Collapse to view only § 1790d. Prompt corrective action
- § 1781. Insurance of member accounts
- § 1782. Administration of insurance fund
- § 1783. National Credit Union Share Insurance Fund
- § 1784. Examination of insured credit unions
- § 1785. Requirements governing insured credit unions
- § 1786. Termination of insured credit union status; cease and desist orders; removal or suspension from office; procedure
- § 1786a. Omitted
- § 1787. Payment of insurance
- § 1788. Special assistance to avoid liquidation
- § 1789. Administrative provisions
- § 1789a. Credit unions as depositaries of public money; fiscal agents; duties
- § 1790. Nondiscriminatory provision
- § 1790a. Board disapproval of directors, committee members, and senior executive officers of insured credit unions
- § 1790b. Credit union employee protection remedy
- § 1790c. Reward for information leading to recoveries or civil penalties
- § 1790d. Prompt corrective action
- § 1790e. Temporary Corporate Credit Union Stabilization Fund
§ 1781. Insurance of member accounts
(a) Eligibility
(b) Application; agreementApplication for insurance of member accounts shall be made immediately by each Federal credit union and may be made at any time by a State credit union or a credit union operating under the jurisdiction of the Department of Defense. Applications for such insurance shall be in such form as the Board shall provide and shall contain an agreement by the applicant—
(1) to pay the reasonable cost of such examinations as the Board may deem necessary in connection with determining the eligibility of the applicant for insurance: Provided, That examinations required under subchapter I of this chapter shall be so conducted that the information derived therefrom may be utilized for share insurance purposes, and examinations conducted by State regulatory agencies shall be utilized by the Board for such purposes to the maximum extent feasible;
(2) to permit and pay the reasonable cost of such examinations as in the judgment of the Board may from time to time be necessary for the protection of the fund and of other insured credit unions;
(3) to permit the Board to have access to any information or report with respect to any examination made by or for any public regulatory authority, including any commission, board, or authority having supervision of a State-chartered credit union, and furnish such additional information with respect thereto as the Board may require;
(4) to provide protection and indemnity against burglary, defalcation, and other similar insurable losses, of the type, in the form, and in an amount at least equal to that required by the laws under which the credit union is organized and operates;
(5) to maintain such regular reserves as may be required by the laws of the State, district, territory, or other jurisdiction pursuant to which it is organized and operated, in the case of a State-chartered credit union, or as may be required by this chapter, in the case of a Federal credit union;
(6) to maintain such special reserves as the Board, by regulation or in special cases, may require for protecting the interest of members or to assure that all insured credit unions maintain regular reserves which are not less than those required under subchapter I of this chapter;
(7) not to issue or have outstanding any account or security the form of which, by regulation or in special cases, has not been approved by the Board except for accounts authorized by State law for State credit unions;
(8) to pay and maintain its deposit and to pay the premium charges for insurance imposed by this subchapter; and
(9) to comply with the requirements of this subchapter and of regulations prescribed by the Board pursuant thereto.
(c) Approval of application
(1) Before approving the application of any credit union for insurance of its member accounts, the Board shall consider—
(A) the history, financial condition, and management policies of the applicant;
(B) the economic advisability of insuring the applicant without undue risk of the fund;
(C) the general character and fitness of the applicant’s management;
(D) the convenience and needs of the members to be served by the applicant; and
(E) whether the applicant is a cooperative association organized for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes.
(2) The Board shall disapprove the application of any credit union for insurance of its member accounts if it finds that its reserves are inadequate, that its financial condition and policies are unsafe or unsound, that its management is unfit, that insurance of its member accounts would otherwise involve undue risk to the fund, or that its powers and purposes are inconsistent with the promotion of thrift among its members and the creation of a source of credit for provident or productive purposes.
(3) Repealed. Pub. L. 95–22, title III, § 301, Apr. 19, 1977, 91 Stat. 49.
(d) Certificate of insurance
(e) Prohibition on certain associations
(1) In general
(2) Routine business financing
(3) “Government-sponsored enterprise” defined
(4) Employee credit union
(June 26, 1934, ch. 750, title II, § 201, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 994; amended Pub. L. 92–221, §§ 1, 2, Dec. 23, 1971, 85 Stat. 796, 797; Pub. L. 95–22, title III, § 301, Apr. 19, 1977, 91 Stat. 49; Pub. L. 95–630, title V, §§ 502(b), 504, Nov. 10, 1978, 92 Stat. 3681, 3682; Pub. L. 98–369, div. B, title VIII, § 2801, July 18, 1984, 98 Stat. 1203; Pub. L. 104–208, div. A, title II, § 2615(a), Sept. 30, 1996, 110 Stat. 3009–478; Pub. L. 109–351, title VII, § 726(11), Oct. 13, 2006, 120 Stat. 2002.)
§ 1782. Administration of insurance fund
(a) Reports of condition
(1) Each insured credit union shall make reports of condition to the Board upon dates which shall be selected by it. Such reports of condition shall be in such form and shall contain such information as the Board may require. The reporting dates selected for reports of condition shall be the same for all insured credit unions except that when any of said reporting dates is a nonbusiness day for any credit union the preceding business day shall be its reporting date. The total amount of the member accounts of each insured credit union as of each reporting date shall be reported in such reports of condition in accordance with regulations prescribed by the Board. Each report of condition shall contain a declaration by the president, by a vice president, by the treasurer, or by any other officer designated by the board of directors of the reporting credit union to make such declaration, that the report is true and correct to the best of such officer’s knowledge and belief. Unless such requirement is waived by the Board, the correctness of each report of condition shall be attested by the signatures of three of the officers of the reporting credit union with the declaration that the report has been examined by them and to the best of their knowledge and belief is true and correct.
(2) The Board may call for such other reports as it may from time to time require.
(3) The Board may require reports of condition to be published in such manner, not inconsistent with any applicable law, as it may direct. Any insured credit union which maintains procedures reasonably adapted to avoid any inadvertent error and, unintentionally and as a result of such an error, fails to submit or publish any report required under this subsection or section 1756 of this title, within the period of time specified by the Board, or submits or publishes any false or misleading report or information, or inadvertently transmits or publishes any report which is minimally late, shall be subject to a penalty of not more than $2,000 for each day during which such failure continues or such false or misleading information is not corrected. The insured credit union shall have the burden of proving that an error was inadvertent and that a report was inadvertently transmitted or published late. Any insured credit union which fails to submit or publish any report required under this subsection or section 1756 of this title, within the period of time specified by the Board, or submits or publishes any false or misleading report or information, in a manner not described in the 2nd preceding sentence shall be subject to a penalty of not more than $20,000 for each day during which such failure continues or such false or misleading information is not corrected. Notwithstanding the preceding sentence, if any insured credit union knowingly or with reckless disregard for the accuracy of any information or report described in such sentence submits or publishes any false or misleading report or information, the Board may assess a penalty of not more than $1,000,000 or 1 percent of total assets of such credit union, whichever is less, per day for each day during which such failure continues or such false or misleading information is not corrected. Any penalty imposed under any of the 4 preceding sentences shall be assessed and collected by the Board in the manner provided in section 1786(k)(2) of this title (for penalties imposed under such section) and any such assessment (including the determination of the amount of the penalty) shall be subject to the provisions of such section. Any insured credit union against which any penalty is assessed under this subsection shall be afforded an agency hearing if such insured credit union submits a request for such hearing within 20 days after the issuance of the notice of assessment. Section 1786(j) of this title shall apply to any proceeding under this subsection.
(4) The Board may accept any report of condition made to any commission, board, or authority having supervision of a State-chartered credit union and may furnish to any such commission, board, or authority reports of condition made to the Board.
(5) Reports required under subchapter I of this chapter shall be so prepared that they can be used for share insurance purposes. To the maximum extent feasible, the Board shall use for insurance purposes reports submitted to State regulatory agencies by State-chartered credit unions.
(6)Audit requirement.—
(A)In general.—Before the end of the 120-day period beginning on August 9, 1989, and notwithstanding any other provision of Federal or State law, the Board shall prescribe, by regulation, audit standards which require an outside, independent audit of any insured credit union by a certified public accountant for any fiscal year (of such credit union)—
(i) for which such credit union has not conducted an annual supervisory committee audit;
(ii) for which such credit union has not received a complete and satisfactory supervisory committee audit; or
(iii) during which such credit union has experienced persistent and serious recordkeeping deficiencies, as determined by the Board.
(B)Unsafe or unsound practice.—The Board may treat the failure of any insured credit union to obtain an outside, independent audit for any fiscal year for which such audit is required under subparagraph (A) or (D) as an unsafe or unsound practice within the meaning of section 1786(b) of this title.
(C)Accounting principles.—
(i)In general.—Accounting principles applicable to reports or statements required to be filed with the Board by each insured credit union shall be uniform and consistent with generally accepted accounting principles.
(ii)Board determination.—If the Board determines that the application of any generally accepted accounting principle to any insured credit union is not appropriate, the Board may prescribe an accounting principle for application to the credit union that is no less stringent than generally accepted accounting principles.
(iii)De minimus 1
1 So in original. Probably should be “De minimis”.
exception.—This subparagraph shall not apply to any insured credit union, the total assets of which are less than $10,000,000, unless prescribed by the Board or an appropriate State credit union supervisor.(D)Large credit union audit requirement.—
(i)In general.—Each insured credit union having total assets of $500,000,000 or more shall have an annual independent audit of the financial statements of the credit union, performed in accordance with generally accepted auditing standards by an independent certified public accountant or public accountant licensed by the appropriate State or jurisdiction to perform those services.
(ii)Voluntary audits.—If a Federal credit union that is not required to conduct an audit under clause (i), and that has total assets of more than $10,000,000 conducts such an audit for any purpose, using an independent auditor who is compensated for his or her audit services with respect to that audit, the audit shall be performed consistent with the accountancy laws of the appropriate State or jurisdiction, including licensing requirements.
(7)Report to independent auditor.—
(A)In general.—Each insured credit union which has engaged the services of an independent auditor to audit such depository institution within the past 2 years shall transmit to such auditor a copy of the most recent report of condition made by such credit union (pursuant to this chapter or any other provision of law) and a copy of the most recent report of examination received by such credit union.
(B)Additional information.—In addition to the copies of the reports required to be provided to an auditor under subparagraph (A), each insured credit union shall provide such auditor with—
(i) a copy of any supervisory memorandum of understanding with such credit union and any written agreement between the Board or a State regulatory agency and the credit union which is in effect during the period covered by the audit; and
(ii) a report of any action initiated or taken by the Board during such period under subsection (e), (f), (g), (i), (l), or (q) of section 1786 of this title, or any similar action taken by a State regulatory agency under State law, or any other civil money penalty assessed by the Board under this chapter, with respect to—(I) the credit union; or(II) any institution-affiliated party.
(8)Data sharing with other agencies and persons.—In addition to reports of examination, reports of condition, and other reports required to be regularly provided to the Board (with respect to all insured credit unions, including a credit union for which the Corporation has been appointed conservator or liquidating agent) or an appropriate State commission, board, or authority having supervision of a State-chartered credit union, the Board may, in the discretion of the Board, furnish any report of examination or other confidential supervisory information concerning any credit union or other entity examined by the Board under authority of any Federal law, to—
(A) any other Federal or State agency or authority with supervisory or regulatory authority over the credit union or other entity;
(B) any officer, director, or receiver of such credit union or entity; and
(C) any other person that the Board determines to be appropriate.
(b) Certified statement
(1) Statement required
(A) In general
(B) Exception for newly insured credit union
(2) Form
(3) Certification
(c) Deposit with National Credit Union Share Insurance Fund; amount, return, distribution, etc.
(1)
(A)
(i) Each insured credit union shall pay to and maintain with the National Credit Union Share Insurance Fund a deposit in an amount equaling 1 per centum of the credit union’s insured shares.
(ii) The Board may, in its discretion, authorize insured credit unions to initially fund such deposit over a period of time in excess of one year if necessary to avoid adverse effects on the condition of insured credit unions.
(iii)Periodic adjustment.—The amount of each insured credit union’s deposit shall be adjusted as follows, in accordance with procedures determined by the Board, to reflect changes in the credit union’s insured shares:(I) annually, in the case of an insured credit union with total assets of not more than $50,000,000; and(II) semi-annually, in the case of an insured credit union with total assets of $50,000,000 or more.
(B)
(i) The deposit shall be returned to an insured credit union in the event that its insurance coverage is terminated, it converts to insurance coverage from another source, or in the event the operations of the fund are transferred from the National Credit Union Administration Board.
(ii) The deposit shall be returned in accordance with procedures and valuation methods determined by the Board, but in no event shall the deposit be returned any later than one year after the final date on which no shares of the credit union are insured by the Board.
(iii) The deposit shall not be returned in the event of liquidation on account of bankruptcy or insolvency.
(iv) The deposit funds may be used by the fund if necessary to meet its expenses, in which case the amount so used shall be expensed and shall be replenished by insured credit unions in accordance with procedures established by the Board.
(2)Insurance premium charges.—
(A)In general.—Each insured credit union shall, at such times as the Board prescribes (but not more than twice in any calendar year), pay to the Fund a premium charge for insurance in an amount stated as a percentage of insured shares (which shall be the same for all insured credit unions).
