§ 4616. Supervisory actions applicable to significantly undercapitalized regulated entities

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1992

   Federal Housing Enterprises Financial Safety and Soundness Act of 1992

   Pub. L. 102–550 title XIII § 1366 · 106 Stat. 3672

   Enacted · 12 U.S.C. § 4616

   Pub. L. 102–550, title XIII, § 1366, Oct. 28, 1992, 106 Stat. 3978

   Source evidence

   Code source credit
   Pub. L. 102–550, title XIII, § 1366, Oct. 28, 1992, 106 Stat. 3978

   Enacted provision · exact public law section
   SEC. 1366. SUPERVISORY ACTIONS APPLICABLE TO SIGNIFICANTLY UNDERCAPITALIZED ENTERPRISES. (a) Mandatory Supervisory Actions.— (1) Capital restoration plan.— An enterprise that is classified as significantly undercapitalized shall, within the time period under section 1369C (b) and (d), submit to the Director a capital restoration plan that complies with section 1369C and carry out the plan after approval. (2) Restrictions on capital distributions.— (A) Prior approval.— An enterprise that is classified as significantly undercapitalized may not make any capital distribution that would result in the enterprise being reclassified as critically undercapitalized. An enterprise that is classified as significantly undercapitalized enter- prise may not make any other capital distribution unless the Director approves the distribution. (B) Standard for approval.— The Director may approve a capital distribution by an enterprise classified as significantly undercapitalized only if the Director deter-mines that the distribution (i) will enhance the ability of the enterprise to meet the risk-based capital level and the minimum capital level for the enterprise promptly, (ii) will contribute to the long-term financial safety and soundness of the enterprise, or (iii) is otherwise in the public interest. (b) Discretionary Supervisory Actions.— In addition to any other actions taken by the Director (including actions under sub-section (a)), the Director may, at any time, take any of the following actions with respect to an enterprise that is classified as significantly undercapitalized: (1) Limitation on increase in obligations.— Limit any increase in, or order the reduction of, any obligations of the enterprise, including off-balance sheet obligations. (2) Limitation on growth.— Limit or prohibit the growth of the assets of the enterprise or require contraction of the assets of the enterprise. (3) Acquisition of new capital.— Require the enterprise to acquire new capital in a form and amount determined by the Director. (4) Restriction OF activities.— Require the enterprise to terminate, reduce, or modify any activity that the Director determines creates excessive risk to the enterprise. (5) Reclassification from significantly to critically undercapitalized.— The Director may reclassify as critically undercapitalized an enterprise that is classified as significantly undercapitalized (and the enterprise shall be subject to the provisions of section 1367) if— (A) the enterprise does not submit a capital restoration plan that is substantially in compliance with section 13690 within the applicable period or the Director does not approve the capital restoration plan submitted by the enterprise; or (B) the Director determines that the enterprise has failed to make, in good faith, reasonable efforts necessary to comply with the capital restoration plan and fulfill the schedule for the plan approved by the Director. (6) Conservatorship.— Appoint a conservator for the enterprise in accordance with the provisions of section 1369 (excluding subsection (a) (1) and (2)), but only if the Director determines— (A) that the amount of core capital of the enterprise is less than the minimum capital level established for the enterprise under section 1362; and (B) that alternative remedies available to the Director under this title are not satisfactory. (c) Effective Date.— This section shall take effect upon the first classification of the enterprises within capital classifications that occurs under section 1364.

2. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(3) · 122 Stat. 2654

   Substituted · 12 U.S.C. § 4616(a)(1)

   Pub. L. 110–289, § 1144(3), substituted “A regulated entity” for “An enterprise”

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 110–289, § 1144(3), substituted “A regulated entity” for “An enterprise”.

