(c) Investment authority

An association may to such extent, and subject to such rules and regulations as the Board may prescribe from time to time, invest in, sell, or otherwise deal with the following loans, or other investments:

(1) Loans or investments without percentage of assets limitation

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

[See main edition for text of (A) to (R)]
(S) Mortgage backed securities

Investments in securities that

(i) are offered and sold pursuant to section 4(5) of the Securities Act of 1933 (15 U.S.C. 77d(5)); or

(ii) are mortgage related securities (as that term is 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 Board may prescribe, including regulations prescribing minimum size of the issue (at the time of initial distribution) or minimum aggregate sales prices, or both.

[See main edition for text of (2) to (5)] (d) Proceedings to enforce compliance with law and regulations; cease and desist proceedings; temporary cease-and-desist orders; suspension or removal of directors or officers; appointment and removal of conservator or receiver; hearings and judicial review; regulations for reorganization, dissolutions, etc.; penalties; definitions; application to other institutions

[See main edition for text of (1) to (5)] (6)(A) The grounds for the appointment of a conservator or receiver for an association shall be one or more of the following: (i) insolvency in that the assets of the association are less than its obligations to its creditors and others, including its members; (ii) substantial dissipation of assets or earnings due to any violation or violations of law, rules, or regulations, or to any unsafe or unsound practice or practices; (iii) an unsafe or unsound conditions to transact business; (iv) willful violation of a ceaseand-desist order which has become final; (v) concealment of books, papers, records, or assets of the association or refusal to submit books, papers, records, or affairs of the association for inspection to any examiner or to any lawful agent of the Board. The Board shall have exclusive power and jurisdiction to appoint a conservator or receiver. If, in the opinion of the Board, a ground for the appointment of a conservator or receiver as herein provided exists, the Board is authorized to appoint ex parte and without notice a conservator or receiver for the association. In the event of such appointment, the association may, within thirty days thereafter, bring an action in the United States district court for the judicial district in which the home office of such association is located, or in the United States District Court for the District of Columbia, for an order requiring the Board to remove such conservator or receiver,

and the court shall upon the merits dismiss such action or direct the Board to remove such conservator or receiver. Upon the commencement of such an action, the court having jurisdiction of any other action or proceeding authorized under this subsection to which the association is a party shall stay such action or proceeding during the pendency of the action for removal of the conservator or receiver.

[See main edition for text of (B) to (D)]

(E) DISCLOSURE REQUIREMENT FOR THOSE ACTING ON BEHALF OF CONSERVATOR.-A conservator shall require that any independent contractor, consultant, or counsel employed by the conservator in connection with the conservatorship of an association pursuant to this section shall fully disclose to all parties with which such contractor, consultant, or counsel is negotiating, any limitation on the authority of such contractor, consultant, or counsel to make legally binding representations on behalf of the conservator.

[See main edition for text of (7)]

(8) [See main edition for text of (A)]

(B)(i) Any association which violates or any officer, director, employee, agent, or other person participating in the conduct of the affairs of such an association who violates the terms of any order which has become final and was issued pursuant to paragraph (2), (3), or (16) of this subsection, shall forfeit and pay a civil penalty of not more than $1,000 per day for each day during which such violation continues: Provided, That the Board may, in its discretion, compromise, modify, or remit any civil money penalty which is subject to imposition or has been imposed under authority of this subsection. The penalty may be assessed and collected by the Board by written notice. As used in this section, the term "violates" includes without any limitation any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.

[See main edition for text of (ii) to (vii), (9) to (15)]

(16) COMPLIANCE WITH MONETARY TRANSACTION RECORDKEEPING AND REPORT REQUIRE

MENTS.

(A) COMPLIANCE PROCEDURES REQUIRED.-The Board shall prescribe regulations requiring associations to establish and maintain procedures reasonably designed to assure and monitor the compliance of such associations with the requirements of subchapter II of chapter 53 of title 31.