(B)Relation of premium charge to equity ratio of Fund.—The Board may assess a premium charge only if—
(i) the Fund’s equity ratio is less than 1.3 percent; and
(ii) the premium charge does not exceed the amount necessary to restore the equity ratio to 1.3 percent.
(C)Premium charge required if equity ratio falls below 1.2 percent.—If the Fund’s equity ratio is less than 1.2 percent, the Board shall, subject to subparagraph (B), assess a premium charge in such an amount as the Board determines to be necessary to restore the equity ratio to, and maintain that ratio at, 1.2 percent.
(D)Fund restoration plans.—
(i)In general.—Whenever—(I) the Board projects that the equity ratio of the Fund will, within 6 months of such determination, fall below the minimum amount specified in subparagraph (C); or(II) the equity ratio of the Fund actually falls below the minimum amount specified in subparagraph (C) without any determination under sub-clause (I) having been made,
the Board shall establish and implement a restoration plan within 90 days that meets the requirements of clause (ii) and such other conditions as the Board determines to be appropriate.
(ii)Requirements of restoration plan.—A restoration plan meets the requirements of this clause if the plan provides that the equity ratio of the Fund will meet or exceed the minimum amount specified in subparagraph (C) before the end of the 8-year period beginning upon the implementation of the plan (or such longer period as the Board may determine to be necessary due to extraordinary circumstances).
(iii)Transparency.—Not more than 30 days after the Board establishes and implements a restoration plan under clause (i), the Board shall publish in the Federal Register a detailed analysis of the factors considered and the basis for the actions taken with regard to the plan.
(3)Distributions from Fund required.—
(A)In general.—The Board shall, subject to the requirements of section 1790e(e) of this title, effect a pro rata distribution to insured credit unions after each calendar year if, as of the end of that calendar year—
(i) any loans to the Fund from the Federal Government, and any interest on those loans, have been repaid;
(ii) the Fund’s equity ratio exceeds the normal operating level; and
(iii) the Fund’s available assets ratio exceeds 1.0 percent.
(B)Amount of distribution.—The Board shall distribute under subparagraph (A) the maximum possible amount that—
(i) does not reduce the Fund’s equity ratio below the normal operating level; and
(ii) does not reduce the Fund’s available assets ratio below 1.0 percent.
(C)Calculation based on certified statements.—In calculating the Fund’s equity ratio and available assets ratio for purposes of this paragraph, the Board shall determine the aggregate amount of the insured shares in all insured credit unions from insured credit unions certified statements under subsection (b) for the final reporting period of the calendar year referred to in subparagraph (A).
(4)Timeliness and accuracy of data.—In calculating the available assets ratio and equity ratio of the Fund, the Board shall use the most current and accurate data reasonably available.
(d) Remedy for failure to report; penalty for failure to file certified statement or pay premium; dispute as to deposit or premium charge; prohibition on distribution of assets or dividends while in default
(1) Any insured credit union which fails to make any report of condition under subsection (a) of this section or to file any certified statement required to be filed by it in connection with determining the amount of its deposit or any premium charge for insurance may be compelled to make such report or to file such statement by mandatory injunction or other appropriate remedy in a suit brought for such purpose by the Board against the credit union and any officer or officers thereof. Any such suit may be brought in any court of the United States of competent jurisdiction in the district or territory in which the principal office of the credit union is located.
(2)Penalty for failure to make accurate certified statement or to pay deposit or premium.—
(A)First tier.—Any insured credit union which—
(i) maintains procedures reasonably adapted to avoid any inadvertent error and, unintentionally and as a result of such an error, fails to submit any certified statement under subsection (b)(1) within the period of time required or submits a false or misleading certified statement under such subsection; or
(ii) submits the statement at a time which is minimally after the time required,
shall be subject to a penalty of not more than $2,000 for each day during which such failure continues or such false and misleading information is not corrected. The insured credit union shall have the burden of proving that an error was inadvertent or that a statement was inadvertently submitted late.
(B)Second tier.—Any insured credit union which—
(i) fails to submit any certified statement under subsection (b)(1) within the period of time required or submits a false or misleading certified statement in a manner not described in subparagraph (A); or
(ii) fails or refuses to pay any deposit or premium for insurance required under this subchapter,
shall be subject to a penalty of not more than $20,000 for each day during which such failure continues, such false and misleading information is not corrected, or such deposit or premium is not paid.
(C)Third tier.—Notwithstanding subparagraphs (A) and (B), if any insured credit union knowingly or with reckless disregard for the accuracy of any certified statement under subsection (b)(1) submits a false or misleading certified statement under such subsection, the Board may assess a penalty of not more than $1,000,000 or not more than 1 percent of the total assets of the credit union, whichever is less, per day for each day during which the failure continues or the false or misleading information in such statement is not corrected.
(D)Assessment procedure.—Any penalty imposed under this paragraph shall be assessed and collected by the Board in the manner provided in section 1786(k)(2) of this title (for penalties imposed under such section) and any such assessment (including the determination of the amount of the penalty) shall be subject to the provisions of such section.
(E)Hearing.—Any insured credit union against which any penalty is assessed under this paragraph shall be afforded an agency hearing if the credit union submits a request for such hearing within 20 days after the issuance of the notice of the assessment. Section 1786(j) of this title shall apply to any proceeding under this subparagraph.
(F)Special rule for disputed payments.—No penalty may be assessed for the failure of any insured credit union to pay any deposit or premium for insurance if—
(i) the failure is due to a dispute between the credit union and the Board over the amount of the deposit or premium which is due from the credit union; and
(ii) the credit union deposits security satisfactory to the Board for payment of the deposit or insurance premium upon final determination of the dispute.
(3) No insured credit union shall pay any dividends on its insured shares or distribute any of its assets while it remains in default in the payment of its deposit or any premium charge for insurance due to the fund. Any director or officer of any insured credit union who knowingly participates in the declaration or payment of any such dividend or in any such distribution shall, upon conviction, be fined not more than $1,000 or imprisoned not more than one year, or both. The provisions of this paragraph shall not be applicable in any case in which the default is due to a dispute between the credit union and the Board over the amount of its deposit or the premium charge due to the fund if the credit union deposits security satisfactory to the Board for payment of its deposit or the premium charge upon final determination of the issue.
(e) Recovery of unpaid deposit or premium; limitations
(f) Penalty for failure to comply with section; court determination of failure; remedies not exclusive
(g) Records
(h) DefinitionsFor purposes of this section, the following definitions shall apply:
(1) Available assets ratioThe term “available assets ratio”, when applied to the Fund, means the ratio of—
(A) the amount determined by subtracting—
(i) direct liabilities of the Fund and contingent liabilities for which no provision for losses has been made, from
(ii) the sum of cash and the market value of unencumbered investments authorized under section 1783(c) of this title, to
(B) the aggregate amount of the insured shares in all insured credit unions.
(2) Equity ratioThe term “equity ratio”, which shall be calculated using the financial statements of the Fund alone, without any consolidation or combination with the financial statements of any other fund or entity, means the ratio of—
(A) the amount of Fund capitalization, including insured credit unions’ 1 percent capitalization deposits and the retained earnings balance of the Fund (net of direct liabilities of the Fund and contingent liabilities for which no provision for losses has been made); to
(B) the aggregate amount of the insured shares in all insured credit unions.
(3) Insured shares
(4) Normal operating level
(June 26, 1934, ch. 750, title II, § 202, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 995; amended Pub. L. 93–383, title VII, § 727, Aug. 22, 1974, 88 Stat. 720; Pub. L. 95–630, title V, §§ 502(b), 505, Nov. 10, 1978, 92 Stat. 3681, 3682; Pub. L. 97–320, title V, §§ 528, 529, Oct. 15, 1982, 96 Stat. 1535; Pub. L. 97–457, § 29, Jan. 12, 1983, 96 Stat. 2510; Pub. L. 98–369, div. B, title VIII, §§ 2802–2810, July 18, 1984, 98 Stat. 1204, 1205; Pub. L. 101–73, title IX, §§ 911(f), 919, 931(b), Aug. 9, 1989, 103 Stat. 482, 488, 493; Pub. L. 102–242, title III, § 313(b), Dec. 19, 1991, 105 Stat. 2369; Pub. L. 102–550, title XVI, § 1605(b)(3), Oct. 28, 1992, 106 Stat. 4087; Pub. L. 105–219, title II, § 201, title III, § 302(a), Aug. 7, 1998, 112 Stat. 918, 931; Pub. L. 109–351, title VII, §§ 707(b), 726(12), Oct. 13, 2006, 120 Stat. 1987, 2002; Pub. L. 111–22, div. A, title II, § 204(e), (f)(2), May 20, 2009, 123 Stat. 1651, 1653; Pub. L. 111–382, § 2, Jan. 4, 2011, 124 Stat. 4135.)
§ 1783. National Credit Union Share Insurance Fund
(a) Creation; use of fund
(b) Deposit of deposits and premium charges, fees and penalties
(c) Investment authorization
(d) Loans to fund, limitation and terms; interest accrual; determination of interest rate
(1) If, in the judgment of the Board, a loan to the insurance fund, or to the stabilization fund described in section 1790e of this title, is required at any time for purposes of this subchapter,1
1 See References in Text note below.
the Secretary of the Treasury shall make the loan, but loans under this paragraph shall not exceed in the aggregate $6,000,000,000 outstanding at any one time. Except as otherwise provided in this subsection, section 1790e of this title, and in subsection (e) of this section, each loan under this paragraph shall be made on such terms as may be fixed by agreement between the Board and the Secretary of the Treasury.(2) Interest shall accrue to the Treasury on the amount of any outstanding loans made to the fund pursuant to paragraph (1) of this subsection on the basis of the average daily amount of such outstanding loans determined at the close of each fiscal year with respect to such year, and the Board shall pay the interest so accruing into the Treasury as miscellaneous receipts annually from the fund. The Secretary of the Treasury shall determine the applicable interest rate in advance by calculating the average yield to maturity (on the basis of daily closing market bid quotations during the month of September of the preceding fiscal year) on outstanding marketable public debt obligations of the United States having a maturity date of five or less years from the first day of such month of September and by adjusting such yield to the nearest one-eighth of 1 per centum.
(3) For the purpose of making loans under paragraph (1) of this subsection, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, and the purposes for which securities may be issued under chapter 31 of title 31 are hereby extended to include such loans. All loans and repayments under this section shall be treated as public debt transactions of the United States.
(4)Temporary increases authorized.—
(A)Recommendations for increase.—During the period beginning on May 20, 2009, and ending on December 31, 2010, if, upon the written recommendation of the Board (upon a vote of not less than two-thirds of the members of the Board) and the Board of Governors of the Federal Reserve System (upon a vote of not less than two-thirds of the members of such Board), the Secretary of the Treasury (in consultation with the President) determines that additional amounts above the $6,000,000,000 amount specified in paragraph (1) are necessary, such amount shall be increased to the amount so determined to be necessary, not to exceed $30,000,000,000.
(B)Report required.—If the borrowing authority of the Board is increased above $6,000,000,000 pursuant to subparagraph (A), the Board shall promptly submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives describing the reasons and need for the additional borrowing authority and its intended uses.
(e) Excess funds credited against loans
(f) Authorization for fund to borrow from Central Liquidity Facility
(June 26, 1934, ch. 750, title II, § 203, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 999; amended Pub. L. 94–273, § 2(4), Apr. 21, 1976, 90 Stat. 375; Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 97–320, title V, § 530, Oct. 15, 1982, 96 Stat. 1535; Pub. L. 98–369, div. B, title VIII, § 2811, July 18, 1984, 98 Stat. 1206; Pub. L. 111–22, div. A, title II, § 204(c)(2), (3), May 20, 2009, 123 Stat. 1650.)
§ 1784. Examination of insured credit unions
(a) Examiners and claim agents; powers; report by examiner; jurisdiction of court
(b) Power of Board; jurisdiction of court
(c) Court orders enforcing subpenas; immunity
(d) Administration acceptance of State board reports; reports of Board furnished to State board
(e) Flood insurance compliance by insured credit unions
(1) Examination
(2) Report
(A) Requirement
(B) Contents
(f) Access to liquidity
The Board shall—
(1) periodically assess the potential liquidity needs of each insured credit union, and the options that the credit union has available for meeting those needs; and
(2) periodically assess the potential liquidity needs of insured credit unions as a group, and the options that insured credit unions have available for meeting those needs.
(g) Sharing information with Federal reserve banks
(June 26, 1934, ch. 750, title II, § 204, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1001; amended Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 101–73, title IX, § 915(a), Aug. 9, 1989, 103 Stat. 486; Pub. L. 103–325, title V, § 529(b), Sept. 23, 1994, 108 Stat. 2266; Pub. L. 105–219, title III, § 303, Aug. 7, 1998, 112 Stat. 934; Pub. L. 109–351, title VII, § 726(13), Oct. 13, 2006, 120 Stat. 2002.)
§ 1785. Requirements governing insured credit unions
(a) Insurance logo
(1) Insured credit unions
(A) In general
(B) Statement to be included
(2) Regulations
(3) Penalties
(b) Restrictions
(1) Except as provided in paragraph (2), no insured credit union shall, without the prior approval of the Board—
(A) merge or consolidate with any noninsured credit union or institution;
(B) assume liability to pay any member accounts in, or similar liabilities of, any noninsured credit union or institution;
(C) transfer assets to any noninsured credit union or institution in consideration of the assumption of liabilities for any portion of the member accounts in such insured credit union; or
(D) convert into a noninsured credit union or institution.