   Enacted provision · exact public law section
   (3) by striking “An enterprise” each place that term appears and inserting “A regulated entity”;

3. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(1) · 122 Stat. 2654

   1. Substituted · 12 U.S.C. § 4616(a)(2)(A)

      Pub. L. 110–289, § 1144(1)–(3), substituted “A regulated entity” for “An enterprise”

   2. Substituted · 12 U.S.C. § 4616(a)(2)(A)

      Pub. L. 110–289, § 1144(1)–(3), substituted “the regulated entity” for “the enterprise”

   3. Substituted · 12 U.S.C. § 4616(a)(2)(A)

      Pub. L. 110–289, § 1144(1)–(3), substituted “undercapitalized” for “undercapitalized enterprise”

   Source evidence

   Code amendment note
   Subsec. (a)(2)(A). Pub. L. 110–289, § 1144(1)–(3), substituted “A regulated entity” for “An enterprise” in two places, “the regulated entity” for “the enterprise”, and, in second sentence, “undercapitalized” for “undercapitalized enterprise”.

   Enacted provision · exact public law section
   (1) in subsection (a)(2), by striking “undercapitalized enterprise” and inserting “undercapitalized”;

4. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(2) · 122 Stat. 2654

   1. Substituted · 12 U.S.C. § 4616(a)(2)(B)

      Pub. L. 110–289, § 1144(2), (4), substituted “a regulated entity” for “an enterprise” wherever appearing

   2. Substituted · 12 U.S.C. § 4616(a)(2)(B)

      Pub. L. 110–289, § 1144(2), (4), substituted “the regulated entity” for “the enterprise” wherever appearing

   Source evidence

   Code amendment note
   Subsec. (a)(2)(B). Pub. L. 110–289, § 1144(2), (4), substituted “a regulated entity” for “an enterprise” and “the regulated entity” for “the enterprise” wherever appearing.

   Enacted provision · exact public law section
   (2) by striking “the enterprise” each place that term appears and inserting “the regulated entity”;

5. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(4) · 122 Stat. 2654

   1. Substituted · 12 U.S.C. § 4616(b)

      Pub. L. 110–289, § 1144(4), (5)(A), (B), substituted “Specific” for “Discretionary supervisory” in introductory provisions

   2. Substituted · 12 U.S.C. § 4616(b)

      Pub. L. 110–289, § 1144(4), (5)(A), (B), substituted “shall carry out this section by taking, at any time, 1 or more” for “may, at any time, take any” in introductory provisions

   3. Substituted · 12 U.S.C. § 4616(b)

      Pub. L. 110–289, § 1144(4), (5)(A), (B), substituted “a regulated entity” for “an enterprise” in introductory provisions

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 110–289, § 1144(4), (5)(A), (B), substituted “Specific” for “Discretionary supervisory” in heading and “shall carry out this section by taking, at any time, 1 or more” for “may, at any time, take any” and “a regulated entity” for “an enterprise” in introductory provisions.

   Enacted provision · exact public law section
   (4) by striking “an enterprise” each place that term appears and inserting “a regulated entity”;

6. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(2) · 122 Stat. 2654

   Substituted · 12 U.S.C. § 4616(b)(1)(4)

   Pub. L. 110–289, § 1144(2), substituted “the regulated entity” for “the enterprise” wherever appearing

   Source evidence

   Code amendment note
   Subsec. (b)(1) to (4). Pub. L. 110–289, § 1144(2), substituted “the regulated entity” for “the enterprise” wherever appearing.

   Enacted provision · exact public law section
   (2) by striking “the enterprise” each place that term appears and inserting “the regulated entity”;

7. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(5)(E) · 122 Stat. 2654

   Redesignated · 12 U.S.C. § 4616(b)(5)

   Pub. L. 110–289, § 1144(5)(E), added par. (5). Former par. (5) redesignated (6)

   Source evidence

   Code amendment note
   Subsec. (b)(5). Pub. L. 110–289, § 1144(5)(E), added par. (5). Former par. (5) redesignated (6).

