured bank or institution.

(4)

In granting or withholding consent under this subsection, the responsible agency shall consider—

(A)

the financial history and condition of the bank,

(B)

the adequacy of its capital structure,

(C)

its future earnings prospects,

(D)

the general character and fitness of its management,

(E)

the convenience and needs of the community to be served, and

(F)

whether or not its corporate powers are consistent with the purposes of this chapter.

(j)

Restrictions on transactions with affiliates and insiders

(1)

Transactions with affiliates

(A)

In general

(B)

“Affiliate” defined

(2)

Extensions of credit to officers, directors, and principal shareholders

(3)

Avoiding extraterritorial application to foreign banks

(A)

Transactions with affiliates

(B)

Extensions of credit to officers, directors, and principal shareholders

(C)

“Foreign bank” defined

(k)

Authority to regulate or prohibit certain forms of benefits to institution-affiliated parties

(1)

Golden parachutes and indemnification payments

(2)

Factors to be taken into account

The Corporation shall prescribe, by regulation, the factors to be considered by the Corporation in taking any action pursuant to paragraph (1) which may include such factors as the following:

(A)

Whether there is a reasonable basis to believe that the institution-affiliated party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the depository institution or covered company that has had a material affect on the financial condition of the institution.

(B)

Whether there is a reasonable basis to believe that the institution-affiliated party is substantially responsible for—

(i)

the insolvency of the depository institution or covered company;

(ii)

the appointment of a conservator or receiver for the depository institution; or

(iii)

the troubled condition of the depository institution (as defined in the regulations prescribed pursuant to section 1831i(f) of this title).

(C)

Whether there is a reasonable basis to believe that the institution-affiliated party has materially violated any applicable Federal or State banking law or regulation that has had a material affect on the financial condition of the institution.

(D)

Whether there is a reasonable basis to believe that the institution-affiliated party has violated or conspired to violate—

(i)

section 215, 656, 657, 1005, 1006, 1007, 1014, 1032, or 1344 of title 18; or

(ii)

section 1341 or 1343 of such title affecting a federally insured financial institution.

(E)

Whether the institution-affiliated party was in a position of managerial or fiduciary responsibility.

(F)

The length of time the party was affiliated with the insured depository institution or covered company, and the degree to which—

(i)

the payment reasonably reflects compensation earned over the period of employment; and

(ii)

the compensation involved represents a reasonable payment for services rendered.

(3)

Certain payments prohibited

No insured depository institution or covered company may prepay the salary or any liability or legal expense of any institution-affiliated party if such payment is made—

(A)

in contemplation of the insolvency of such institution or covered company or after the commission of an act of insolvency; and

(B)

with a view to, or has the result of—

(i)

preventing the proper application of the assets of the institution to creditors; or

(ii)

preferring one creditor over another.

(4)

“Golden parachute payment” defined

For purposes of this subsection—

(A)

In general

The term “golden parachute payment” means any payment (or any agreement to make any payment) in the nature of compensation by any insured depository institution or covered company for the benefit of any institution-affiliated party pursuant to an obligation of such institution or covered company that—

(i)

is contingent on the termination of such party’s affiliation with the institution or covered company; and

(ii)

is received on or after the date on which—

(I)

the insured depository institution or covered company, or any insured depository institution subsidiary of such covered company, is insolvent;

(II)

any conservator or receiver is appointed for such institution;

(III)

the institution’s appropriate Federal banking agency determines that the insured depository institution is in a troubled condition (as defined in the regulations prescribed pursuant to section 1831i(f) of this title);

(IV)

the insured depository institution has been assigned a composite rating by the appropriate Federal banking agency or the Corporation of 4 or 5 under the Uniform Financial Institutions Rating System; or

(V)

the insured depository institution is subject to a proceeding initiated by the Corporation to terminate or suspend deposit insurance for such institution.

(B)

Certain payments in contemplation of an event

(C)

Certain payments not included

The term “golden parachute payment” shall not include—

(i)

any payment made pursuant to a retirement plan which is qualified (or is intended to be qualified) under section 401 of title 26 or other nondiscriminatory benefit plan;

(ii)

any payment made pursuant to a bona fide deferred compensation plan or arrangement which the Board determines, by regulation or order, to be permissible; or

(iii)

any payment made by reason of the death or disability of an institution-affiliated party.

