United States Code

[See main edition for text of (B) to (G); (l) to (p)]

(q) Change in control of insured institutions

(1) No person, acting directly or indirectly or through or in concert with one or more other persons, shall acquire control of any insured institution through a purchase assignment, transfer, pledge, or other disposition of voting stock of such insured institution unless the Corporation has been given sixty days' prior written notice of such proposed acquisition and within that time period the Corporation has not issued a notice disapproving the proposed acquisition or, in the discretion of the Corporation, extending for an additional 30 days the period during which a disapproval may issue. The period for disapproval under the preceding sentence may be extended not to exceed 2 additional times for not more than 45 days each time if

(A) the Corporation determines that any acquiring party has not furnished all the information required under paragraph (6);

(B) in the Corporation's judgment, any material information submitted is substantially inaccurate;

(C) the Corporation has been unable to complete the investigation of an acquiring party under paragraph (2)(B) because of any delay caused by, or the inadequate cooperation of, such acquiring party; or

(D) the Corporation determines that additional time is needed to investigate and determine that no acquiring party has a record of failing to comply with the requirements of subchapter II of chapter 53 of title 31.

An acquisition may be made prior to expiration of the disapproval period if the Corporation issues written notice of its intent not to disapprove the action. For purposes of this subsection, the term "insured institution" shall include any "savings and loan holding company", as that term is defined in section 1730a of this title, which has control of any such insured institution.

(2)(A) NOTICE TO STATE AGENCY.-Upon receiving any notice under this subsection, the Corporation shall forward a copy thereof to the appropriate State savings and loan association supervisory agency if the insured institution the voting shares of which are sought to be acquired is a State chartered institution, and shall allow thirty days within which the views and recommendations of such State supervisory agency may be submitted. The Corporation shall give due consideration to the views and recommendations of such State agency in determining whether to disapprove any proposed acquisition. Notwithstanding the provisions of this paragraph, if the Corporation determines that it must act immediately upon any notice of a proposed acquisition in order to prevent the probable failure of the institution involved in the proposed acquisition, the Corporation may dispense with the requirement of this paragraph or, if a copy of the notice is forwarded to the State supervisory agency, the Corporation

"So in original. Probably should be followed by a comma.

may request that the views and recommendations of such State supervisory agency be submitted immediately in any form or by any means acceptable to the Corporation.

(B) INVESTIGATION OF PRINCIPALS REQUIRED.— Upon receiving any notice under this subsection, the Corporation shall

(i) conduct an investigation of the competence, experience, integrity, and financial ability of each person named in a notice of a proposed acquisition as a person by whom or for whom such acquisition is to be made; and

(ii) make an independent determination of the accuracy and completeness of any information described in paragraph (6) with respect to such person.

(C) REPORT.-The Corporation shall prepare a written report of any investigation under subparagraph (B) which shall contain, at a minimum, a summary of the results of such investigation. The Corporation shall retain such written report as a record of the Corporation.

(D) PUBLIC COMMENT.-Upon receiving notice of a proposed acquisition, the Corporation shall, within a reasonable period of time

(i) publish the name of the insured institution proposed to be acquired and the name of each person identified in such notice as a person by whom or for whom such acquisition is to be made; and

(ii) solicit public comment on such proposed acquisition, particularly from persons in the geographic area where the institution proposed to be acquired is located, before final consideration of such notice by the Corpora

tion,

unless the Corporation determines in writing that such disclosure or solicitation would seriously threaten the safety or soundness of such institution.

[See main edition for text of (3) to (7)] (8) CONSIDERATION OF LOSS OF CERTAIN TAX BENEFITS.

(A) IN GENERAL.-In each case in which a filing of any type is made under this subsection, or regulations prescribed under this section, before the acquisition of stock of an insured institution, the Corporation, in evaluating such filing, may consider the likelihood that the proposed acquisition will result in the loss or reduction of the tax benefits of an insured institution's net operating loss carryforwards under section 382 of title 26.