   Enacted provision · exact public law section
   (E) by inserting after paragraph (4) the following: “(5) Improvement of management.— Take 1 or more of the following actions: “(A) New election of board.— Order a new election for the board of directors of the regulated entity. “(B) Dismissal of directors or executive officers.— Require the regulated entity to dismiss from office any director or executive officer who had held office for more than 180 days immediately before the date on which the regulated entity became undercapitalized. Dismissal under this subparagraph shall not be construed to be a removal pursuant to the enforcement powers of the Director under section 1377. “(C) Employ qualified executive officers.— Require the regulated entity to employ qualified executive officers (who, if the Director so specifies, shall be subject to approval by the Director).” ; and

8. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(2) · 122 Stat. 2654

   1. Substituted · 12 U.S.C. § 4616(b)(5)

      Pub. L. 110–289, § 1144(2), (4), substituted “a regulated entity” for “an enterprise” wherever appearing

   2. Substituted · 12 U.S.C. § 4616(b)(5)

      Pub. L. 110–289, § 1144(2), (4), substituted “the regulated entity” for “the enterprise” wherever appearing

   Target inherited from the preceding amendment note.

   Source evidence

   Code amendment note
   Pub. L. 110–289, § 1144(2), (4), substituted “a regulated entity” for “an enterprise” in introductory provisions and “the regulated entity” for “the enterprise” wherever appearing.

   Enacted provision · exact public law section
   (2) by striking “the enterprise” each place that term appears and inserting “the regulated entity”;

9. 2008

   Federal Housing Finance Regulatory Reform Act of 2008

   Pub. L. 110–289 § 1144(5)(C) · 122 Stat. 2654

   1. Redesignated · 12 U.S.C. § 4616(b)(6)

      Pub. L. 110–289, § 1144(5)(C), (D), redesignated par. (5) as (6)

   2. Struck · 12 U.S.C. § 4616(b)(6)

      Pub. L. 110–289, § 1144(5)(C), (D), struck out former par. (6) which permitted the Director to appoint a conservator

   Source evidence

   Code amendment note
   Subsec. (b)(6). Pub. L. 110–289, § 1144(5)(C), (D), redesignated par. (5) as (6) and struck out former par. (6) which permitted the Director to appoint a conservator.

   Enacted provision · exact public law section
   (C) by striking paragraph (6);

10. 2008

    Federal Housing Finance Regulatory Reform Act of 2008

    Pub. L. 110–289 § 1144(5)(F) · 122 Stat. 2654

    Added · 12 U.S.C. § 4616(b)(7)

    Pub. L. 110–289, § 1144(5)(F), added par. (7)

    Source evidence

    Code amendment note
    Subsec. (b)(7). Pub. L. 110–289, § 1144(5)(F), added par. (7).

    Enacted provision · exact public law section
    (F) by adding at the end the following: “(7) Other action.— Require the regulated entity to take any other action that the Director determines will better carry out the purpose of this section than any of the other actions specified in this subsection.” ; and

11. 2008

    Federal Housing Finance Regulatory Reform Act of 2008

    Pub. L. 110–289 § 1144(6) · 122 Stat. 2654

    1. Added · 12 U.S.C. § 4616(c)

       Pub. L. 110–289, § 1144(6), added subsec. (c)

    2. Struck · 12 U.S.C. § 4616(c)

       Pub. L. 110–289, § 1144(6), struck out former subsec. (c). Prior to amendment, text read as follows: “This section shall take effect upon the first classification of the enterprises within capital classifications that occurs under section 4614 of this title.”

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 110–289, § 1144(6), added subsec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: “This section shall take effect upon the first classification of the enterprises within capital classifications that occurs under section 4614 of this title.”

    Enacted provision · exact public law section
    (6) by striking subsection (c) and inserting the following: “(c) Restriction on Compensation of Executive Officers.— A regulated entity that is classified as significantly undercapitalized in accordance with section 1364 may not, without prior written approval by the Director— “(1) pay any bonus to any executive officer; or “(2) provide compensation to any executive officer at a rate exceeding the average rate of compensation of that officer (excluding bonuses, stock options, and profit sharing) during the 12 calendar months preceding the calendar month in which the regulated entity became significantly undercapitalized.” .

19 of 19 references resolved to an enrolled provision