(B) EXAMINATIONS OF ASSOCIATIONS TO INCLUDE REVIEW OF COMPLIANCE PROCEDURES.—

(i) IN GENERAL.-Each examination of an association by the Board shall include a review of the procedures required to be established and maintained under subparagraph (A).

(ii) EXAM REPORT REQUIREMENT.-The report of examination shall describe any

problem with the procedures maintained by the association.

(C) ORDER TO COMPLY WITH REQUIREMENTS.— If the Board determines that an 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 Board,

the Board shall issue an order in the manner prescribed in paragraph (2) or (3) requiring such association to cease and desist from its violation of this paragraph or regulations prescribed under this paragraph.

[See main edition for text of (e) to (k)]

(1) Association as trustee of trust respecting stock bonus, pension, or profit-sharing plans

Any such association is authorized to act as trustee of any trust created or organized in the United States and forming part of a stock bonus, pension, or profit-sharing plan which qualifies or qualified for specific tax treatment under section 401(d) of the Internal Revenue Code of 1986 [26 U.S.C. 401(d)] and to act as trustee or custodian of an individual retirement account within the meaning of section 408 of such Code [26 U.S.C. 408], if the funds of such trust or account are invested only in savings accounts or deposits in such association or in obligations or securities issued by such association. All funds held in such fiduciary capacity by any such association may be commingled for appropriate purposes of investment, but individual records shall be kept by the fiduciary for each participant and shall show in proper detail all transactions engaged in under the authority of this paragraph.

[See main edition for text of (m) to (q)] (r) Out-of-State branches; qualification; exemptions; compliance period

(1) No association may establish, retain, or operate a branch outside the State in which the 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. No out-ofState branch so established shall be retained or operated unless the total assets of the association attributable to all branches of the 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 said section 7701(a)(19).

[See main edition for text of (2) and (3)] (s) Minimum capital requirements

(1) In general

Consistent with the purposes of section 3907 of this title and the capital requirements established pursuant to such section by the appropriate Federal banking agencies (as de

fined in section 3902(1) of this title), the Board shall require all associations to achieve and maintain adequate capital by

(A) establishing minimum levels of capital for associations; and

(B) using such other methods as the Board determines to be appropriate.

(2) Minimum capital levels may be determined by Board on case-by-case basis

The Board may establish the minimum level of capital for an association at such amount or at such ratio of capital-to-assets as the Board determines to be necessary or appropriate for such association in light of the particular circumstances of the association. (3) Unsafe or unsound practice

In the Board's discretion, the Board may treat the failure of any association to maintain capital at or above the minimum level required by the Board under this subsection as an unsafe or unsound practice within the meaning of subsection (d) of this section. (4) Directive to increase capital

(A) Plan may be required

In addition to any other action authorized by law, including paragraph (3), the Board may issue a directive requiring any association which fails to maintain capital at or above the minimum level required by the Board to submit and adhere to a plan for increasing capital which is acceptable to the Board.

(B) Enforcement of plan

Any directive issued and plan approved under subparagraph (A) shall be enforceable under subsection (d)(8) of this section to the same extent and in the same manner as an outstanding order which was issued under subsection (d)(2) of this section and has become final.

(5) Plan taken into account in other proceedings The Board may—

(A) consider an 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 Board 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 Board; and

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

(As amended Oct. 3, 1984, Pub. L. 98-440, title I, § 105(a), 98 Stat. 1691; Nov. 8, 1984, Pub. L. 98-620, title IV, § 402(9), 98 Stat. 3357; Oct. 22, 1986, Pub. L. 99-514, § 2, 100 Stat. 2095; Oct. 27, 1986, Pub. L. 99-570, title I, § 1359(b), 100 Stat. 3207-27; Aug. 10, 1987, Pub. L. 100-86, title IV, §§ 406(a), 413(a), title V, § 509(a), 101 Stat. 614, 621, 635.)