(B) REQUIRED CONSIDERATION IN CERTAIN CASES.-The Corporation shall, with respect to any acquisition, give consideration to the likelihood of future loss or reduction of the tax benefits of an insured institution's net operating loss carryforwards under section 382 of title 26 if such net operating loss carry forwards result from the insured institution's acquisition of one or more insured institutions under section 1729(f) or 1730a(m) of this title or pursuant to acquisitions that are otherwise deemed to be supervisory cases by the Corporation.

(i) acquisitions in which the proposed acquirer commits itself in writing to maintain the ratio of tangible equity capital to liabilities of the insured institutions to be acquired, as determined in accordance with generally accepted accounting principles, in an amount equal to the ratio in existence at the time of filing with the Corporation,

(ii) acquisitions which are approved by the holders of a majority of the voting stock of the institution to be acquired, or

(iii) acquisitions under section 1729(f) or 1730a(m) of this title, or are acquisitions that are otherwise deemed to be supervisory cases by the Corporation.

(9) For the purposes of this subsection, the term

(A) “person” means an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or any other form of entity not specifically listed herein, and

(B) "control" means the power, directly or indirectly, to direct the management or policies of an insured institution or to vote 25 per centum or more of any class of voting securities of an insured institution.

(10) Whenever any insured institution or an insured bank makes a loan, or loans, secured, or to be secured, by 25 per centum or more of the outstanding voting stock of an insured institution, the president or other chief executive officer of the lending insured institution or insured bank shall promptly report such fact to the Corporation upon obtaining knowledge of such loan or loans, except that no report need be made in those cases where the borrower has been the owner of record of the stock for a period of one year or more or where the stock is that of the newly organized institution prior to its opening.

(11) The reports required by paragraph (9) of this subsection shall contain such of the information referred to in paragraph (6) of this subsection, and such other relevant information, as the Corporation may require by regulation or by specific request in connection with any particular report.

(12) Whenever a change in control occurs, each insured institution shall report promptly to the Corporation any changes or replacement of its chief executive officer or of any director occurring in the next twelve-month period, including in its report a statement of the past and current business and professional affiliations of the new chief executive officer or directors.

(13) Without limitation by or on the foregoing provisions of this subsection, the Corporation may require insured institutions and individuals or other persons who have or have had any connection with the management of any insured institution, as defined by the Corporation, to provide, in such manner as the Corporation may prescribe, such periodic or other reports and disclosures, including proxy statements and the solicitation of proxies thereby,

as the Corporation may determine to be necessary or appropriate for the protection of investors or the Corporation.

(14)(A) As used in this subsection, the term "stock" means such stock or other equity securities or equity interests in an insured institution which is a stock company, or rights, interests, or powers with respect thereto.

(B) For the purposes of this subsection, the term "insured institution" shall include a Federal savings bank the deposits of which are insured by the Federal Deposit Insurance Corporation.

(15) The Corporation is authorized to issue rules and regulations to carry out this subsection.

(16) Within two years after the effective date of the Change in Savings and Loan Control Act of 1978 and each year thereafter in the Corporation's annual report to the Congress, the Corporation shall report to the Congress the results of the administration of this subsection, and make any recommendations as to changes in the law which in the opinion of the Corporation would be desirable.

(17) INVESTIGATIVE and ENFORCEMENT AUTHORITY.

(A) INVESTIGATIONS.-The Corporation may exercise any authority vested in the Corporation under paragraph (2) or (3) of subsection (m) of this section in the course of conducting any investigation under paragraph (2)(B) or any other investigation which the Corporation, in its discretion, determines is necessary to determine whether any person has filed inaccurate, incomplete, or misleading information under this subsection or otherwise is violating, has violated, or is about to violate any provision of this subsection or any regulation prescribed under this subsection.

(B) ENFORCEMENT.—Whenever it appears to the Corporation that any person is violating, has violated, or is about to violate any provision of this subsection or any regulation prescribed under this subsection, the agency may, in its discretion, apply to the appropriate district court of the United States or the United States court of any territory for—

(i) a temporary or permanent injunction or restraining order enjoining such person from violating this subsection or any regulation prescribed under this subsection; or

(ii) such other equitable relief as may be necessary to prevent any such violation (including divestiture).

(i) The district courts of the United States and the United States courts in any territory shall have the same jurisdiction and power in connection with any exercise of any authority by the Corporation under subparagraph (A) as such courts have under paragraph (2) or (3) of subsection (m) of this section.

