12 USC 347b - Advances to individual member banks on time or demand notes; maturities; time notes secured by mortgage loans covering one-to-four family residences

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

§ 347b.

Advances to individual member banks on time or demand notes; maturities; time notes secured by mortgage loans covering one-to-four family residences

(a)

In general

(b)

Limitations on advances

(1)

Limitation on extended periods

(2)

Viability exception

(A)

In general

If—

(i)

the head of the appropriate Federal banking agency certifies in advance in writing to the Federal Reserve bank that any depository institution is viable; or

(ii)

the Board conducts an examination of any depository institution and the Chairman of the Board certifies in writing to the Federal Reserve bank that the institution is viable,

the limitation contained in paragraph (1) shall not apply during the 60-day period beginning on the date such certification is received.

(B)

Extensions of period

(C)

Authority to issue a certificate of viability may not be delegated

(D)

Extended advances subject to paragraph (3)

Notwithstanding paragraph (1), an undercapitalized depository institution which does not have a certificate of viability in effect under this paragraph may have advances outstanding for more than 60 days in any 120-day period if the Board elects to treat—

(i)

such institution as critically undercapitalized under paragraph (3); and

(ii)

any such advance as an advance described in subparagraph (A)(i) of paragraph (3).

(3)

Advances to critically undercapitalized depository institutions

(A)

Liability for increased loss

Notwithstanding any other provision of this section, if—

(i)

in the case of any critically undercapitalized depository institution—

(I)

any advance under this section to such institution is outstanding without payment having been demanded as of the end of the 5-day period beginning on the date the institution becomes a critically undercapitalized depository institution; or

(II)

any new advance is made to such institution under this section after the end of such period; and

(ii)

after the end of that 5-day period, the Deposit Insurance Fund of the Federal Deposit Insurance Corporation incurs a loss exceeding the loss that the Corporation would have incurred if it had liquidated that institution as of the end of that period,

the Board shall, subject to the limitations in subparagraph (B), be liable to the Federal Deposit Insurance Corporation for the excess loss, without regard to the terms of the advance or any collateral pledged to secure the advance.

(B)

Limitation on excess loss

The liability of the Board under subparagraph (A) shall not exceed the lesser of the following:

(i)

The amount of the loss the Board or any Federal Reserve bank would have incurred on the increases in the amount of advances made after the 5-day period referred to in subparagraph (A) if those increased advances had been unsecured.

(ii)

The interest received on the increases in the amount of advances made after the 5-day period referred to in subparagraph (A).

(C)

Federal Reserve to pay obligation

(D)

Report

(4)

No obligation to make advances

(5)

Definitions

(A)

Appropriate Federal banking agency

(B)

Critically undercapitalized

(C)

Depository institution

(D)

Undercapitalized depository institution

The term “undercapitalized depository institution” means any depository institution which—

(i)

is undercapitalized, as defined in section 1831o of this title; or

(ii)

has a composite CAMEL rating of 5 under the Uniform Financial Institutions Rating System (or an equivalent rating by any such agency under a comparable rating system) as of the most recent examination of such institution.

(E)

Viable

A depository institution is “viable” if the Board or the appropriate Federal banking agency determines, giving due regard to the economic conditions and circumstances in the market in which the institution operates, that the institution—

(i)

is not critically undercapitalized;

(ii)

is not expected to become critically undercapitalized; and

(iii)

is not expected to be placed in conservatorship or receivership.

(Dec. 23, 1913, ch. 6, § 10B, formerly § 10(b), as added Feb. 27, 1932, ch. 58, § 2, 47 Stat. 56; amended Feb. 3, 1933, ch. 34, 47 Stat. 794; Mar. 9, 1933, ch. 1, title IV, § 402, 48 Stat. 7; Aug. 23, 1935, ch. 614, title II, § 204, 49 Stat. 705; Pub. L. 93–449, § 5, Oct. 18, 1974, 88 Stat. 1368; Pub. L. 96–221, title I, § 106, Mar. 31, 1980, 94 Stat. 140; renumbered § 10B and amended Pub. L. 102–242, title I, § 142(a)(2), (b), Dec. 19, 1991, 105 Stat. 2279; Pub. L. 104–208, div. A, title II, § 2704(d)(9), Sept. 30, 1996, 110 Stat. 3009–489; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 9(c), Feb. 15, 2006, 119 Stat. 3616.)

cite as: 12 USC 347b