REFERENCES IN TEXT

The Housing and Urban Development Act of 1968, as amended, referred to in subsec. (c)(1)(N), (O), is Pub. L. 90-448, Aug. 1, 1968, 82 Stat. 476, as amended. Title IX of the Housing and Urban Development Act of 1968, as amended, is classified principally to chapter 49 (§ 3931 et seq.) of Title 42, The Public Health and Welfare. Title IV of the Housing and Urban Development Act, which was classified to chapter 48 (§ 3901 et seq.) of Title 42, was repealed, with certain exceptions which were omitted from the Code, by Pub. L. 98-181, title IV, § 474(e), Nov. 30, 1983, 97 Stat. 1239. For complete classification of this Act to the Code, see Short Title of 1968 Amendment note set out under section 1701 of this title and Tables.

AMENDMENTS

1987-Pub. L. 100-86, § 509(a), repealed Pub. L. 97-320, § 141. See 1982 Amendment note below.

Subsec. (d)(6)(E). Pub. L. 100-86, § 413(a), added subpar. (E).

Subsec. (s). Pub. L. 100-86, § 406(a), added subsec.

(s).

1986-Subsec.

(d)(8)(B)(i). Pub. L. 99-570,

§ 1359(b)(2), inserted reference to par. (16) of this subsection.

Subsec. (d)(16). Pub. L. 99-570, § 1359(b)(1), added par. (16).

Subsecs. (1), (r)(1). Pub. L. 99-514 substituted "Internal Revenue Code of 1986" for "Internal Revenue Code of 1954".

1984-Subsec. (c)(1)(S). Pub. L. 98-440 added subpar.

(S).

Subsec. (d)(6)(A). Pub. L. 98-620 struck out provision that such proceedings had to be given precedence over other cases pending in such courts, and had to be in every way expedited.

1982-Subsec. (o). Pub. L. 97-320, § 112, added subsec. (o).

Subsec. (o)(2)(F), (G). Pub. L. 97-320, § 141(a)(2), which directed the repeal of subpars. (F) and (G) effective Oct. 13, 1986, was repealed by Pub. L. 100-86, § 509(a). See Effective and Termination Dates of 1982 Amendment note and Extension of Emergency Acquisition and Net Worth Guarantee Provisions of Pub. L. 97-320 note set out below.

Subsec. (p). Pub. L. 97-320, § 141(a)(5), which directed the repeal of subsec. (p) effective Oct. 13, 1986, was repealed by Pub. L. 100-86, § 509(a). See Effective and Termination Dates of 1982 Amendment note and Extension of Emergency Acquisition and Net Worth Guarantee Provisions of Pub. L. 97-320 note set out below.

Pub. L. 97-320, § 121, added subsec. (p).

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by Pub. L. 98-620 not applicable to cases pending on Nov. 8, 1984, see section 403 of Pub. L. 98-620, set out as an Effective Date note under section 1657 of Title 28, Judiciary and Judicial Procedure.

EFFECTIVE AND TERMINATION DATES OF 1982
AMENDMENT

Prior to its repeal by section 509(a) of Pub. L. 100-86, section 141 of Pub. L. 97-320, as amended by Pub. L. 99-120, § 6(a), Oct. 8, 1985, 99 Stat. 504; Pub. L. 99-278, § 1(a), Apr. 24, 1986, 100 Stat. 397; Pub. L. 99-400, § 1(a), Aug. 27, 1986, 100 Stat. 902; Pub. L. 99-452, § 1(a), Oct. 8, 1986, 100 Stat. 1140, provided that:

"(a) Effective on October 13, 1986

"(1) section 13(c)(5) of the Federal Deposit Insurance Act [section 1823(c)(5) of this title], as added by section 111 of this Act, shall be repealed;

“(2) subparagraphs (F) and (G) of section 5(o)(2) of the Home Owners' Loan Act of 1933 [section 1464(o)(2) of this title], as added by section 112 of this Act, shall be repealed;

"(3) the provision of law amended by section 116 of this Act [section 1823(f) of this title] shall be

amended to read as it would without such amendment;

"(4) the provisions of law amended by subsections (a) [section 1843(c)(8) of this title] and (c) [section 1842(d) of this title] of section 118 shall be amended to read as they would without such amendments;

"(5) the provision of law amended by section 121 of this Act [section 1464(p) of this title] shall be amended to read as it would without such amendment;

"(6) the provisions of law amended by subsections (d) through (g) of section 122 of this Act [section 1729(c), (d) of this title] shall be amended to read as they would without such amendments;

"(7) the provisions of law amended by section 123 of this Act [section 1730a(e)(2), (m) of this title] shall be amended to read as they would without such amendments; and

"(8) the provisions of law amended by sections 131 [section 1785(h), (i) of this title] and 132 [section 1786(b)(2), (h)-(p) of this title] shall be amended to read as they would without such amendments.