(ii) The district courts of the United States and the United States courts of any territory shall have jurisdiction and power to issue any injunction or restraining order or grant any equitable relief described in subparagraph (B). When appropriate, any

injunction, order, or other equitable relief under this paragraph shall be granted without requiring the posting of any bond.

(18) Any person who willfully violates any provision of this subsection, or any regulation or order issued by the Corporation pursuant thereto, shall forfeit and pay a civil penalty of not more than $10,000 per day for each day during which such violation continues. The Corporation shall have authority to assess such a civil penalty, after giving notice and an opportunity to the person to submit data, views, and arguments, and after giving due consideration to the appropriateness of the penalty with respect to the size of financial resources and good faith of the person charged, the gravity of the violation, and any data, views, and arguments submitted. The agency may collect such civil penalty by agreement with the person or by bringing an action in the appropriate United States district court, except that in any such action, the person against whom the penalty has been assessed shall have a right to trial de

novo.

(19) This subsection shall not apply to a transaction subject to section 1730a of this title.

[See main edition for text of (r)]

(s) Compliance with monetary transaction recordkeeping and report requirements

(1) Compliance procedures required

The Corporation shall prescribe regulations requiring insured institutions to establish and maintain procedures reasonably designed to assure and monitor the compliance of such institutions with the requirements of subchapter II of chapter 53 of title 31.

(2) Examinations of institutions to include review of compliance procedures

(A) In general

Each examination of an insured institution by the Corporation shall include a review of the procedures required to be established and maintained under paragraph (1).

(B) Exam report requirement

The report of examination shall describe any problem with the procedures maintained by the insured institution.

(3) Order to comply with requirements

If the Corporation determines that an insured institution

(A) has failed to establish and maintain the procedures described in paragraph (1);

(B) has failed to correct any problem with the procedures maintained by such institution which was previously reported to the institution by the Corporation,

the Corporation shall issue an order in the manner prescribed in subsection (e) or (f) of this section requiring such institution to cease and desist from its violation of this subsection or regulations prescribed under this subsection.

(t) 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 defined in section 3902(1) of this title), the Corporation shall require all insured institutions to achieve and maintain adequate capital by(A) establishing minimum levels of capital for insured institutions; and

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

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

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

In the Corporation's discretion, the Corporation may treat the failure of any insured institution to maintain capital at or above the minimum level required by the Corporation under this subsection as an unsafe or unsound practice within the meaning of subsection (e) 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 Corporation may issue a directive requiring any insured institution which fails to maintain capital at or above the minimum level required by the Corporation to submit and adhere to a plan for increasing capital which is acceptable to the Corporation.

(B) Enforcement of plan

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

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

(A) consider an insured institution's progress in adhering to any plan required under paragraph (4) whenever such insured institution or any affiliate of such insured institution (including any company which controls such insured institution) seeks the approval of the Corporation for any proposal which would have the effect of diverting earnings, diminishing capital, or otherwise impeding such insured institution's progress in meeting the minimum level of capital required by the Corporation; and

(B) disapprove any proposal referred to in subparagraph (A) if the Corporation determines that the proposal would adversely

affect the ability of the insured institution to comply with such plan.

(As amended Oct. 27, 1986, Pub. L. 99-570, title I, §§ 1359(c), 1361, 100 Stat. 3207-28, 3207-31; Aug. 10, 1987, Pub. L. 100-86, title I, § 111(b), title III, § 306(e), title IV, §§ 406(b), 413(b), 101 Stat. 581, 602, 615, 621.)

REFERENCES IN TEXT

For effective date of the Change in Savings and Loan Control Act of 1978, referred to in subsec. (q)(16), see Short Title of 1978 Amendment note below and section 2101 of Pub. L. 95-630, set out as a note under section 375b of this title.

AMENDMENTS

1987-Subsec. (b)(4). Pub. L. 100-86, § 413(b), added par. (4).

Subsec. (d). Pub. L. 100-86, § 306(e), designated existing provisions as par. (1) and added par. (2).

Subsec. (q)(8) to (19). Pub. L. 100-86, § 111(b), added par. (8) and redesignated former pars. (8) to (18) as (9) to (19), respectively.