(5)

Other definitions

For purposes of this subsection—

(A)

Indemnification payment

Subject to paragraph (6), the term “indemnification payment” means any payment (or any agreement to make any payment) by any insured depository institution or covered company for the benefit of any person who is or was an institution-affiliated party, to pay or reimburse such person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the appropriate Federal banking agency which results in a final order under which such person—

(i)

is assessed a civil money penalty;

(ii)

is removed or prohibited from participating in conduct of the affairs of the insured depository institution; or

(iii)

is required to take any affirmative action described in section 1818(b)(6) of this title with respect to such institution.

(B)

Liability or legal expense

The term “liability or legal expense” means—

(i)

any legal or other professional expense incurred in connection with any claim, proceeding, or action;

(ii)

the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and

(iii)

the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action.

(C)

Payment

The term “payment” includes—

(i)

any direct or indirect transfer of any funds or any asset; and

(ii)

any segregation of any funds or assets for the purpose of making, or pursuant to an agreement to make, any payment after the date on which such funds or assets are segregated, without regard to whether the obligation to make such payment is contingent on—

(I)

the determination, after such date, of the liability for the payment of such amount; or

(II)

the liquidation, after such date, of the amount of such payment.

(D)

Covered company

(6)

Certain commercial insurance coverage not treated as covered benefit payment

(l)

Acquisition of foreign banks or entities

(m)

Activities of savings associations and their subsidiaries

(1)

Procedures

When an insured savings association establishes or acquires a subsidiary or when an insured savings association elects to conduct any new activity through a subsidiary that the insured savings association controls, the insured savings association—

(A)

shall notify the Corporation or the Comptroller of the Currency, as appropriate, not less than 30 days prior to the establishment, or acquisition, of any such subsidiary, and not less than 30 days prior to the commencement of any such activity, and in either case shall provide at that time such information as each such agency may, by regulation, require; and

(B)

shall conduct the activities of the subsidiary in accordance with regulations of the Comptroller of the Currency and orders of the Corporation and the Comptroller of the Currency.

(2)

Enforcement powers

With respect to any subsidiary of an insured savings association:

(A)

the Corporation and the Comptroller of the Currency, as appropriate, shall each have, with respect to such subsidiary, the respective powers that each has with respect to the insured savings association pursuant to this section or section 1818 of this title; and

(B)

the Corporation or the Comptroller of the Currency, as appropriate, may determine, after notice and opportunity for hearing, that the continuation by the insured savings association of its ownership or control of, or its relationship to, the subsidiary—

(i)

constitutes a serious risk to the safety, soundness, or stability of the insured savings association, or

(ii)

is inconsistent with sound banking principles or with the purposes of this chapter.

Upon making any such determination, the Corporation or the Office of the Comptroller of the Currency, as appropriate, shall have authority to order the insured savings association to divest itself of control of the subsidiary. The Corporation or the Comptroller of the Currency, as appropriate, may take any other corrective measures with respect to the subsidiary, including the authority to require the subsidiary to terminate the activities or operations posing such risks, as the Corporation or the Comptroller of the Currency, respectively, may deem appropriate.

(3)

Activities incompatible with deposit insurance

(A)

In general

(B)

Authority of Comptroller of the Currency

(C)

Additional authority of FDIC to prevent serious risks to insurance fund

(4)

“Subsidiary” defined

(5)

Applicability to certain savings banks

Subparagraphs (A) and (B) of paragraph (1) of this subsection do not apply to—

(A)

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

(B)

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

(n)

Calculation of capital

(o)

Real estate lending

(1)

Uniform regulations

Not more than 9 months after December 19, 1991, each appropriate Federal banking agency shall adopt uniform regulations prescribing standards for extensions of credit that are—

(A)

secured by liens on interests in real estate; or

(B)

made for the purpose of financing the construction of a building or other improvements to real estate.

(2)

Standards

(A)

Criteria

In prescribing standards under paragraph (1), the agencies shall consider—

(i)

the risk posed to the Deposit Insurance Fund by such extensions of credit;

(ii)

the need for safe and sound operation of insured depository institutions; and

(iii)

the availability of credit.

(B)

Variations permitted

In prescribing standards under paragraph (1), the appropriate Federal banking agencies may differentiate among types of loans—

(i)

as may be required by Federal statute;

(ii)

as may be warranted, based on the risk to the Deposit Insurance Fund; or

(iii)

as may be warranted, based on the safety and soundness of the institutions.