(2)Conversion of insured credit unions to mutual savings banks.—
(A)In general.—Notwithstanding paragraph (1), an insured credit union may convert to a mutual savings bank or savings association (if the savings association is in mutual form), as those terms are defined in section 1813 of this title, without the prior approval of the Board, subject to the requirements and procedures set forth in the laws and regulations governing mutual savings banks and savings associations.
(B)Conversion proposal.—A proposal for a conversion described in subparagraph (A) shall first be approved, and a date set for a vote thereon by the members (either at a meeting to be held on that date or by written ballot to be filed on or before that date), by a majority of the directors of the insured credit union. Approval of the proposal for conversion shall be by the affirmative vote of a majority of the members of the insured credit union who vote on the proposal.
(C)Notice of proposal to members.—An insured credit union that proposes to convert to a mutual savings bank or savings association under subparagraph (A) shall submit notice to each of its members who is eligible to vote on the matter of its intent to convert—
(i) 90 days before the date of the member vote on the conversion;
(ii) 60 days before the date of the member vote on the conversion; and
(iii) 30 days before the date of the member vote on the conversion.
(D)Notice of proposal to board.—The Board may require an insured credit union that proposes to convert to a mutual savings bank or savings association under subparagraph (A) to submit a notice to the Board of its intent to convert during the 90-day period preceding the date of the completion of the conversion.
(E)Inapplicability of chapter upon conversion.—Upon completion of a conversion described in subparagraph (A), the credit union shall no longer be subject to any of the provisions of this chapter.
(F)Limit on compensation of officials.—
(i)In general.—No director or senior management official of an insured credit union may receive any economic benefit in connection with a conversion of the credit union as described in subparagraph (A), other than—(I) director fees; and(II) compensation and other benefits paid to directors or senior management officials of the converted institution in the ordinary course of business.
(ii)Senior management official.—For purposes of this subparagraph, the term “senior management official” means a chief executive officer, an assistant chief executive officer, a chief financial officer, and any other senior executive officer (as defined by the appropriate Federal banking agency pursuant to section 1831i(f) of this title).
(G)Consistent rules.—
(i)In general.—Not later than 6 months after August 7, 1998, the Administration shall promulgate final rules applicable to charter conversions described in this paragraph that are consistent with rules promulgated by other financial regulators, including the Office of the Comptroller of the Currency. The rules required by this clause shall provide that charter conversion by an insured credit union shall be subject to regulation that is no more or less restrictive than that applicable to charter conversions by other financial institutions.
(ii)Oversight of member vote.—The member vote concerning charter conversion under this paragraph shall be administered by the Administration, and shall be verified by the Federal or State regulatory agency that would have jurisdiction over the institution after the conversion. If either the Administration or that regulatory agency disapproves of the methods by which the member vote was taken or procedures applicable to the member vote, the member vote shall be taken again, as directed by the Administration or the agency.
(3) Except with the prior written approval of the Board, no insured credit union shall merge or consolidate with any other insured credit union or, either directly or indirectly, acquire the assets of, or assume liability to pay any member accounts in, any other insured credit union.
(c) Considerations for waiver or enforcement of restrictionsIn granting or withholding approval or consent under subsection (b) of this section, the Board shall consider—
(1) the history, financial condition, and management policies of the credit union;
(2) the adequacy of the credit union’s reserves;
(3) the economic advisability of the transaction;
(4) the general character and fitness of the credit union’s management;
(5) the convenience and needs of the members to be served by the credit union; and
(6) whether the credit union is a cooperative association organized for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes.
(d) Prohibition
(1) In generalExcept with prior written consent of the Board—
(A) any person who has been convicted of any criminal offense involving dishonesty or a breach of trust, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, may not—
(i) become, or continue as, an institution-affiliated party with respect to any insured credit union; or
(ii) otherwise participate, directly or indirectly, in the conduct of the affairs of any insured credit union; and
(B) any insured credit union may not permit any person referred to in subparagraph (A) to engage in any conduct or continue any relationship prohibited under such subparagraph.
(2) Minimum 10-year prohibition period for certain offenses
(A) In generalIf the offense referred to in paragraph (1)(A) in connection with any person referred to in such paragraph is—
(i) an offense under—(I) section 215, 656, 657, 1005, 1006, 1007, 1008,1
1 See References in Text note below.
1014, 1032, 1344, 1517, 1956, or 1957 of title 18; or(II) section 1341 or 1343 of such title which affects any financial institution (as defined in section 20 of such title); or(ii) the offense of conspiring to commit any such offense,
the Board may not consent to any exception to the application of paragraph (1) to such person during the 10-year period beginning on the date the conviction or the agreement of the person becomes final.
(B) Exception by order of sentencing court
(i) In general
(ii) Period for filing
(3) Penalty
(4) Exceptions
(A) Certain older offenses
(i) In generalWith respect to an individual, paragraph (1) shall not apply to an offense if—(I) it has been 7 years or more since the offense occurred; or(II) the individual was incarcerated with respect to the offense and it has been 5 years or more since the individual was released from incarceration.
(ii) Offenses committed by individuals 21 or younger
(iii) Limitation
(B) Expungement and sealingWith respect to an individual, paragraph (1) shall not apply to an offense if—
(i) there is an order of expungement, sealing, or dismissal that has been issued in regard to the conviction in connection with such offense; and
(ii) it is intended by the language in the order itself, or in the legislative provisions under which the order was issued, that the conviction shall be destroyed or sealed from the individual’s State, Tribal, or Federal record, even if exceptions allow the record to be considered for certain character and fitness evaluation purposes.
(C) De minimis exemption
(i) In general
(ii) Confinement criteriaIn issuing rules under clause (i), the Board shall include a requirement that the offense was punishable by a term of three years or less confined in a correctional facility, where such confinement—(I) is calculated based on the time an individual spent incarcerated as a punishment or a sanction, not as pretrial detention; and(II) does not include probation or parole where an individual was restricted to a particular jurisdiction or was required to report occasionally to an individual or a specific location.
(iii) Bad check criteria
(iv) Designated lesser offenses
(5) Consent applications
(A) In general
(B) Sponsored applications filed with regional officesConsent applications filed at a regional office of the Board by an insured credit union on behalf of an individual—
(i) shall be reviewed by such office;
(ii) may be approved or denied by such office, if such authority has been delegated to such office by the Board; and
(iii) may only be denied by such office if the general counsel of the Board (or a designee) certifies that the denial is consistent with this section.
(C) Individual applications filed with regional officesConsent applications filed at a regional office by an individual—
(i) shall be reviewed by such office; and
(ii) may be approved or denied by such office, if such authority has been delegated to such office by the Board, except with respect to—(I) cases involving an offense described under paragraph (1)(B); 1 and(II) such other high-level security cases as may be designated by the Board.
(D) National office reviewThe national office of the Board shall—
(i) review any consent application with respect to which a regional office is not authorized to approve or deny the application; and
(ii) review any consent application that is denied by a regional office, if the individual requests a review by the national office.
(E) Forms and instructions
(i) Availability
(ii) Contents
(F) Consideration of criminal history
(i) Regional office considerationIn reviewing a consent application, a regional office shall—(I) primarily rely on the criminal history record of the Federal Bureau of Investigation; and(II) provide such record to the applicant to review for accuracy.
(ii) Certified copies
(G) Consideration of rehabilitationConsistent with title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.), the Board shall—
(i) conduct an individualized assessment when evaluating consent applications that takes into account evidence of rehabilitation, the applicant’s age at the time of the conviction or program entry, the time that has elapsed since conviction or program entry, and the relationship of individual’s 2
2 So in original. Probably should be preceded by “the”.
offense to the responsibilities of the applicable position;(ii) consider the individual’s employment history, letters of recommendation, certificates documenting participation in substance abuse programs, successful participating in job preparation and educational programs, and other relevant mitigating evidence; and
(iii) consider any additional information the Board determines necessary for safety and soundness.
(H) Scope of employment
(I) Coordination with FDIC
(6) DefinitionsIn this subsection:
(A) Consent application
(B) Criminal offense involving dishonestyThe term “criminal offense involving dishonesty”—
(i) means an offense under which an individual, directly or indirectly—(I) cheats or defrauds; or(II) wrongfully takes property belonging to another in violation of a criminal statute;
(ii) includes an offense that Federal, State, or local law defines as dishonest, or for which dishonesty is an element of the offense; and
(iii) does not include—(I) a misdemeanor criminal offense committed more than one year before the date on which an individual files a consent application, excluding any period of incarceration; or(II) an offense involving the possession of controlled substances.
(C) Pretrial diversion or similar program
(e) Security standards; reports; penalty
(1) The Board shall promulgate rules establishing minimum standards with which each insured credit union must comply with respect to the installation, maintenance, and operation of security devices and procedures, reasonable in cost, to discourage robberies, burglaries, and larcenies and to assist in the identification and apprehension of persons who commit such acts.
(2) The rules shall establish the time limits within which insured credit unions shall comply with the standards and shall require the submission of periodic reports with respect to the installation, maintenance, and operation of security devices and procedures.
(3) An insured credit union which violates a rule promulgated pursuant to this subsection shall be subject to a civil penalty which shall not exceed $100 for each day of the violation.
(f) Share draft accounts; maintenance, loans, etc.
(1) Every insured credit union is authorized to maintain, and make loans with respect to, share draft accounts in accordance with rules and regulations prescribed by the Board. Except as provided in paragraph (2), an insured credit union may pay dividends on share draft accounts and may permit the owners of such share draft accounts to make withdrawals by negotiable or transferable instruments or other orders for the purpose of making transfers to third parties.
(2) Paragraph (1) shall apply only with respect to share draft accounts in which the entire beneficial interest is held by one or more individuals or members or by an organization which is operated primarily for religious, philanthropic, charitable, educational, or other similar purposes and which is not operated for profit, and with respect to deposits of public funds by an officer, employee, or agent of the United States, any State, county, municipality, or political subdivision thereof, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, any territory or possession of the United States, or any political subdivision thereof.
(g) Interest rates
(1) If the applicable rate prescribed in this subsection exceeds the rate an insured credit union would be permitted to charge in the absence of this subsection, such credit union may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this subsection, take, receive, reserve, and charge on any loan, interest at a rate of not more than 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where such insured credit union is located or at the rate allowed by the laws of the State, territory, or district where such credit union is located, whichever may be greater.
(2) If the rate prescribed in paragraph (1) exceeds the rate such credit union would be permitted to charge in the absence of this subsection, and such State fixed rate is thereby preempted by the rate described in paragraph (1), the taking, receiving, reserving, or charging a greater rate than is allowed by paragraph (1), when knowingly done, shall be deemed a forfeiture of the entire interest which the loan carries with it, or which has been agreed to be paid thereon. If such greater rate of interest has been paid, the person who paid it may recover, in a civil action commenced in a court of appropriate jurisdiction not later than two years after the date of such payment, an amount equal to twice the amount of interest paid from the credit union taking or receiving such interest.
(h) Emergency mergerNotwithstanding any other provision of law, the Board may authorize a merger or consolidation of an insured credit union which is insolvent or is in danger of insolvency with any other insured credit union or may authorize an insured credit union to purchase any of the assets of, or assume any of the liabilities of, any other insured credit union which is insolvent or in danger of insolvency if the Board is satisfied that—
(1) an emergency requiring expeditious action exists with respect to such other insured credit union;
(2) other alternatives are not reasonably available; and
(3) the public interest would best be served by approval of such merger, consolidation, purchase, or assumption.
(i) Emergency purchase of assets; conversion to insured deposits
(1) Notwithstanding any other provision of this chapter or of State law, the Board may authorize an institution whose deposits or accounts are insured by the Federal Deposit Insurance Corporation to purchase any of the assets of or assume any of the liabilities of an insured credit union which is insolvent or in danger of insolvency, except that prior to exercising this authority the Board must attempt to effect the merger or consolidation of an insured credit union which is insolvent or in danger of insolvency with another insured credit union, as provided in subsection (h).
(2) For purposes of the authority contained in paragraph (1), insured accounts of the credit union may upon consummation of the purchase and assumption be converted to insured deposits or other comparable accounts in the acquiring institution, and the Board and the National Credit Union Share Insurance Fund shall be absolved of any liability to the credit union’s members with respect to those accounts.
(j) Privileges not affected by disclosure to banking agency or supervisor
(1) In general
(2) Rule of constructionNo 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 Administration, any State credit union supervisor, or foreign banking authority, but for this subsection.
(June 26, 1934, ch. 750, title II, § 205, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1002; amended Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 96–221, title III, § 305(d), title V, § 523, Mar. 31, 1980, 94 Stat. 147, 166; Pub. L. 97–320, title I, § 131, 141(a)(8), title VII, § 706(b), Oct. 15, 1982, 96 Stat. 1486, 1489, 1540; Pub. L. 100–86, title V, § 509(a), Aug. 10, 1987, 101 Stat. 635; Pub. L. 101–73, title IX, § 910(b), Aug. 9, 1989, 103 Stat. 478; Pub. L. 103–322, title XXXII, § 320606, Sept. 13, 1994, 108 Stat. 2119; Pub. L. 105–219, title II, § 202, Aug. 7, 1998, 112 Stat. 919; Pub. L. 109–173, § 2(d)(3), Feb. 15, 2006, 119 Stat. 3604; Pub. L. 109–351, title VI, § 607(b), Oct. 13, 2006, 120 Stat. 1982; Pub. L. 111–203, title III, § 362(2), July 21, 2010, 124 Stat. 1549; Pub. L. 117–263, div. E, title LVII, § 5705(b), Dec. 23, 2022, 136 Stat. 3414.)