Subsec. (t). Pub. L. 100-86, § 406(b), added subsec.

(t).

1986 Subsec. (k)(3)(A). Pub. L. 99-570, § 1359(c)(2), substituted "subsection (e), (f), or (s) of this section shall forfeit" for "subsection (e) or (f) of this section shall forefit".

Subsec. (q)(1). Pub. L. 99-570, § 1361(a), substituted "or, in the discretion of the Corporation, extending for an additional 30 days" for "or extending up to another thirty days" in first sentence and amended second generally. Prior to amendment, second sentence read as follows: "The period for disapproval may be further extended only if the Corporation determines that any acquiring party has not furnished all the information required under paragraph (6) of this subsection or that in its judgment any material information submitted is substantially inaccurate."

Subsec. (q)(2). Pub. L. 99-570, § 1361(b), (c), designated existing provisions as subpar. (A) and added subpars. (B) to (D).

Subsec. (q)(16) to (18). Pub. L. 99-570, § 1361(d), added par. (16), and redesignated former pars. (16) and (17) as (17) and (18), respectively.

Subsec. (s). Pub. L. 99-570, § 1359(c)(1), added subsec. (s).

EFFECTIVE DATE OF 1986 AMENDMENT

Section 1364(f) of Pub. L. 99-570 provided that: "The amendments made by sections 1360 and 1361 [amending sections 1730 and 1817 of this title] shall apply with respect to notices of proposed acquisitions filed after the date of the enactment of this Act [Oct. 27, 1986]."

1-YEAR PROHIBITION ON TERMINATION OF FSLIC
INSURED Status

Section 306(h) of Pub. L. 100-86 provided that: “(1) IN GENERAL.-No association or insured institution may take any action which would result in the voluntary termination of its status as an insured institution during the 1-year period beginning on the date of the enactment of this Act [Aug. 10, 1987].

"(2) EXCEPTION.-Paragraph (1) shall not apply with respect to any association or institution described in section 21(f)(4)(F) of the Federal Home Loan Bank Act (as added by section 302 of this title) [12 U.S.C. 1441(f)(4)(F)).

"(3) AUTHORITY OF FSLIC TO ARRANGE EMERGENCY ACQUISITIONS NOT AFFECTED.-Paragraph (1) shall not affect the authority of the Federal Savings and Loan Insurance Corporation to arrange for the acquisition of an association or insured institution under section 406(f) or 408(m) of the National Housing Act [12 U.S.C. 1729(f), 1730a(m)].

“(4) DEFINITIONS.-For purposes of this subsection"(A) ASSOCIATION.-The term 'association' has the meaning given to such term under section 2(d) of the Home Owners' Loan Act of 1933 [12 U.S.C. 1462(d)]."

"(B) INSURED INSTITUTION.-The term 'insured institution' has the meaning given to such term in section 401(a) of the National Housing Act [12 U.S.C. 1724(a)]."

EFFECTIVE DATE OF REGULATIONS PRESCRIBED UNDER 1986 AMENDMENT

The regulations required to be prescribed under amendments by section 1359 of Pub. L. 99-570 effective at end of 3-month period beginning on October 27, 1986, see section 1364(e) of Pub. L. 99-570, set out as a note under section 1464 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1425a, 1441, 1727, 2804, 3507, 4009 of this title; title 15 sections 57a, 780-5, 1607, 1691c, 16927, 16930; title 31 sections 3121, 9110.

§ 1730a. Regulation of holding companies

(a) Definitions

(1) As used in this section, unless the context otherwise requires—

(A) "insured institution" means a Federal savings and loan association, a Federal savings bank, a building and loan, savings and loan or homestead association or a cooperative bank, the accounts of which are insured by the Federal Savings and Loan Insurance Corporation, and shall include a Federal savings bank the deposits of which are insured by the Federal Deposit Insurance Corporation and a savings bank which is deemed by the Corporation to be an insured institution under subsection (n) of this section;

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

(I) "affiliate" of a specified insured institution means any person or company which controls, is controlled by, or is under common control with, such insured institution;

(J) "State" includes the District of Columbia and the Commonwealth of Puerto Rico; (K) the terms "bank holding company" and "bank" have the meanings given to such terms in subsections (a) and (c), respectively, of section 1841 of this title; and

(L) the term “acquire” has the meaning given to such term in section 1823(f)(8)(E) of this title.