(3)

Loan evaluation standard

(4)

Effective date

(p)

Periodic review of capital standards

(q)

Sovereign risk

(r)

Subsidiary depository institutions as agents for certain affiliates

(1)

In general

(2)

Bank acting as agent is not a branch

(3)

Prohibitions on activities

A depository institution may not—

(A)

conduct any activity as an agent under paragraph (1) or (6) which such institution is prohibited from conducting as a principal under any applicable Federal or State law; or

(B)

as a principal, have an agent conduct any activity under paragraph (1) or (6) which the institution is prohibited from conducting under any applicable Federal or State law.

(4)

Existing authority not affected

No provision of this subsection shall be construed as affecting—

(A)

the authority of any depository institution to act as an agent on behalf of any other depository institution under any other provision of law; or

(B)

whether a depository institution which conducts any activity as an agent on behalf of any other depository institution under any other provision of law shall be considered to be a branch of such other institution.

(5)

Agency relationship required to be consistent with safe and sound banking practices

(6)

Affiliated insured savings associations

An insured savings association which was an affiliate of a bank on July 1, 1994, may conduct activities as an agent on behalf of such bank in the same manner as an insured bank affiliate of such bank may act as agent for such bank under this subsection to the extent such activities are conducted only in—

(A)

any State in which—

(i)

the bank is not prohibited from operating a branch under any provision of Federal or State law; and

(ii)

the savings association maintained an office or branch and conducted business as of July 1, 1994; or

(B)

any State in which—

(i)

the bank is not expressly prohibited from operating a branch under a State law described in section 1831u(a)(2) of this title; and

(ii)

the savings association maintained a main office and conducted business as of July 1, 1994.

(s)

Prohibition on certain affiliations

(1)

In general

(2)

Exception for members of a Federal home loan bank

(3)

Routine business financing

(4)

Student loans

(A)

In general

This subsection shall not apply to any arrangement between the Holding Company (or any subsidiary of the Holding Company other than the Student Loan Marketing Association) and a depository institution, if the Secretary approves the affiliation and determines that—

(i)

the reorganization of such Association in accordance with section 1087–3 of title 20 will not be adversely affected by the arrangement;

(ii)

the dissolution of the Association pursuant to such reorganization will occur before the end of the 2-year period beginning on the date on which such arrangement is consummated or on such earlier date as the Secretary deems appropriate: Provided, That the Secretary may extend this period for not more than 1 year at a time if the Secretary determines that such extension is in the public interest and is appropriate to achieve an orderly reorganization of the Association or to prevent market disruptions in connection with such reorganization, but no such extensions shall in the aggregate exceed 2 years;

(iii)

the Association will not purchase or extend credit to, or guarantee or provide credit enhancement to, any obligation of the depository institution;

(iv)

the operations of the Association will be separate from the operations of the depository institution; and

(v)

until the “dissolution date” (as that term is defined in section 1087–3 of title 20) has occurred, such depository institution will not use the trade name or service mark “Sallie Mae” in connection with any product or service it offers if the appropriate Federal banking agency for such depository institution determines that—

(I)

the depository institution is the only institution offering such product or service using the “Sallie Mae” name; and

(II)

such use would result in the depository institution having an unfair competitive advantage over other depository institutions.

(B)

Terms and conditions

In approving any arrangement referred to in subparagraph (A) the Secretary may impose any terms and conditions on such an arrangement that the Secretary considers appropriate, including—

(i)

imposing additional restrictions on the issuance of debt obligations by the Association; or

(ii)

restricting the use of proceeds from the issuance of such debt.

(C)

Additional limitations

In the event that the Holding Company (or any subsidiary of the Holding Company) enters into such an arrangement, the value of the Association’s “investment portfolio” shall not at any time exceed the lesser of—

(i)

the value of such portfolio on the date of the enactment of this subsection; or

(ii)

the value of such portfolio on the date such an arrangement is consummated. The term “investment portfolio” shall mean all investments shown on the consolidated balance sheet of the Association other than—

(I)

any instrument or assets described in section 1087–2(d) of title 20, as such section existed on the day before the date of the repeal of such section;

(II)

any direct noncallable obligations of the United States or any agency thereof for which the full faith and credit of the United States is pledged; or

(III)

cash or cash equivalents.