§ 1786. Termination of insured credit union status; cease and desist orders; removal or suspension from office; procedure
(a) Termination of insurance
(1) Any insured credit union other than a Federal credit union may, upon not less than ninety days’ written notice to the Board and upon the affirmative vote of a majority of its members within one year prior to the giving of such notice, terminate its status as an insured credit union.
(2) Any insured credit union, other than a Federal credit union, which has obtained a new certificate of insurance from a corporation authorized and duly licensed to insure member accounts may upon not less than ninety days’ written notice to the Board convert from status as an insured credit union under this chapter: Provided, That at the time of giving notice to the Board the provisions of paragraph (b)(1) of this section are not being invoked against the credit union.
(b) Unsound condition of credit union; notice to correct condition; hearing; judicial review
(1) Whenever, in the opinion of the Board, any insured credit union is engaging or has engaged in unsafe or unsound practices in conducting the business of such credit union, or is in an unsafe or unsound condition to continue operations as an insured credit union, or is violating or has violated an applicable law, rule, regulation, order, or any condition imposed in writing by the Board in connection with any action on any application, notice, or other request by the credit union or institution-affiliated party,, 1
1 So in original.
or is violating or has violated any written agreement entered into with the Board, the Board shall serve upon the credit union a statement with respect to such practices or conditions or violations for the purpose of securing the correction thereof. In the case of an insured State-chartered credit union, the Board shall send a copy of such statement to the commission, board, or authority, if any, having supervision of such credit union. Unless such correction shall be made within one hundred and twenty days after service of such statement, or within such shorter period of not less than twenty days after such service as the Board shall require in any case where it determines that the insurance risk with respect to such credit union could be unduly jeopardized by further delay in the correction of such practices or conditions or violations, or as the commission, board, or authority having supervision of such credit union, if any, shall require in the case of an insured State-chartered credit union, the Board, if it shall determine to proceed further, shall give to the credit union not less than thirty days’ written notice of its intention to terminate the status of the credit union as an insured credit union. Such notice shall contain a statement of the facts constituting the alleged unsafe and unsound practices or conditions or violations and shall fix a time and place for a hearing thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of such notice unless an earlier or a later date is set by the Board at the request of the credit union. Unless the credit union shall appear at the hearing by a duly authorized representative, it shall be deemed to have consented to the termination of its status as an insured credit union. In the event of such consent, or if upon the record made at any such hearing the Board shall find that any unsafe or unsound practice or condition or violation specified in the notice has been established and has not been corrected within the time above-prescribed in which to make such correction, the Board may issue and serve upon the credit union an order terminating its status as an insured credit union on a date subsequent to the date of such finding and subsequent to the expiration of the time specified in the notice.(2) Any credit union whose insured status has been terminated by order of the Board under this subsection shall have the right of judicial review of such order only to the same extent as provided for the review of orders under subsection (j) of this section.
(c) Notice to members of termination of insured status
(d) Continuation of insurance for one year; approval of conversion of status; procedure subsequent to approval; reduction of premium charges
(1) After the termination of the insured status of any credit union as provided under subsection (a)(1) or (b) of this section, insurance of its member accounts to the extent that they were insured on the effective date of such termination, less any amounts thereafter withdrawn which reduce the accounts below the amount covered by insurance on the effective date of such termination, shall continue for a period of one year, but no shares issued by the credit union or deposits made after the date of such termination shall be insured by the Board. The credit union shall continue to maintain its deposit with and pay premiums to the Board during such period as in the case of an insured credit union and the Board shall have the right to examine such credit union from time to time during the period during which such insurance continues. Such credit union shall, in all other respects, be subject to the duties and obligations of an insured credit union for the period of one year from the date of such termination. In the event that such credit union shall be closed for liquidation within such period of one year, the Board shall have the same powers and rights with respect to such credit union as in the case of an insured credit union. Notwithstanding the above, when an insured credit union’s insured status is terminated and the credit union subsequently obtains comparable insurance coverage from another source, insurance of its accounts by the fund may cease immediately upon the effective date of such comparable coverage by mutual consent of the credit union and the Board.
(2) No credit union shall convert from status as an insured credit union under this chapter as provided under subsection (a)(2) of this section until the proposition for such conversion has been approved by a majority of all the directors of the credit union, and by affirmative vote of a majority of the members of the credit union who vote on the proposition in a vote in which at least 20 per centum of the total membership of the credit union participates. Following approval by the directors, written notice of the proposition and of the date set for the membership vote shall be delivered in person to each member, or mailed to each member at the address for such member appearing on the records of the credit union, not more than thirty nor less than seven days prior to such date. The membership shall be given the opportunity to vote by mail ballot. If the proposition is approved by the membership, prompt and reasonable notice of insurance conversion shall be given to all members.
(3) In the event of a conversion of a credit union from status as an insured credit union under this chapter as provided under subsection (a)(2) of this section, premium charges payable under section 1782(c) of this title shall be reduced by an amount proportionate to the number of calendar months for which the converting credit union will no longer be insured under this chapter. As long as a converting credit union remains insured under this chapter, it shall remain subject to all of the provisions of this subchapter.
(e) Opinion of Board as to unsound condition of credit union; notice of charges; hearing; order to cease and desist; judicial review
(1) If, in the opinion of the Board, any insured credit union, credit union which has insured accounts, or any institution-affiliated party is engaging or has engaged, or the Board has reasonable cause to believe that the credit union or any institution-affiliated party is about to engage, in an unsafe or unsound practice in conducting the business of such credit union, or is violating or has violated, or the Board has reasonable cause to believe that the credit union or any institution-affiliated party is about to violate, a law, rule, or regulation, or any condition imposed in writing by the Board in connection with the granting of any application or other request by the credit union or any written agreement entered into with the Board, the Board may issue and serve upon the credit union or such party a notice of charges in respect thereof. The notice shall contain a statement of the facts constituting the alleged violation or violations or the unsafe or unsound practice or practices, and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist therefrom should issue against the credit union or the institution-affiliated party. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of such notice unless an earlier or a later date is set by the Board at the request of any party so served. Unless the party or parties so served shall appear at the hearing by a duly authorized representative, they shall be deemed to have consented to the issuance of the cease-and-desist order. In the event of such consent, or if upon the record made at any such hearing, the Board shall find that any violation or unsafe or unsound practice specified in the notice of charges has been established, the Board may issue and serve upon the credit union or the institution-affiliated party an order to cease and desist from any such violation or practice. Such order may, by provisions which may be mandatory or otherwise, require the credit union or its institution-affiliated parties to cease and desist from the same, and, further, to take affirmative action to correct the conditions resulting from any such violation or practice.
(2) A cease-and-desist order shall become effective at the expiration of thirty days after the service of such order upon the credit union or other person concerned (except in the case of a cease-and-desist order issued upon consent, which shall become effective at the time specified therein), and shall remain effective and enforceable as provided therein, except to such extent as it is stayed, modified, terminated, or set aside by action of the Board or a reviewing court.
(3)Affirmative action to correct conditions resulting from violations or practices.—The authority to issue an order under this subsection and subsection (f) which requires an insured credit union or any institution-affiliated party to take affirmative action to correct any conditions resulting from any violation or practice with respect to which such order is issued includes the authority to require such insured credit union or such party to—
(A) make restitution or provide reimbursement, indemnification, or guarantee against loss if—
(i) such credit union or such party was unjustly enriched in connection with such violation or practice; or
(ii) the violation or practice involved a reckless disregard for the law or any applicable regulations or prior order of the Board;
(B) restrict the growth of the institution;
(C) rescind agreements or contracts;
(D) dispose of any loan or asset involved;
(E) employ qualified officers or employees (who may be subject to approval by the Board at the direction of such Board); and
(F) take such other action as the Board determines to be appropriate.
(4)Authority to limit activities.—The authority to issue an order under this subsection or subsection (f) includes the authority to place limitations on the activities or functions of an insured credit union or any institution-affiliated party.
(f) Temporary cease and desist order; injunctive procedure
(1) Whenever the Board shall determine that the violation or threatened violation or the unsafe or unsound practice or practices, specified in the notice of charges served upon the credit union or any institution-affiliated party pursuant to paragraph (1) of subsection (e) of this section, or the continuation thereof, is likely to cause insolvency or significant dissipation of assets or earnings of the credit union, or is likely to weaken the condition of the credit union or otherwise prejudice the interests of its insured members prior to the completion of the proceedings conducted pursuant to paragraph (1) of subsection (e) of this section, the Board may issue a temporary order requiring the credit union or such party to cease and desist from any such violation or practice and to take affirmative action to prevent such insolvency, dissipation, condition, or prejudice pending completion of such proceedings. Such order may include any requirement authorized under subsection (e)(3). Such order shall become effective upon service upon the credit union or such institution-affiliated party and, unless set aside, limited, or suspended by a court in proceedings authorized by paragraph (2) of this subsection, shall remain effective and enforceable pending the completion of the administrative proceedings pursuant to such notice and until such time as the Administration shall dismiss the charges specified in such notice, or if a cease-and-desist order is issued against the credit union or such party, until the effective date of such order.
(2) Within ten days after the credit union concerned or any institution-affiliated party has been served with a temporary cease-and-desist order, the credit union or such party may apply to the United States district court for the judicial district in which the home office of the credit union is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order pending the completion of the administrative proceedings pursuant to the notice of charges served upon the credit union or such party under paragraph (1) of subsection (e) of this section, and such court shall have jurisdiction to issue such injunction.
(3)Incomplete or inaccurate records.—
(A)Temporary order.—If a notice of charges served under subsection (e)(1) specifies, on the basis of particular facts and circumstances, that an insured credit union’s books and records are so incomplete or inaccurate that the Board is unable, through the normal supervisory process, to determine the financial condition of that insured credit union or the details or purpose of any transaction or transactions that may have a material effect on the financial condi
(i) the cessation of any activity or practice which gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or
(ii) affirmative action to restore such books or records to a complete and accurate state, until the completion of the proceedings under subsection (e)(1).
(B)Effective period.—Any temporary order issued under subparagraph (A)—
(i) shall become effective upon service; and
(ii) unless set aside, limited, or suspended by a court in proceedings under paragraph (2), shall remain in effect and enforceable until the earlier of—(I) the completion of the proceeding initiated under subsection (e)(1) in connection with the notice of charges; or(II) the date the Board determines, by examination or otherwise, that the insured credit union’s books and records are accurate and reflect the financial condition of the credit union.
(4) In the case of violation or threatened violation of, or failure to obey, a temporary cease-and-desist order, the Board may apply to the United States district court, or the United States court of any territory, within the jurisdiction of which the principal office of the credit union is located for an injunction to enforce such order, and, if the court shall determine that there has been such violation or threatened violation or failure to obey, it shall be the duty of the court to issue such injunction.
(g) Removal and prohibition authority
(1)Authority to issue order.—Whenever the Board determines that—
(A) any institution-affiliated party has, directly or indirectly—
(i) violated—(I) any law or regulation;(II) any cease-and-desist order which has become final;(III) any condition imposed in writing by the Board in connection with any action on any application, notice, or request by such credit union or institution-affiliated party; or(IV) any written agreement between such credit union and the Board;
(ii) engaged or participated in any unsafe or unsound practice in connection with any insured credit union or business institution; or
(iii) committed or engaged in any act, omission, or practice which constitutes a breach of such party’s fiduciary duty;
(B) by reason of the violation, practice, or breach described in any clause of subparagraph (A)—
(i) such insured credit union or business institution has suffered or will probably suffer financial loss or other damage;
(ii) the interests of the insured credit union’s members have been or could be prejudiced; or
(iii) such party has received financial gain or other benefit by reason of such violation, practice or breach; and
(C) such violation, practice, or breach—
(i) involves personal dishonesty on the part of such party; or
(ii) demonstrates such party’s unfitness to serve as a director or officer of, or to otherwise participate in the conduct of the affairs of, an insured credit union,
the Board may serve upon such party a written notice of the Board’s intention to remove such party from office or to prohibit any further participation, by such party, in any manner in the conduct of the affairs of any insured credit union.
(2)Specific violations.—
(A)In general.—Whenever the Board determines that—
(i) an institution-affiliated party has committed a violation of any provision of subchapter II of chapter 53 of title 31, unless such violation was inadvertent or unintentional;
(ii) an officer or director of an insured credit union has knowledge that an institution-affiliated party of the insured credit union has violated any such provision or any provision of law referred to in subsection (i)(1)(A)(ii); or
(iii) an officer or director of an insured credit union has committed any violation of the Depository Institution Management Interlocks Act [12 U.S.C. 3201 et seq.],
the Board may serve upon such party, officer, or director a written notice of the Board’s intention to remove such officer or director from office.
(B)Factors to be considered.—In determining whether an officer or director should be removed as a result of the application of subparagraph (A)(ii), the Board shall consider whether the officer or director took appropriate action to stop, or to prevent the recurrence of, a violation described in such subparagraph.