[See main edition for text of (2) and (3); (b)] (c) Holding company activities

(1) Prohibited activities

Except as otherwise provided in this subsection, no savings and loan holding company and no subsidiary (of such company) which is not an insured institution shall

(A) engage in any activity or render any service for or on behalf of an insured institution subsidiary for the purpose or with the effect of evading any law or regulation applicable to such insured institution;

(B) commence any business activity, other than the activities described in paragraph (2), after August 10, 1987; or

(i) the end of the 2-year period beginning on August 10, 1987; or

(ii) the date on which such company received approval under subsection (e) of this section to become a savings and loan holding company.

(2) Exempt activities

The prohibitions of subparagraphs (B) and (C) of paragraph (1) shall not apply to the following business activities of any savings and loan holding company or any subsidiary (of such company) which is not an insured institution:

(A) Furnishing or performing management services for an insured institution subsidiary of such company.

(B) Conducting an insurance agency or escrow business.

(D) Holding or managing properties used or occupied by an insured institution subsidiary of such company.

(E) Acting as trustee under deed of trust. (F) Any other activity

(i) which the Board of Governors of the Federal Reserve System, by regulation, has determined to be permissible for bank holding companies under section 1843(c) of this title, unless the Corporation, by regulation, prohibits or limits any such activity for savings and loan holding companies; or

(ii) in which multiple savings and loan holding companies were authorized (by regulation) to directly engage on March 5, 1987.

(3) Certain limitations on activities not applicable to certain holding companies

Notwithstanding paragraphs (4) and (6) of this subsection, the limitations contained in subparagraphs (B) and (C) of paragraph (1) shall not apply to any savings and loan holding company (or any subsidiary of such company) which controls

(A) only 1 insured institution, if the insured institution subsidiary of such company is a qualified thrift lender (as determined under subsection (o) of this section);

(B) more than 1 insured institution, if—

(i) all, or all but 1, of the insured institution subsidiaries of such company were acquired pursuant to an acquisition under subsection (m) of this section or section 1729(f) of this title; and

(ii) all of the insured institution subsidiaries of such company are qualified thrift lenders (as determined under subsection (o) of this section).

(4) Prior approval of certain new activities required (A) In general

No savings and loan holding company and no subsidiary (of such company) which is not an insured institution shall commence, either de novo or by an acquisition (in whole or in part) of a going concern, any activity described in paragraph (2)(F)(i) of this subsection without the prior approval of the Corporation.

(B) Factors to be considered by Corporation

In considering any application under subparagraph (A) by any savings and loan holding company or any subsidiary of any such company which is not an insured institution, the Corporation shall consider

(i) whether the performance of the activity described in such application by the company or the subsidiary can reasonably be expected to produce benefits to the public (such as greater convenience, increased competition, or gains in efficiency) that outweigh possible adverse effects of such activity (such as undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound financial practices);

(ii) the managerial resources of the companies involved; and

(iii) the adequacy of the financial resources, including capital, of the companies involved.

In prescribing any regulation or considering any application under this paragraph, the Corporation may differentiate between activities commenced de novo and activities commenced by the acquisition, in whole or in part, of a going concern.

(D) Approval or disapproval by order

The approval or disapproval of any application under this paragraph by the Corporation shall be made in an order issued by the Corporation containing the reasons for such approval or disapproval.

(5) Grace period to achieve compliance

If any insured institution referred to in paragraph (3) fails to maintain the status of such institution as a qualified thrift lender, the Corporation may allow, for good cause shown, any company which controls such institution (or any subsidiary of such company which is not an insured institution) up to 3 years to comply with the limitations contained in paragraph (1)(C).

(6) Special provisions relating to certain companies affected by 1987 amendments

(A) Exception to 2-year grace period for achieving compliance

Notwithstanding paragraph (1)(C)(i), any company which received approval under subsection (e) of this section to acquire control of an insured institution between March 5, 1987, and August 10, 1987, shall not continue any business activity other

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