(D)

(E)

Definitions

For purposes of this paragraph, the following definition shall apply—

(i)

Association; Holding Company

(ii)

Secretary

(5)

“Government-sponsored enterprise” defined

(t)

Recordkeeping requirements

(1)

Requirements

(2)

Availability to Commission; confidentiality

(3)

Definition

(u)

Limitation on claims

(1)

In general

No person may bring a claim against any Federal banking agency (including in its capacity as conservator or receiver) for the return of assets of an affiliate or controlling shareholder of the insured depository institution transferred to, or for the benefit of, an insured depository institution by such affiliate or controlling shareholder of the insured depository institution, or a claim against such Federal banking agency for monetary damages or other legal or equitable relief in connection with such transfer, if at the time of the transfer—

(A)

the insured depository institution is subject to any direction issued in writing by a Federal banking agency to increase its capital; and

(B)

for that portion of the transfer that is made by an entity covered by section 1844(g) of this title or section 1831v of this title, the Federal banking agency has followed the procedure set forth in such section.

(2)

Definition of claim

For purposes of paragraph (1), the term “claim”—

(A)

means a cause of action based on Federal or State law that—

(i)

provides for the avoidance of preferential or fraudulent transfers or conveyances; or

(ii)

provides similar remedies for preferential or fraudulent transfers or conveyances; and

(B)

does not include any claim based on actual intent to hinder, delay, or defraud pursuant to such a fraudulent transfer or conveyance law.

(v)

Loans by insured institutions on their own stock

(1)

General prohibition

(2)

Exclusion

(w)

Written employment references may contain suspicions of involvement in illegal activity

(1)

Authority to disclose information

(2)

Information not required

(3)

Malicious intent

(4)

Definition

(x)

Privileges not affected by disclosure to banking agency or supervisor

(1)

In general

(2)

Rule of construction

No provision of paragraph (1) may be construed as implying or establishing that—

(A)

any person waives any privilege applicable to information that is submitted or transferred under any circumstance to which paragraph (1) does not apply; or

(B)

any person would waive any privilege applicable to any information by submitting the information to the Bureau of Consumer Financial Protection, any Federal banking agency, State bank supervisor, or foreign banking authority, but for this subsection.

(y)

State lending limit treatment of derivatives transactions

(z)

General prohibition on sale of assets

(1)

In general

An insured depository institution may not purchase an asset from, or sell an asset to, an executive officer, director, or principal shareholder of the insured depository institution, or any related interest of such person (as such terms are defined in section 375b of this title), unless—

(A)

the transaction is on market terms; and

(B)

if the transaction represents more than 10 percent of the capital stock and surplus of the insured depository institution, the transaction has been approved in advance by a majority of the members of the board of directors of the insured depository institution who do not have an interest in the transaction.

(2)

Rulemaking

(aa)

Treatment of certain municipal obligations

(1)

Definitions

In this subsection—

(A)

the term “investment grade”, with respect to an obligation, has the meaning given the term in section 1.2 of title 12, Code of Federal Regulations, or any successor thereto;

(B)

the term “liquid and readily-marketable” has the meaning given the term in section 249.3 of title 12, Code of Federal Regulations, or any successor thereto; and

(C)

the term “municipal obligation” means an obligation of—

(i)

a State or any political subdivision thereof; or

(ii)

any agency or instrumentality of a State or any political subdivision thereof.

(2)

Municipal obligations

For purposes of the final rule entitled “Liquidity Coverage Ratio: Liquidity Risk Measurement Standards” (79 Fed. Reg. 61439 (October 10, 2014)), the final rule entitled “Liquidity Coverage Ratio: Treatment of U.S. Municipal Securities as High-Quality Liquid Assets” (81 Fed. Reg. 21223 (April 11, 2016)), and any other regulation that incorporates a definition of the term “high-quality liquid asset” or another substantially similar term, the appropriate Federal banking agencies shall treat a municipal obligation as a high-quality liquid asset that is a level 2B liquid asset if that obligation is, as of the date of calculation—

(A)

liquid and readily-marketable; and

(B)

investment grade.