(3)Suspension order.—
(A)Suspension or prohibition authorized.—If the Board serves written notice under paragraph (1) or (2) to any institution-affiliated party of the Board’s intention to issue an order under such paragraph, the Board may suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of the institution, if the Board—
(i) determines that such action is necessary for the protection of the credit union or the interests of the credit union’s members; and
(ii) serves such person with written notice of the suspension order.
(B)Effective period.—Any suspension order issued under subparagraph (A)—
(i) shall become effective upon service; and
(ii) unless a court issues a stay of such order under paragraph (6), shall remain in effect and enforceable until—(I) the date the Board dismisses the charges contained in the notice served under paragraph (1) or (2) with respect to such party; or(II) the effective date of an order issued by the Board to such person under paragraph (1) or (2).
(C)Copy of order.—If the Board issues a suspension order under subparagraph (A) to any institution-affiliated party, the Board shall serve a copy of such order on any insured credit union with which such party is associated at the time such order is issued.
(4) A notice of intention to remove a director, committee member, officer, or other person from office or to prohibit his participation in the conduct of the affairs of an insured credit union, shall contain a statement of the facts constituting grounds therefor, and shall fix a time and place at which a hearing will be held thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after the date of service of such notice, unless an earlier or a later date is set by the Board at the request of (A) such director, committee member, or officer or other person, and for good cause shown, or (B) the Attorney General of the United States. Unless such director, committee member, officer, or other person shall appear at the hearing in person or by a duly authorized representative, he shall be deemed to have consented to the issuance of an order of such removal or prohibition. In the event of such consent, or if upon the record made at any such hearing the Board shall find that any of the grounds specified in such notice have been established, the Board may issue such orders of suspension or removal from office, or prohibition from participation in the conduct of the affairs of the credit union, as it may deem appropriate. Any such order shall become effective at the expiration of thirty days after service upon such credit union and the director, committee member, officer, or other person concerned (except in the case of an order issued upon consent, which shall become effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the Board or a reviewing court.
(5)Prohibition of certain specific activities.—Any person subject to an order issued under this subsection shall not—
(A) participate in any manner in the conduct of the affairs of any institution or agency specified in paragraph (7)(A);
(B) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any institution described in subparagraph (A);
(C) violate any voting agreement previously approved by the appropriate Federal banking agency; or
(D) vote for a director, or serve or act as an institution-affiliated party.
(6) Within ten days after any director, officer, committee member, or other person has been suspended from office and/or prohibited from participation in the conduct of the affairs of an insured credit union under paragraph (3) of this subsection, such director, officer, committee member, or other person may apply to the United States district court for the judicial district in which the principal office of the credit union is located, or the United States District Court for the District of Columbia, for a stay of such suspension and/or prohibition pending the completion of the administrative proceedings pursuant to the notice served upon such director, officer, committee member, or other person under paragraph (1) or (2) of this subsection, and such court shall have jurisdiction to stay such suspension and/or prohibition.
(7)Industrywide Prohibition.—
(A)In general.—Except as provided in subparagraph (B), any person who, pursuant to an order issued under this subsection or subsection (i), has been removed or suspended from office in an insured credit union or prohibited from participating in the conduct of the affairs of an insured credit union may not, while such order is in effect, continue or commence to hold any office in, or participate in any manner in the conduct of the affairs of—
(i) any insured depository institution;
(ii) any institution treated as an insured bank under paragraph (3) or (4) of section 1818(b) of this title, or as a savings association under section 1818(b)(9) of this title;
(iii) any insured credit union;
(iv) any institution chartered under the Farm Credit Act of 1971 [12 U.S.C. 2001 et seq.];
(v) any appropriate Federal financial institution regulatory agency; and
(vi) the Federal Housing Finance Agency and any Federal home loan bank.
(B)Exception if agency provides written consent.—If, on or after the date an order is issued under this subsection which removes or suspends from office any institution-affiliated party or prohibits such party from participating in the conduct of the affairs of an insured credit union, such party receives the written consent of—
(i) the Board; and
(ii) the appropriate Federal financial institutions regulatory agency of the institution described in any clause of subparagraph (A) with respect to which such party proposes to become an institution-affiliated party,
subparagraph (A) shall, to the extent of such consent, cease to apply to such party with respect to the institution described in each written consent. If any person receives such a written consent from the Board, the Board shall publicly disclose such consent. If the agency referred to in clause (ii) grants such a written consent, such agency shall report such action to the Board and publicly disclose such consent.
(C)Violation of paragraph treated as violation of order.—Any violation of subparagraph (A) by any person who is subject to an order described in such subparagraph shall be treated as a violation of the order.
(D)“Appropriate federal financial institutions regulatory agency” defined.—For purposes of this paragraph, the term “appropriate Federal financial institutions regulatory agency” means—
(i) the appropriate Federal banking agency, as provided in section 1813(q) of this title;
(ii) the Farm Credit Administration, in the case of an institution chartered under the Farm Credit Act of 1971 [12 U.S.C. 2001 et seq.];
(iii) the National Credit Union Administration Board, in the case of an insured credit union (as defined in section 1752(7) of this title); and
(iv) the Secretary of the Treasury, in the case of the Federal Housing Finance Agency and any Federal home loan bank; 2
2 So in original. The semicolon probably should be a period.
(E)Consultation between agencies.—The agencies referred to in clauses (i) and (ii) of subparagraph (B) shall consult with each other before providing any written consent described in subparagraph (B).
(F)Applicability.—This paragraph shall only apply to a person who is an individual, unless the Board specifically finds that it should apply to a corporation, firm, or other business enterprise.
(h) Board’s appointment of conservator; consultation with State; authority
(1) The Board may, ex parte without notice, appoint itself or another (including, in the case of a State-chartered insured credit union, the State official having jurisdiction over the credit union) as conservator and immediately take possession and control of the business and assets of any insured credit union in any case in which—
(A) the Board determines that such action is necessary to conserve the assets of any insured credit union or to protect the Fund or the interests of the members of such insured credit union;
(B) an insured credit union, by a resolution of its board of directors, consents to such an action by the Board;
(C) the Attorney General notifies the Board in writing that an insured credit union has been found guilty of a criminal offense under section 1956 or 1957 of title 18 or section 5322 or 5324 of title 31;
(D) there is a willful violation of a cease-and-desist order which has become final;
(E) there is concealment of books, papers, records, or assets of the credit union or refusal to submit books, papers, records, or affairs of the credit union for inspection to any examiner or to any lawful agent of the Board;
(F) the credit union is significantly undercapitalized, as defined in section 1790d of this title, and has no reasonable prospect of becoming adequately capitalized, as defined in section 1790d of this title; or
(G) the credit union is critically undercapitalized, as defined in section 1790d of this title.
(2)
(A) Except as provided in subparagraph (C), in the case of a State-chartered insured credit union, the authority conferred by paragraph (1) shall not be exercised without the written approval of the State official having jurisdiction over the State-chartered credit union that the grounds specified for such exercise exist.
(B) If such approval has not been received by the Board within 30 days of receipt of notice by the State that the Board has determined such grounds exist, and the Board has responded in writing to the State’s written reasons, if any, for withholding approval, then the Board may proceed without State approval only by a unanimous vote of the Board.
(C) In the case of a State-chartered insured credit union, the authority conferred by subparagraphs (F) and (G) of paragraph (1) may not be exercised unless the Board has complied with section 1790d(l) of this title.
(3) Not later than ten days after the date on which the Board takes possession and control of the business and assets of an insured credit union pursuant to paragraph (1), such insured credit union may apply to the United States district court for the judicial district in which the principal office of such insured credit union is located or the United States District Court for the District of Columbia, for an order requiring the Board to show cause why it should not be enjoined from continuing such possession and control. Except as provided in this paragraph, no court may take any action, except at the request of the Board by regulation or order, to restrain or affect the exercise of powers or functions of the Board as conservator.
(4) Except as provided in paragraph (3), in the case of a Federal credit union, the Board may maintain possession and control of the business and assets of such credit union and may operate such credit union until such time—
(A) as the Board shall permit such credit union to continue business subject to such terms and conditions as may be imposed by the Board; or
(B) as such credit union is liquidated in accordance with the provisions of section 1787 of this title.
(5) Except as provided in paragraph (3), in the case of an insured State-chartered credit union, the Board may maintain possession and control of the business and assets of such credit union and may operate such credit union until such time—
(A) as the Board shall permit such credit union to continue business, subject to such terms and conditions as may be imposed by the Board;
(B) as the Board shall permit the transfer of possession and control of such credit union to any commission, board, or authority which has supervisory authority over such credit union and which is authorized by State law to operate such credit union; or
(C) as such credit union is liquidated in accordance with the provisions of section 1787 of this title.
(6) The Board may appoint such agents as it considers necessary in order to assist the Board in carrying out its duties as a conservator under this subsection.
(7) All expenses incurred by the Board in exercising its authority under this subsection with respect to any credit union shall be paid out of the assets of such credit union.
(8) The conservator shall have all the powers of the members, the directors, the officers, and the committees of the credit union and shall be authorized to operate the credit union in its own name or to conserve its assets in the manner and to the extent authorized by the Board.
(9) The authority granted by this subsection is in addition to all other authority granted to the Board under this chapter.
(i) Suspension, removal, and prohibition from participation orders in the case of certain criminal offenses
(1)Suspension or prohibition authorized.—
(A)In general.—Whenever any institution-affiliated party is charged in any information, indictment, or complaint, with the commission of or participation in—
(i) a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under State or Federal law, or
(ii) a criminal violation of section 1956, 1957, or 1960 of title 18 or section 5322 or 5324 of title 31,
the Board may, if continued service or participation by such party may pose a threat to the interests of the credit union’s members or may threaten to impair public confidence in any credit union, by written notice served upon such party, suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of any credit union.
(B)Provisions applicable to notice.—
(i)Copy.—A copy of any notice under subparagraph (A) shall also be served upon the credit union of which the subject of the order is, or most recently was, an institution-affiliated party.
(ii)Effective period.—A suspension or prohibition under subparagraph (A) shall remain in effect until the information, indictment, or complaint referred to in such subparagraph is finally disposed of or until terminated by the Board.
(C)Removal or prohibition.—
(i)In general.—If a judgment of conviction or an agreement to enter a pretrial diversion or other similar program is entered against an institution-affiliated party in connection with a crime described in subparagraph (A)(i), at such time as such judgment is not subject to further appellate review, the Board may, if continued service or participation by such party may pose a threat to the interests of any credit union’s members or may threaten to impair public confidence in any credit union, issue and serve upon such party an order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of any credit union without the prior written consent of the Board.
(ii)Required for certain offenses—In the case of a judgment of conviction or agreement against an institution-affiliated party in connection with a violation described in subparagraph (A)(ii), the Board shall issue and serve upon such party an order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of any credit union without the prior written consent of the Board.
(D)Provisions applicable to order.—
(i)Copy.—A copy of any order under subparagraph (C) shall also be served upon the credit union of which the subject of the order is, or most recently was, an institution-affiliated party, whereupon such party (if a director or an officer) shall cease to be a director or officer of such credit union.
(ii)Effect of acquittal.—A finding of not guilty or other disposition of the charge shall not preclude the Board from instituting proceedings after such finding or disposition to remove such party from office or to prohibit further participation in credit union affairs, pursuant to paragraph (1), (2), or (3) of subsection (g) of this section.
(iii)Effective period.—Any notice of suspension or order of removal issued under this paragraph shall remain effective and outstanding until the completion of any hearing or appeal authorized under paragraph (3) unless terminated by the Board.
(E)Continuation of authority.—The Board may issue an order under this paragraph with respect to an individual who is an institution-affiliated party at a credit union at the time of an offense described in subparagraph (A) without regard to—
(i) whether such individual is an institution-affiliated party at any credit union at the time the order is considered or issued by the Board; or
(ii) whether the credit union at which the individual was an institution-affiliated party at the time of the offense remains in existence at the time the order is considered or issued by the Board.
(2) If at any time, because of the suspension of one or more directors pursuant to this section, there shall be on the board of directors of a Federal credit union less than a quorum of directors not so suspended, all powers and functions vested in or exercisable by such board shall vest in and be exercisable by the director or directors on the board not so suspended, until such time as there shall be a quorum of the board of directors. In the event all of the directors of a Federal credit union are suspended pursuant to this section, the Board shall appoint persons to serve temporarily as directors in their place and stead pending the termination of such suspensions, or until such time as those who have been suspended cease to be directors of the credit union and their respective successors have been elected by the members at an annual or special meeting and have taken office. Directors appointed temporarily by the Board shall, within thirty days following their appointment, call a special meeting for the election of new directors, unless during the thirty-day period (A) the regular annual meeting is scheduled, or (B) the suspensions giving rise to the appointment of temporary directors are terminated.