"(b) The repeal or termination by subsection (a) of any amendment made by this Act shall have no effect on any action taken or authorized while such amendment was in effect."

EFFECTIVE Date of RegulatIONS PRESCRIBED UNDER 1986 AMENDMENT

Section 1364(e) of Pub. L. 99-570 provided that: "The regulations required to be prescribed under the amendments made by section 1359 [amending sections 1464, 1730, 1786, and 1818 of this title] shall take effect at the end of the 3-month period beginning on the date of the enactment of this Act [Oct. 27, 1986]."

EXTENSION OF EMERGENCY ACQUISITION AND NET WORTH GUARANTEE PROVISIONS OF PUB. L. 97-320 Section 509(c) of Pub. L. 100-86 provided that: "No amendment made by part D [section 141, formerly set out as an Effective and Termination Dates of 1982 Amendment note above] of title I or section 206 [set out as an Effective and Termination Dates of 1982 Amendment note under section 1729 of this title] of the Garn-St Germain Depository Institutions Act of 1982 [Pub. L. 97-320], as in effect before the date of the enactment of this Act (Aug. 10, 1987], to any other provision of law shall be deemed to have taken effect before the date of the enactment of this Act and any such provision of law shall be in effect as if no such amendment had been made before such date of enactment."

Pub. L. 99-452, § 1(c), Oct. 8, 1986, 100 Stat. 1140, provided that: "No amendment made by section 141(a) or section 206(a) of the Garn-St Germain Depository Institutions Act of 1982 [set out as Effective and Termination Dates of 1982 Amendment notes under sections 1464 and 1729 of this title], as in effect on the day before the date of the enactment of this Act [Oct. 8, 1986], to any other provision of law shall be deemed to have taken effect before such date of enactment and any such provision of law shall be in effect as if no such amendment had taken effect before such date of enactment."

Pub. L. 99-400, § 1(c), Aug. 27, 1986, 100 Stat. 902, provided that: "Sections 141(a) and 206(a) of the Garn-St Germain Depository Institutions Act of 1982 [set out as Effective and Termination Dates of 1982 Amendment notes under sections 1464 and 1729 of this title], as such sections are in effect on the day after the date of enactment of this Act (Aug. 27, 1986), shall apply as if such sections had been included in the Garn-St Germain Depository Institutions Act of 1982 on the date of the enactment of such Act [Oct. 15, 1982], no amendment made by any such section to any other provision of law shall be deemed to have taken effect before the date of the enactment of this Act, and any such provision of law shall be in effect as if

no such amendment had taken effect before the date of the enactment of this Act."

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1462, 1465, 1466a, 1725, 1726, 1729, 1730a, 1813, 1814, 2804, 2805, 3507 of this title; title 15 sections 18a, 57a, 780-5, 1607, 1681s, 1691c, 16921, 16930; title 26 section 368; title 31 sections 3121, 9110.

§ 1466a. District of Columbia Savings and Loan Associations

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 15 section 78c.

§ 1467. Accounting principles and other standards and requirements

(a) In general

The Board shall prescribe regulations which make the following provisions applicable to associations for regulatory purposes:

(1) Asset classification system

An asset classification system shall be established which is consistent with the asset classification system established by the Federal banking agencies, except that such system shall provide that the principal supervisory agent of the Board for each Federal home loan bank district may, in such agent's discretion

(A) require an association to create additional general loss reserves on the basis of an evaluation of such institution's assets; or (B) determine whether a restructured loan asset which is in a nonperforming status or with respect to which the borrowers have otherwise failed to remain in compliance with the repayment terms at the time of such restructuring shall be classified.