(Sept. 21, 1950, ch. 967, § 2[18], 64 Stat. 891; Pub. L. 86–463, May 13, 1960, 74 Stat. 129; Pub. L. 87–827, § 2, Oct. 15, 1962, 76 Stat. 953; Pub. L. 89–79, § 2, July 21, 1965, 79 Stat. 244; Pub. L. 89–356, § 1, Feb. 21, 1966, 80 Stat. 7; Pub. L. 89–485, § 12(c), July 1, 1966, 80 Stat. 242; Pub. L. 89–597, § 3, Sept. 21, 1966, 80 Stat. 824; Pub. L. 90–505, § 2(b), Sept. 21, 1968, 82 Stat. 856; Pub. L. 91–151, title I, §§ 2(a), 4(b), (c), Dec. 23, 1969, 83 Stat. 372, 374, 375; Pub. L. 93–100, § 3, Aug. 16, 1973, 87 Stat. 342; Pub. L. 93–495, title I, § 106, Oct. 28, 1974, 88 Stat. 1505; Pub. L. 93–501, title I, § 102(a), title III, § 302, Oct. 29, 1974, 88 Stat. 1558, 1560; Pub. L. 95–369, § 6(c)(25)–(28), Sept. 17, 1978, 92 Stat. 620; Pub. L. 95–630, title I, § 108, title III, §§ 301(b), (c), 306, Nov. 10, 1978, 92 Stat. 3664, 3675, 3677; Pub. L. 96–104, title II, § 202, Nov. 5, 1979, 93 Stat. 792; Pub. L. 96–161, title I, § 101(b), title II, § 209, Dec. 28, 1979, 93 Stat. 1233, 1239; Pub. L. 96–221, title II, § 207(b)(2), (3), title III, §§ 302(b), 307, title V, § 529, Mar. 31, 1980, 94 Stat. 144, 146, 147, 168; Pub. L. 97–320, title I, § 113(n), (o), title IV, §§ 410(d), 423, 424(b), (d)(10), (e), Oct. 15, 1982, 96 Stat. 1474, 1520, 1522, 1523; Pub. L. 100–86, title I, §§ 102(b), 103, title V, § 504(b), Aug. 10, 1987, 101 Stat. 566, 632; Pub. L. 101–73, title II, §§ 201, 221, title IX, §§ 905(d), 907(c), Aug. 9, 1989, 103 Stat. 187, 266, 460, 466; Pub. L. 101–647, title XXV, § 2523(a), Nov. 29, 1990, 104 Stat. 4868; Pub. L. 102–242, title III, §§ 304(a), 305(a), 306(k), Dec. 19, 1991, 105 Stat. 2354, 2359; Pub. L. 102–550, title XVI, § 1605(a)(9), Oct. 28, 1992, 106 Stat. 4086; Pub. L. 103–325, title III, §§ 321(b), 324, 326(b)(1), title VI, § 602(a)(44)–(50), Sept. 23, 1994, 108 Stat. 2226, 2227, 2229, 2290; Pub. L. 103–328, title I, §§ 101(d), 102(b)(3)(A), 103(b), Sept. 29, 1994, 108 Stat. 2342, 2350, 2353; Pub. L. 104–208, div. A, title II, §§ 2615(b), 2704(d)(14)(U), (V), Sept. 30, 1996, 110 Stat. 3009–479, 3009–494; Pub. L. 105–277, div. H, § 2, Oct. 21, 1998, 112 Stat. 2681–854; Pub. L. 106–102, title II, § 204, title VII, § 730, Nov. 12, 1999, 113 Stat. 1391, 1476; Pub. L. 106–569, title XII, § 1207(b), Dec. 27, 2000, 114 Stat. 3034; Pub. L. 107–56, title III, §§ 327(b)(1), 355, Oct. 26, 2001, 115 Stat. 319, 324; Pub. L. 108–386, § 8(a)(5), Oct. 30, 2004, 118 Stat. 2231; Pub. L. 108–458, title VI, § 6203(j), Dec. 17, 2004, 118 Stat. 3747; Pub. L. 109–171, title II, §§ 2102(b), 2104(c), Feb. 8, 2006, 120 Stat. 9, 13; Pub. L. 109–173, §§ 2(c)(2), 8(a)(28)–(30), Feb. 15, 2006, 119 Stat. 3602, 3615; Pub. L. 109–351, title VI, §§ 606, 607(a), title VII, §§ 702(b), 704, Oct. 13, 2006, 120 Stat. 1981, 1982, 1985, 1986; Pub. L. 110–315, title IV, § 438(b), Aug. 14, 2008, 122 Stat. 3258; Pub. L. 110–343, div. A, title I, § 126(a), (d), Oct. 3, 2008, 122 Stat. 3793, 3796; Pub. L. 111–203, title III, § 363(7), title VI, §§ 604(f), 611(a), 613(b), 615(a), 623(a), 627(a)(3), July 21, 2010, 124 Stat. 1553, 1602, 1612, 1614, 1634, 1640; Pub. L. 112–215, § 1(2), Dec. 20, 2012, 126 Stat. 1589; Pub. L. 115–174, title IV, § 403(a), May 24, 2018, 132 Stat. 1360.)

cite as: 12 USC 1828

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