(3) Within thirty days from service of any notice of suspension or order of removal issued pursuant to paragraph (1) of this subsection, the institution-affiliated party concerned may request in writing an opportunity to appear before the Board to show that the continued service to or participation in the conduct of the affairs of the credit union by such party does not, or is not likely to, pose a threat to the interests of the credit union’s members or threaten to impair public confidence in the credit union. Upon receipt of any such request, the Board shall fix a time (not more than thirty days after receipt of such request, unless extended at the request of such party) and place at which such party may appear, personally or through counsel, before the Board or its designee to submit written materials (or, at the discretion of the Board, oral testimony) and oral argument. Within sixty days of such hearing, the Board shall notify such party whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the credit union will be continued, terminated or otherwise modified, or whether the order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the credit union will be rescinded or otherwise modified. Such notification shall contain a statement of the basis for the Board’s decision, if adverse to such party. The Board is authorized to prescribe such rules as may be necessary to effectuate the purposes of this subsection.
(j) Jurisdiction of hearing; procedure; judicial review
(1) Any hearing provided for in this section (other than the hearing provided for in subsection (i)(3) of this section) shall be held in the Federal judicial district or in the territory in which the principal office of the credit union is located, unless the party afforded the hearing consents to another place, and shall be conducted in accordance with the provisions of chapter 5 of title 5. After such hearing, and within ninety days after the Board has notified the parties that the case has been submitted to it for final decision, it shall render its decision (which shall include findings of fact upon which its decision is predicated) and shall issue and serve upon each party to the proceeding an order or orders consistent with the provisions of this section. Judicial review of any such order shall be exclusively as provided in this subsection (j). Unless a petition for review is timely filed in a court of appeals of the United States, as provided in paragraph (2) of this subsection, and thereafter until the record in the proceeding has been filed as so provided, the Board may at any time, upon such notice and in such manner as it may deem proper, modify, terminate, or set aside any such order. Upon such filing of the record, the Board may modify, terminate, or set aside any such order with permission of the court.
(2) Any party to any proceeding under paragraph (1) may obtain a review of any order served pursuant to paragraph (1) of this subsection (other than an order issued with the consent of the credit union or the institution-affiliated party concerned or an order issued under subsection (i)(1) of this section) by filing in the court of appeals of the United States for the circuit in which the principal office of the credit union is located, or in the United States Court of Appeals for the District of Columbia Circuit, within thirty days after the date of service of such order, a written petition praying that the order of the Board be modified, terminated, or set aside. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Board, and thereupon the Board shall file in the court the record in the proceeding, as provided in section 2112 of title 28. Upon the filing of such petition, such court shall have jurisdiction, which upon the filing of the record shall, except as provided in the last sentence of said paragraph (1), be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Board. Review of such proceedings shall be had as provided in chapter 7 of title 5. The judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari, as provided in section 1254 of title 28.
(3) The commencement of proceedings for judicial review under paragraph (2) of this subsection shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Board.
(k) Jurisdiction and enforcement; penalty
(1) The Board may in its discretion apply to the United States district court, or the United States court of any territory within the jurisdiction of which the principal office of the credit union is located, for the enforcement of any effective and outstanding notice or order issued under this section or section 1790d of this title, and such courts shall have jurisdiction and power to order and require compliance therewith. However, except as otherwise provided in this section or section 1790d of this title, no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this section or section 1790d of this title or to review, modify, suspend, terminate, or set aside any such notice or order.
(2)Civil money penalty.—
(A)First tier.—Any insured credit union which, and any institution-affiliated party who—
(i) violates any law or regulation;
(ii) violates any final order or temporary order issued pursuant to subsection (e), (f), (g), (i), or (q), or any final order under section 1790d of this title;
(iii) violates any condition imposed in writing by the Board in connection with any action on any application, notice, or other request by the credit union or institution-affiliated party; or
(iv) violates any written agreement between such credit union and such agency,
shall forfeit and pay a civil penalty of not more than $5,000 for each day during which such violation continues.
(B)Second tier.—Notwithstanding subparagraph (A), any insured credit union which, and any institution-affiliated party who—
(i)(I) commits any violation described in any clause of subparagraph (A);(II) recklessly engages in an unsafe or unsound practice in conducting the affairs of such credit union; or(III) breaches any fiduciary duty;
(ii) which violation, practice, or breach—(I) is part of a pattern of misconduct;(II) causes or is likely to cause more than a minimal loss to such credit union; or(III) results in pecuniary gain or other benefit to such party,
shall forfeit and pay a civil penalty of not more than $25,000 for each day during which such violation, practice, or breach continues.
(C)Third tier.—Notwithstanding subparagraphs (A) and (B), any insured credit union which, and any institution-affiliated party who—
(i) knowingly—(I) commits any violation described in any clause of subparagraph (A);(II) engages in any unsafe or unsound practice in conducting the affairs of such credit union; or(III) breaches any fiduciary duty; and
(ii) knowingly or recklessly causes a substantial loss to such credit union or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under subparagraph (D) for each day during which such violation, practice, or breach continues.
(D)Maximum amounts of penalties for any violation described in subparagraph (c).—The maximum daily amount of any civil penalty which may be assessed pursuant to subparagraph (C) for any violation, practice, or breach described in such subparagraph is—
(i) in the case of any person other than an insured credit union, an amount to not 3
3 So in original. Probably should be “not to”.
exceed $1,000,000; and(ii) in the case of any insured credit union, an amount not to exceed the lesser of—(I) $1,000,000; or(II) 1 percent of the total assets of such credit union.
(E)Assessment.—
(i)Written notice.—Any penalty imposed under subparagraph (A), (B), or (C) may be assessed and collected by the Board by written notice.
(ii)Finality of assessment.—If, with respect to any assessment under clause (i), a hearing is not requested pursuant to subparagraph (H) within the period of time allowed under such subparagraph, the assessment shall constitute a final and unappealable order.
(F)Authority to modify or remit penalty.—The Board may compromise, modify, or remit any penalty which such agency may assess or had already assessed under subparagraph (A), (B), or (C).
(G)Mitigating factors.—In determining the amount of any penalty imposed under subparagraph (A), (B), or (C), the Board shall take into account the appropriateness of the penalty with respect to—
(i) the size of financial resources and good faith of the insured credit union or the person charged;
(ii) the gravity of the violation;
(iii) the history of previous violations; and
(iv) such other matters as justice may require.
(H)Hearing.—The insured credit union or other person against whom any penalty is assessed under this paragraph shall be afforded an agency hearing if such institution or person submits a request for such hearing within 20 days after the issuance of the notice of assessment.
(I)Collection.—
(i)Referral.—If any insured credit union or other person fails to pay an assessment after any penalty assessed under this paragraph has become final, the Board shall recover the amount assessed by action in the appropriate United States district court.
(ii)Appropriateness of penalty not reviewable.—In any civil action under clause (i), the validity and appropriateness of the penalty shall not be subject to review.
(J)Disbursement.—All penalties collected under authority of this paragraph shall be deposited into the Treasury.
(K)“Violate” defined.—For purposes of this section, the term “violate” includes any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
(L)Regulations.—The Board shall prescribe regulations establishing such procedures as may be necessary to carry out this paragraph.
(3)Notice under this section after separation from service.—The resignation, termination of employment or participation, or separation of a institution-affiliated party (including a separation caused by the closing of an insured credit union) shall not affect the jurisdiction and authority of the Board to issue any notice or order and proceed under this section against any such party, if such notice or order is served before the end of the 6-year period beginning on the date such party ceased to be such a party with respect to such credit union (whether such date occurs before, on, or after August 9, 1989).
(l) Criminal penalty for violation of certain ordersWhoever—
(1) under this chapter, is suspended or removed from, or prohibited from participating in the affairs of any credit union described in subsection (g)(5); and
(2) knowingly participates, directly or indirectly, in any manner (including by engaging in an activity specifically prohibited in such an order or in subsection (g)(5)) in the conduct of the affairs of such a credit union;
shall be fined not more than $1,000,000, imprisoned for not more than 5 years, or both.
(m) Definitions
(n) Notice or order to State board supervising State-chartered credit union
(o) Notice of proceedings to State board supervising State-chartered credit union; effect of corrective action by State board; attack on validity of notice or order
(p) Proceedings; powers of Board; court enforcement of subpenas; witness fees; expenses and attorneys’ fees
(q) Compliance with monetary transaction recordkeeping and report requirements
(1) Compliance procedures required
(2) Examinations of credit unions to include review of compliance procedures
(A) In general
(B) Exam report requirement
(3) Order to comply with requirementsIf the Board determines that an insured credit union—
(A) has failed to establish and maintain the procedures described in paragraph (1); or
(B) has failed to correct any problem with the procedures maintained by such credit union which was previously reported to the credit union by the Board,
the Board shall issue an order in the manner prescribed in subsection (e) or (f) requiring such credit union to cease and desist from its violation of this subsection or regulations prescribed under this subsection.
(r) “Institution-affiliated party” definedFor purposes of this chapter, the term “institution-affiliated party” means—
(1) any committee member, director, officer, or employee of, or agent for, an insured credit union;
(2) any consultant, joint venture partner, and any other person as determined by the Board (by regulation or on a case-by-case basis) who participates in the conduct of the affairs of an insured credit union; and
(3) any independent contractor (including any attorney, appraiser, or accountant) who knowingly or recklessly participates in—
(A) any violation of any law or regulation;
(B) any breach of fiduciary duty; or
(C) any unsafe or unsound practice,
which caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the insured credit union.
(s) Public disclosure of agency action
(1) In generalThe Board shall publish and make available to the public on a monthly basis—
(A) any written agreement or other written statement for which a violation may be enforced by the Board, unless the Board, in its discretion, determines that publication would be contrary to the public interest;
(B) any final order issued with respect to any administrative enforcement proceeding initiated by the Board under this section or any other law; and
(C) any modification to or termination of any order or agreement made public pursuant to this paragraph.
(2) Hearings
(3) Reports to Congress
(4) Transcript of hearing
(5) Delay of publication under exceptional circumstances
(6) Documents filed under seal in public enforcement hearings
(7) Retention of documents
(8) Disclosures to Congress
(9) Preservation of records
(A) In generalThe Board may cause any and all records, papers, or documents kept by the Administration or in the possession or custody of the Administration to be—
(i) photographed or microphotographed or otherwise reproduced upon film; or
(ii) preserved in any electronic medium or format which is capable of—(I) being read or scanned by computer; and(II) being reproduced from such electronic medium or format by printing or any other form of reproduction of electronically stored data.
(B) Treatment as original records
(C) Authority of the administration
(t) Regulation of certain forms of benefits to institution-affiliated parties
(1) Golden parachutes and indemnification payments
(2) Factors to be taken into accountThe Board shall prescribe, by regulation, the factors to be considered by the Board 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 credit union that has had a material affect on the financial condition of the credit union.
(B) Whether there is a reasonable basis to believe that the institution-affiliated party is substantially responsible for the insolvency of the credit union, the appointment of a conservator or liquidating agent for the credit union, or the credit union’s troubled condition (as defined in regulations prescribed by the Board pursuant to paragraph (4)(A)(ii)(III)).
(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 effect on the financial condition of the credit union.
(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 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 credit union 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 prohibitedNo credit union 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 credit union 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 credit union; or
(ii) preferring one creditor over another.
(4) “Golden parachute payment” definedFor purposes of this subsection—
(A) In generalThe term “golden parachute payment” means any payment (or any agreement to make any payment) in the nature of compensation by any credit union for the benefit of any institution-affiliated party pursuant to an obligation of such credit union that—
(i) is contingent on the termination of such party’s affiliation with the credit union; and
(ii) is received on or after the date on which—(I) the credit union is insolvent;(II) any conservator or liquidating agent is appointed for such credit union;(III) the Board determines that the credit union is in a troubled condition (as defined in regulations which the Board shall prescribe);(IV) the credit union has been assigned a composite rating by the Board of 4 or 5 under the Uniform Financial Institutions Rating System (as applicable with respect to credit unions); or(V) the credit union is subject to a proceeding initiated by the Board to terminate or suspend deposit insurance for such credit union.
(B) Certain payments in contemplation of an event
(C) Certain payments not includedThe 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 retirement or severance 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 definitionsFor purposes of this subsection—
(A) Indemnification paymentSubject to paragraph (6), the term “indemnification payment” means any payment (or any agreement to make any payment) by any credit union 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 Board 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 credit union; or
(iii) is required to take any affirmative action described in subsection (e)(3) with respect to such credit union.
(B) Liability or legal expenseThe 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) PaymentThe 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.
(6) Certain commercial insurance coverage not treated as covered benefit payment
(u) Foreign investigations
(1) Requesting assistance from foreign banking authoritiesIn conducting any investigation, examination, or enforcement action under this chapter, the Board may—
(A) request the assistance of any foreign banking authority; and
(B) maintain an office outside the United States.
(2) Providing assistance to foreign banking authorities
(A) In general
(B) Investigation by Federal banking agency
(C) Factors to considerIn deciding whether to provide assistance under this paragraph, the Board shall consider—
(i) whether the requesting authority has agreed to provide reciprocal assistance with respect to banking matters within the jurisdiction of the Board or any appropriate Federal banking agency; and
(ii) whether compliance with the request would prejudice the public interest of the United States.
(D) Treatment of foreign banking authority
(3) Rule of construction
(v) Termination of insurance for money laundering or cash transaction reporting offenses
(1) In general
(A) Conviction of title 18 offenses
(i) Duty to notify
(ii) Notice of termination
(B) Conviction of title 31 offenses
(C) Notice to State supervisor
(2) Factors to be consideredIn determining whether to terminate insurance under paragraph (1), the Board shall take into account the following factors:
(A) The extent to which directors, committee members, or senior executive officers (as defined by the Board in regulations which the Board shall prescribe) of the credit union knew of, or were involved in, the commission of the money laundering offense of which the credit union was found guilty.