(2) Appraisal standard

An appraisal standard shall be established which is consistent with the appraisal standard established by the Federal banking agencies.

(3) Reappraisal upon foreclosure

Generally accepted accounting principles shall apply to any reappraisal of the value of property securing any loan or other extension of credit upon any foreclosure on such property by an association (or any other action by the association in lieu of foreclosure).

(4) Authorizing use of FASB 15 for troubled debt restructuring

If

(A) an association engages in troubled debt restructuring with respect to any loan by the association; and

(B) the troubled debt restructuring complies with Statement of Financial Accounting Standards Numbered 5 and Statement of Financial Accounting Standards Numbered 15 (as issued by the Financial Accounting Standards Board),

regulatory accounting principles shall allow the association to account for the effects of the troubled debt restructuring and to ac

count for such association's investment in the original debt instrument (or other agreement which is subject to such restructuring) in the manner provided in such statements.

(5) Certain loan loss reserves treated as capital for certain purposes

Any amount which an association holds in any account as a general loss reserve may be treated, at the option of the association, as capital of the association for purposes of determining regulatory capital or regulatory net worth with respect to such association, to the extent such treatment is consistent with the procedures established by the Federal banking agencies.

(b) Uniform GAAP accounting standards required (1) In general

Except as otherwise provided in this section, the Board shall prescribe, by regulation, uniformly applicable accounting standards to be used by all associations for the purpose of determining compliance with any rule or regulation issued by the Board or the Federal Savings and Loan Insurance Corporation to the same degree that generally accepted accounting principles are used to determine compliance with rules and regulations of the Federal banking agencies.

(2) Exception for certain institutions and transactions

Notwithstanding the requirement contained in paragraph (1)(A),2 the Board may suspend the application of any such standard with respect to any association or transaction if—

(A) the application of such standard to an association and a company that controls such association would result in such association and company being treated differently than a bank and such bank's holding company considered on a consolidated basis; and

(B) the transaction was consistent with generally accepted accounting principles when such transaction was completed.

(c) Asset evaluations

The Board may not require an association to establish reserves against, or write down the value of, any asset in an amount in excess of the amount which would result from an evaluation of such asset which is consistent with generally accepted accounting principles, except that evaluations which are consistent with the practice of the Federal banking agencies may be used for supervisory purposes.

(d) Accounting for subordinated debt and goodwill

No provision of this section shall affect the authority of the Board to authorize associations to utilize subordinated debt and goodwill in meeting reserve and other regulatory requirements.

(e) Loss deferrals

Notwithstanding any other provision of this

section

'So in original. Probably should be “paragraph (1),”.

(1) associations may continue, for purposes of determining regulatory net worth and capital, to defer and amortize gains and losses from the disposition of assets pursuant to regulations of the Board in effect before August 10, 1987; and

(2) the use of such deferrals and amortizations, consistently with the regulations referred to in paragraph (1), shall not reduce the ability of an association to comply with any other rule issued or regulation prescribed by the Board.

(f) "Federal banking agency" defined

For purposes of this section, the term "Federal banking agency" means the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation.

(June 13, 1933, ch. 64, § 9, as added Aug. 10, 1987, Pub. L. 100-86, title IV, § 402(a), 101 Stat. 605.)

TERMINATION OF SUBSECTION (a)(2), (3), AND (5) For termination of subsection (a)(2), (3), (5) by section 416 of Pub. L. 100-86, see Sunset Provisions; Savings Provisions note below.

PRIOR PROVISIONS

A prior section 1467, acts June 13, 1933, ch. 64, § 8, 48 Stat. 134; Apr. 27, 1934, ch. 168, § 12, 48 Stat. 647; May 28, 1935, ch. 150, §§ 20, 21, 49 Stat. 298, which related to penalties, was repealed by act June 25, 1948, ch. 645, § 21, 62 Stat. 862, eff. Sept. 1, 1948. See sections 223, 433, 493, 657, 1006, and 1014 of Title 18, Crimes and Criminal Procedure.