(B) The extent to which the offense occurred despite the existence of policies and procedures within the credit union which were designed to prevent the occurrence of any such offense.
(C) The extent to which the credit union has fully cooperated with law enforcement authorities with respect to the investigation of the money laundering offense of which the credit union was found guilty.
(D) The extent to which the credit union has implemented additional internal controls (since the commission of the offense of which the credit union was found guilty) to prevent the occurrence of any other money laundering offense.
(E) The extent to which the interest of the local community in having adequate deposit and credit services available would be threatened by the termination of insurance.
(3) Notice to State credit union supervisor and publicWhen the order to terminate insured status initiated pursuant to this subsection is final, the Board shall—
(A) notify the commission, board, or authority (if any) having supervision of the credit union described in paragraph (1) at least 10 days prior to the effective date of the order of the termination of the insured status of such credit union; and
(B) publish notice of the termination of the insured status of the credit union.
(4) Temporary insurance of previously insured deposits
(5) Successor liability
(w) One-year restrictions on Federal examiners of insured credit unions
(1) In generalIn addition to other applicable restrictions set forth in title 18, the penalties set forth in paragraph (5) of this subsection shall apply to any person who—
(A) was an officer or employee (including any special Government employee) of the Administration;
(B) served 2 or more months during the final 12 months of his or her employment with the Administration as the senior examiner (or a functionally equivalent position) of an insured credit union with continuing, broad responsibility for the examination (or inspection) of that insured credit union on behalf of the Administration; and
(C) within 1 year after the termination date of his or her service or employment with the Administration, knowingly accepts compensation as an employee, officer, director, or consultant from such insured credit union.
(2) Rule of construction
(3) Regulations
(A) In general
(B) Consultation
(4) Waiver
(5) Penalties
(A) In generalIn addition to any other administrative, civil, or criminal remedy or penalty that may otherwise apply, whenever the Board determines that a person subject to paragraph (1) has become associated, in the manner described in paragraph (1)(C), with an insured credit union, the Board shall impose upon such person one or more of the following penalties:
(i) Industry-wide prohibition orderThe Board shall serve a written notice or order in accordance with and subject to the provisions of subsection (g)(4) for written notices or orders under paragraph (1) or (2) of subsection (g), upon such person of the intention of the Board—(I) to remove such person from office or to prohibit such person from further participation in the conduct of the affairs of the insured credit union for a period of up to 5 years; and(II) to prohibit any further participation by such person, in any manner, in the conduct of the affairs of any insured credit union for a period of up to 5 years.
(ii) Civil monetary penalty
(B) Scope of prohibition order
(June 26, 1934, ch. 750, title II, § 206, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1003; amended Pub. L. 93–383, title VII, § 728, Aug. 22, 1974, 88 Stat. 720; Pub. L. 95–22, title III, § 307, Apr. 19, 1977, 91 Stat. 52; Pub. L. 95–630, title I, §§ 107(a)(4), (c)(4), (d)(4), (e)(4), 111(d), title V, § 502(b), Nov. 10, 1978, 92 Stat. 3652, 3656, 3659, 3663, 3670, 3681; Pub. L. 97–320, title I, §§ 132, 141(a)(8), title IV, §§ 424(a), (d)(9), (e), 427(c), Oct. 15, 1982, 96 Stat. 1487, 1489, 1522, 1523, 1525; Pub. L. 98–369, div. B, title VIII, § 2812, July 18, 1984, 98 Stat. 1206; Pub. L. 99–570, title I, § 1359(d), Oct. 27, 1986, 100 Stat. 3207–29; Pub. L. 100–86, title V, § 509(a), title VII, §§ 709–713, Aug. 10, 1987, 101 Stat. 635, 653, 654; Pub. L. 101–73, title IX, §§ 901(a), (b)(2), 902(b), 903(b), 904(b), 905(b), 906(b), 907(b), 908(b), 913(b), 915(b), 920(b), title XII, § 1217(b), Aug. 9, 1989, 103 Stat. 446, 448, 451, 455, 458, 460, 462, 464, 477, 484, 486, 488, 546; Pub. L. 101–647, title XXV, §§ 2523(b), 2532(c), 2547(b), Nov. 29, 1990, 104 Stat. 4870, 4881, 4887; Pub. L. 102–233, title III, § 302(a), Dec. 12, 1991, 105 Stat. 1767; Pub. L. 102–550, title XV, §§ 1501(b), 1503(b), 1504(b), Oct. 28, 1992, 106 Stat. 4044, 4050, 4053; Pub. L. 103–325, title IV, § 411(c)(2)(B), Sept. 23, 1994, 108 Stat. 2253; Pub. L. 105–219, title III, § 301(b)(1), (g)(1), (2), Aug. 7, 1998, 112 Stat. 930, 931; Pub. L. 108–458, title VI, § 6303(c), Dec. 17, 2004, 118 Stat. 3753; Pub. L. 109–351, title VII, §§ 708(b), 715(b), 716(b), 723(b), 726(14)–(19), Oct. 13, 2006, 120 Stat. 1989, 1995, 1996, 2000, 2002, 2003; Pub. L. 111–203, title III, § 362(3), July 21, 2010, 124 Stat. 1549.)
§ 1786a. Omitted
§ 1787. Payment of insurance
(a) Liquidation by Board; bond; appointment of agent; fees to be fixed by Board
(1)
(A) Upon its finding that a Federal credit union insured under this subchapter is bankrupt or insolvent, the Board shall close such credit union for liquidation and appoint itself liquidating agent therefor.
(B) Not later than 10 days after the date on which the Board closes a credit union for liquidation pursuant to paragraph (1), or accepts appointment as liquidating agent pursuant to subsection (b), such insured credit union may apply to the United States district court for the judicial district in which the principal office of such insured credit union is located or the United States District Court for the District of Columbia, for an order requiring the Board to show cause why it should not be prohibited from continuing such liquidation. Except as otherwise provided in this subparagraph, no court may take any action for or toward the removal of any liquidating agent or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a liquidating agent.
(2) Notwithstanding any other provision of law, the Board as liquidating agent of a closed Federal credit union insured under this subchapter shall not be required to furnish bond and shall have the right to appoint an agent or agents to assist it in its duties as such liquidating agent. All fees, compensation, and expenses of liquidation and administration thereof shall be fixed by the Board and may be paid by them out of funds coming into its possession as such liquidating agent.
(3)Liquidation to facilitate prompt corrective action.—The Board may close any credit union for liquidation, and appoint itself or another (including, in the case of a State-chartered insured credit union, the State official having jurisdiction over the credit union) as liquidating agent of that credit union, if—
(A) the Board determines that—
(i) the credit union is significantly undercapitalized, as defined in section 1790d of this title, and has no reasonable prospect of becoming adequately capitalized, as defined in section 1790d of this title; or
(ii) the credit union is critically undercapitalized, as defined in section 1790d of this title; and
(B) in the case of a State-chartered insured credit union, the Board has complied with section 1790d(l) of this title.
(b) Powers and duties of Board as conservator or liquidating agent
(1) Rulemaking authority of Board
(2) General powers
(A) Successor to credit unionThe Board shall, as conservator or liquidating agent, and by operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the credit union, and of any member, accountholder, officer, or director of such credit union with respect to the credit union and the assets of the credit union; and
(ii) title to the books, records, and assets of any previous conservator or other legal custodian of such credit union.
(B) Operate the credit unionThe Board may, as conservator or liquidating agent—
(i) take over the assets of and operate the credit union with all the powers of the members or shareholders, the directors, and the officers of the credit union and shall be authorized to conduct all business of the credit union;
(ii) collect all obligations and money due the credit union;
(iii) perform all functions of the credit union in the name of the credit union which is consistent with the appointment as conservator or liquidating agent; and
(iv) preserve and conserve the assets and property of such credit union.
(C) Functions of credit union’s officers, directors, and shareholders
(D) Powers as conservatorThe Board may, as conservator, take such action as may be—
(i) necessary to put the credit union in a sound and solvent condition; and
(ii) appropriate to carry on the business of the credit union and preserve and conserve the assets and property of the credit union.
(E) Additional powers as liquidating agent
(F) Payment of valid obligations
(G) Attachment of assets and injunctive relief
(H) Standards
(i) Showing
(ii) State proceeding
(I) Subpoena authority
(i) In general
(ii) Authority of Board
(iii) Rule of construction
(J) Incidental powersThe Board may, as conservator or liquidating agent—
(i) exercise all powers and authorities specifically granted to conservators or liquidating agents, respectively, under this chapter and such incidental powers as shall be necessary to carry out such powers; and
(ii) take any action authorized by this chapter,
which the Board determines is in the best interests of the credit union, its account holders, or the Board.
(K) Exemption from criminal prosecution
(3) Authority of liquidating agent to determine claims
(A) In general
(B) Notice requirementsThe liquidating agent, in any case involving the liquidation or winding up of the affairs of a closed credit union, shall—
(i) promptly publish a notice to the credit union’s creditors to present their claims, together with proof, to the liquidating agent by a date specified in the notice which shall be not less than 90 days after the publication of such notice; and
(ii) republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i).
(C) Mailing requiredThe liquidating agent shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the credit union’s books—
(i) at the creditor’s last address appearing in such books; or
(ii) upon discovery of the name and address of a claimant not appearing on the credit union’s books within 30 days after the discovery of such name and address.
(4) Rulemaking authority relating to determination of claims
(5) Procedures for determination of claims
(A) Determination period
(i) In general
(ii) Extension of time
(iii) Mailing of notice sufficientThe requirements of clause (i) shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears—(I) on the credit union’s books;(II) in the claim filed by the claimant; or(III) in documents submitted in proof of the claim.
(iv) Contents of notice of disallowanceIf any claim filed under clause (i) is disallowed, the notice to the claimant shall contain—(I) a statement of each reason for the disallowance; and(II) the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim.
(B) Allowance of proven claims
(C) Disallowance of claims filed after end of filing period
(i) In general
(ii) Certain exceptionsClause (i) shall not apply with respect to any claim filed by any claimant after the date specified in the notice published under paragraph (3)(B)(i) and such claim may be considered by the liquidating agent if—(I) the claimant did not receive notice of the appointment of the liquidating agent in time to file such claim before such date; and(II) such claim is filed in time to permit payment of such claim.
(D) Authority to disallow claims
(E) No judicial review of determination pursuant to subparagraph (D)
(F) Legal effect of filing
(i) Statute of limitation tolled
(ii) No prejudice to other actions
(6) Provision for agency review or judicial determination of claims
(A) In generalBefore the end of the 60-day period beginning on the earlier of—
(i) the end of the period described in paragraph (5)(A)(i) with respect to any claim against a credit union for which the Board is liquidating agent; or
(ii) the date of any notice of disallowance of such claim pursuant to paragraph (5)(A)(i),
the claimant may request administrative review of the claim in accordance with subparagraph (A) or (B) of paragraph (7) or file suit on such claim (or continue an action commenced before the appointment of the liquidating agent) in the district or territorial court of the United States for the district within which the credit union’s principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim).
(B) Statute of limitationsIf any claimant fails to—
(i) request administrative review of any claim in accordance with subparagraph (A) or (B) of paragraph (7); or
(ii) file suit on such claim (or continue an action commenced before the appointment of the liquidating agent),
before the end of the 60-day period described in subparagraph (A), the claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the liquidating agent) as of the end of such period, such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.
(7) Review of claims
(A) Administrative hearing
(B) Other review procedures
(i) In general
(ii) Criteria
(iii) Voluntary binding or nonbinding procedures
(iv) Consideration of incentives
(8) Expedited determination of claims
(A) Establishment requiredThe Board shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (5) for claimants who—
(i) allege the existence of legally valid and enforceable or perfected security interests in assets of any credit union for which the Board has been appointed liquidating agent; and
(ii) allege that irreparable injury will occur if the routine claims procedure is followed.
(B) Determination periodBefore the end of the 90-day period beginning on the date any claim is filed in accordance with the procedures established pursuant to subparagraph (A), the Board shall—
(i) determine—(I) whether to allow or disallow such claim; or(II) whether such claim should be determined pursuant to the procedures established pursuant to paragraph (5); or
(ii) notify the claimant of the determination, and if the claim is disallowed, a statement of each reason for the disallowance and the procedure for obtaining agency review or judicial determination.
(C) Period for filing or renewing suitAny claimant who files a request for expedited relief shall be permitted to file a suit, or to continue a suit filed before the appointment of the liquidating agent, seeking a determination of the claimant’s rights with respect to such security interest after the earlier of—
(i) the end of the 90-day period beginning on the date of the filing of a request for expedited relief; or
(ii) the date the Board denies the claim.
(D) Statute of limitations
(E) Legal effect of filing
(i) Statute of limitation tolled
(ii) No prejudice to other actions
(9) Agreement as basis of claim
(A) Requirements
(B) Exception to contemporaneous execution requirement
(10) Payment of claims
(A) In general
(B) Payment of dividends on claims
(11) Distribution of assets
(A) Subrogated claims; claims of uninsured accountholders and other creditorsThe liquidating agent shall—
(i) retain for the account of the Board such portion of the amounts realized from any liquidation as the Board may be entitled to receive in connection with the subrogation of the claims of accountholders; and
(ii) pay to accountholders and other creditors the net amounts available for distribution to them.