A prior section 9 of act June 13, 1933, was renumbered section 11 and is classified to section 1468 of this title.

SUBMISSION of Proposed Regulations to CONGRESS

Section 402(c) of Pub. L. 100-86 provided that: "Not later than the end of the 90-day period beginning on the date of the enactment of this Act [Aug. 10, 1987)—

"(1) the Federal Home Loan Bank Board shall submit a copy of the proposed regulations required to be prescribed under the amendment made by subsection (a) [enacting this section] to the Congress; and

"(2) the Federal Savings and Loan Insurance Corporation shall submit a copy of the proposed regulations required to be prescribed under the amendment made by subsection (b) [enacting section 1730h of this title] to the Congress."

EFFECTIVE DATE OF REGULATIONS

Section 402(d) of Pub. L. 100-86 provided that:

"(1) IN GENERAL.-Except as provided in paragraph (2), any regulation required to be prescribed under the amendment made by subsections (a) and (b) [enacting sections 1467 and 1730h of this title] shall be implemented not later than the end of the 150-day period beginning on the date of the enactment of this Act [Aug. 10, 1987].

"(2) UNIFORM GAAP ACCOUNTING STANDARDS.—

"(A) IN GENERAL.-Except as provided in subparagraph (B), the regulations required to be prescribed pursuant to subsection (b) of the amendments made by subsections (a) and (b) of this section shall take effect on December 31, 1987.

"(B) COMPLIANCE AT A LATER DATE.—If any association or insured institution demonstrates to the satisfaction of the Home Loan Bank Board or the Federal Savings and Loan Insurance Corporation, as the case may be, that it is not feasible for such associa

tion or institution to achieve compliance with the regulations referred to in subparagraph (A) by the date contained in such subparagraph, the Board or Corporation may approve a plan submitted by an association or insured institution which allows such association or institution to comply with such regulations at a later date to the extent such later date is the earlier of—

"(i) the date by which, in the determination of the Board or Corporation, it is feasible for such association or insured institution to achieve compliance with such regulations; or

"(ii) December 31, 1993."

SUNSET PROVISIONS; SAVINGS PROVISIONS

Subsec. (a)(2), (3), (5) ceases to be effective on date that notice of completion of all net new borrowing by Financing Corporation is published in Federal Register, with such termination not to be construed to affect or limit any authority of Federal Home Loan Bank Board or Federal Savings and Loan Insurance Corporation to prescribe any regulation or engage in any activity with respect to any association or insured institution under any other provision of law, see section 416 of Pub. L. 100-86, set out as a note under section 1441 of this title.

§ 1467a. Thrift industry recovery regulations (a) In general

The Board shall prescribe capital recovery regulations for regulating and supervising troubled but well-managed and viable associations in a manner which will maximize the long-term viability of the thrift industry at the lowest cost to the Federal Savings and Loan Insurance Corporation.

(b) Capital recovery

The regulations required to be prescribed under subsection (a) of this section shall provide that an association with net worth of 0.5 percent or more, as determined in accordance with regulatory accounting principles, may be allowed to continue to operate and be eligible for capital forbearance if

(1) the Board determines that the association's weak capital condition is—

(A) primarily the result of losses recognized on, the nonperforming status of, or the failure of borrowers to otherwise remain in compliance with the repayment terms of, loans, or participations in loans, the value of the collateral for which has been adversely affected by economic conditions in a designated economically depressed region; or

(B) primarily the result of losses recognized on, the nonperforming status of, or the failure of borrowers to otherwise remain in compliance with the repayment terms of, loans, or participation in loans, made by a minority association 50 percent or more of whose loan assets are minority loans and 50 percent or more of whose originated loans are construction or permanent loans for 1 to 4 family residences;

(2) the Board determines that the association's weak capital condition is not the result of imprudent operating practices, such as practices that were speculative at the time the practices were undertaken, insider abuses, excessive operating expenses, dividends paid