(B) Distribution to shareholders of amounts remaining after payment of all other claims and expenses
(12) Suspension of legal actions
(A) In generalAfter the appointment of a conservator or liquidating agent for an insured credit union, the conservator or liquidating agent may request a stay for a period not to exceed—
(i) 45 days, in the case of any conservator; and
(ii) 90 days, in the case of any liquidating agent,
(B) Grant of stay by all courts required
(13) Additional rights and duties
(A) Prior final adjudication
(B) Rights and remedies of conservator or liquidating agentIn the event of any appealable judgment, the Board as conservator or liquidating agent shall—
(i) have all the rights and remedies available to the credit union (before the appointment of such conservator or liquidating agent) and the Board in its corporate capacity, including removal to Federal court and all appellate rights; and
(ii) not be required to post any bond in order to pursue such remedies.
(C) No attachment or execution
(D) Limitation on judicial reviewExcept as otherwise provided in this subsection, no court shall have jurisdiction over—
(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any credit union for which the Board has been appointed liquidating agent, including assets which the Board may acquire from itself as such liquidating agent; or
(ii) any claim relating to any act or omission of such credit union or the Board as liquidating agent.
(14) Statute of limitations for actions brought by conservator or liquidating agent
(A) In generalNotwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Board as conservator or liquidating agent shall be—
(i) in the case of any contract claim, the longer of—(I) the 6-year period beginning on the date the claim accrues; or(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of—(I) the 3-year period beginning on the date the claim accrues; or(II) the period applicable under State law.
(B) Determination of the date on which a claim accruesFor purposes of subparagraph (A), the date on which the statute of limitation begins to run on any claim described in such subparagraph shall be the later of—
(i) the date of the appointment of the Board as conservator or liquidating agent; or
(ii) the date on which the cause of action accrues.
(15) Accounting and recordkeeping requirements
(A) In general
(B) Annual accounting or report
(C) Availability of reports
(D) Recordkeeping requirement
(i) In general
(ii) Old records
(16) Fraudulent transfers
(A) In general
(B) Right of recoveryTo the extent a transfer is avoided under subparagraph (A), the Board may recover, for the benefit of the insured credit union, the property transferred, or, if a court so orders, the value of such property (at the time of such transfer) from—
(i) the initial transferee of such transfer or the institution-affiliated party or person for whose benefit such transfer was made; or
(ii) any immediate or mediate transferee of any such initial transferee.
(C) Rights of transferee or obligeeThe Board may not recover under subparagraph (B) from—
(i) any transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith; or
(ii) any immediate or mediate good faith transferee of such transferee.
(D) Rights under this paragraph
(c) Provisions relating to contracts entered into before appointment of conservator or liquidating agent
(1) Authority to repudiate contractsIn addition to any other rights a conservator or liquidating agent may have, the conservator or liquidating agent for any insured credit union may disaffirm or repudiate any contract or lease—
(A) to which such credit union is a party;
(B) the performance of which the conservator or liquidating agent, in the conservator’s or liquidating agent’s discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the conservator or liquidating agent determines, in the conservator’s or liquidating agent’s discretion, will promote the orderly administration of the credit union’s affairs.
(2) Timing of repudiation
(3) Claims for damages for repudiation
(A) In generalExcept as otherwise provided in subparagraph (C) and paragraphs (4), (5), and (6), the liability of the conservator or liquidating agent for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be—
(i) limited to actual direct compensatory damages; and
(ii) determined as of—(I) the date of the appointment of the conservator or liquidating agent; or(II) in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudiation of such contract or agreement.
(B) No liability for other damagesFor purposes of subparagraph (A), the term “actual direct compensatory damages” does not include—
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of financial contractsIn the case of any qualified financial contract or agreement to which paragraph (8) applies, compensatory damages shall be—
(i) deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized in the industries for such contract and agreement claims; and
(ii) paid in accordance with this subsection and subsection (f) except as otherwise specifically provided in this section.
(4) Leases under which the credit union is the lessee
(A) In general
(B) Payments of rentNotwithstanding subparagraph (A), the lessor under a lease to which such subparagraph applies shall—
(i) be entitled to the contractual rent accruing before the later of the date—(I) the notice of disaffirmance or repudiation is mailed; or(II) the disaffirmance or repudiation becomes effective,
unless the lessor is in default or breach of the terms of the lease;
(ii) have no claim for damages under any acceleration clause or other penalty provision in the lease; and
(iii) have a claim for any unpaid rent, subject to all appropriate offsets and defenses, due as of the date of the appointment which shall be paid in accordance with this subsection and subsection (b).
(5) Leases under which the credit union is the lessor
(A) In generalIf the conservator or liquidating agent repudiates an unexpired written lease of real property of the credit union under which the credit union is the lessor and the lessee is not, as of the date of such repudiation, in default, the lessee under such lease may either—
(i) treat the lease as terminated by such repudiation; or
(ii) remain in possession of the leasehold interest for the balance of the term of the lease unless the lessee defaults under the terms of the lease after the date of such repudiation.
(B) Provisions applicable to lessee remaining in possessionIf any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of such subparagraph—
(i) the lessee—(I) shall continue to pay the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and(II) may offset against any rent payment which accrues after the date of the repudiation of the lease, any damages which accrue after such date due to the nonperformance of any obligation of the credit union under the lease after such date; and
(ii) the conservator or liquidating agent shall not be liable to the lessee for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II).
(6) Contracts for the sale of real property
(A) In generalIf the conservator or liquidating agent repudiates any contract (which meets the requirements of each paragraph of section 1788(a)(3) of this title) for the sale of real property and the purchaser of such real property under such contract is in possession and is not, as of the date of such repudiation, in default, such purchaser may either—
(i) treat the contract as terminated by such repudiation; or
(ii) remain in possession of such real property.
(B) Provisions applicable to purchaser remaining in possessionIf any purchaser of real property under any contract described in subparagraph (A) remains in possession of such property pursuant to clause (ii) of such subparagraph—
(i) the purchaser—(I) shall continue to make all payments due under the contract after the date of the repudiation of the contract; and(II) may offset against any such payments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the credit union under the contract; and
(ii) the conservator or liquidating agent shall—(I) not be liable to the purchaser for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II);(II) deliver title to the purchaser in accordance with the provisions of the contract; and(III) have no obligation under the contract other than the performance required under subclause (II).
(C) Assignment and sale allowed
(i) In general
(ii) No liability after assignment and sale
(7) Provisions applicable to service contracts
(A) Services performed before appointmentIn the case of any contract for services between any person and any insured credit union for which the Board has been appointed conservator or liquidating agent, any claim of such person for services performed before the appointment of the conservator or the liquidating agent shall be—
(i) a claim to be paid in accordance with subsection (b); and
(ii) deemed to have arisen as of the date the conservator or liquidating agent was appointed.
(B) Services performed after appointment and prior to repudiationIf, in the case of any contract for services described in subparagraph (A), the conservator or liquidating agent accepts performance by the other person before the conservator or liquidating agent makes any determination to exercise the right of repudiation of such contract under this section—
(i) the other party shall be paid under the terms of the contract for the services performed; and
(ii) the amount of such payment shall be treated as an administrative expense of the conservatorship or liquidation.
(C) Acceptance of performance no bar to subsequent repudiation
(8) Certain qualified financial contracts
(A) Rights of parties to contractsSubject to paragraphs (9) and (10) of this subsection and notwithstanding any other provision of this chapter (other than subsection (b)(9) of this section and section 1788(a)(3) of this title), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—
(i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with an insured credit union which arises upon the appointment of the Board as liquidating agent for such credit union at any time after such appointment;
(ii) any right under any security agreement or arrangement or other credit enhancement related to 1 or more qualified financial contracts described in clause (i); 1
1 So in original. Probably should be followed by “or”.
(iii) any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts and agreements described in clause (i), including any master agreement for such contracts or agreements.
(B) Applicability of other provisions
(C) Certain transfers not avoidable
(i) In general
(ii) Exception for certain transfers
(D) Certain contracts and agreements definedFor purposes of this subsection, the following definitions shall apply:
(i) Qualified financial contract
(ii) Securities contractThe term “securities contract”—(I) means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or any option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such repurchase or reverse repurchase transaction is a “repurchase agreement”, as defined in clause (v));(II) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan unless the Board determines by regulation, resolution, or order to include any such agreement within the meaning of such term;(III) means any option entered into on a national securities exchange relating to foreign currencies;(IV) means the guarantee (including by novation) by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such settlement is in connection with any agreement or transaction referred to in subclauses (I) through (XII) (other than subclause (II));(V) means any margin loan;(VI) means any extension of credit for the clearance or settlement of securities transactions;(VII) means any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled with a securities sale transaction;(VIII) means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;(IX) means any combination of the agreements or transactions referred to in this clause;(X) means any option to enter into any agreement or transaction referred to in this clause;(XI) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this clause, except that the master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X); and(XII) means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(iii) Commodity contractThe term “commodity contract” means—(I) with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;(II) with respect to a foreign futures commission merchant, a foreign future;(III) with respect to a leverage transaction merchant, a leverage transaction;(IV) with respect to a clearing organization, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;(V) with respect to a commodity options dealer, a commodity option;(VI) any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;(VII) any combination of the agreements or transactions referred to in this clause;(VIII) any option to enter into any agreement or transaction referred to in this clause;(IX) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII); or(X) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(iv) Forward contractThe term “forward contract” means—(I) a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date more than 2 days after the date the contract is entered into, including,2
2 So in original. The comma probably should not appear.
a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a “repurchase agreement”, as defined in clause (v)), consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;(II) any combination of agreements or transactions referred to in subclauses (I) and (III);(III) any option to enter into any agreement or transaction referred to in subclause (I) or (II);(IV) a master agreement that provides for an agreement or transaction referred to in subclauses (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, except that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or(V) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.(v) Repurchase agreementThe term “repurchase agreement” (which definition also applies to a reverse repurchase agreement)—(I) means an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage-related securities (as such term is defined in the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.]), mortgage loans, interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities or securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests with a simultaneous agreement by such transferee to transfer to the transferor thereof certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests as described above, at a date certain not later than 1 year after such transfers or on demand, against the transfer of funds, or any other similar agreement;(II) does not include any repurchase obligation under a participation in a commercial mortgage loan unless the Board determines by regulation, resolution, or order to include any such participation within the meaning of such term;(III) means any combination of agreements or transactions referred to in subclauses (I) and (IV);(IV) means any option to enter into any agreement or transaction referred to in subclause (I) or (III);(V) means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a repurchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); and(VI) means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
For purposes of this clause, the term “qualified foreign government security” means a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development (as determined by regulation or order adopted by the appropriate Federal banking authority).
(vi) Swap agreementThe term “swap agreement” means—(I) any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange, precious metals, or other commodity agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or forward agreement; a total return, credit spread or credit swap, option, future, or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option, future, or forward agreement;(II) any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option, or spot transaction on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;(III) any combination of agreements or transactions referred to in this clause;(IV) any option to enter into any agreement or transaction referred to in this clause;(V) a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, except that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), or (IV); and(VI) any security agreement or arrangement or other credit enhancement related to any agreements or transactions referred to in subclause (I), (II), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
Such term is applicable for purposes of this subsection only and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any swap agreement under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank Products Act of 2000 [7 U.S.C. 27 to 27f], the securities laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(47)]) and the Commodity Exchange Act [7 U.S.C. 1 et seq.].
(vii) Treatment of master agreement as one agreement
(viii) Transfer
(ix) Person
(E) Certain protections in event of appointment of conservatorNotwithstanding any other provision of this chapter (other than subsections (b)(9) and (c)(10) of this section, and section 1788(a)(3) of this title), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—
(i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a credit union in a conservatorship based upon a default under such financial contract which is enforceable under applicable noninsolvency law;
(ii) any right under any security agreement or arrangement or other credit enhancement related to 1 or more qualified financial contracts described in clause (i); 1
(iii) any right to offset or net out any termination values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts.
(F) Clarification
(G) Walkaway clauses not effective
(i) In general
(ii) Limited suspension of certain obligationsIn the case of a qualified financial contract referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time the liquidating agent is appointed until the earlier of—(I) the time such party receives notice that such contract has been transferred pursuant to subparagraph (A); or(II) 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent.
(iii) Walkaway clause defined
(H) Recordkeeping requirements
(9) Transfer of qualified financial contracts
(A) In generalIn making any transfer of assets or liabilities of a credit union in default which includes any qualified financial contract, the conservator or liquidating agent for such credit union shall either—
(i) transfer to 1 financial institution, other than a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding—(I) all qualified financial contracts between any person or any affiliate of such person and the credit union in default;(II) all claims of such person or any affiliate of such person against such credit union under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general unsecured creditors of such credit union);(III) all claims of such credit union against such person or any affiliate of such person under any such contract; and(IV) all property securing or any other credit enhancement for any contract described in subclause (I) or any claim described in subclause (II) or (III) under any such contract; or
(ii) transfer none of the qualified financial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and any affiliate of such person).
(B) Transfer to foreign bank, foreign financial institution, or branch or agency of a foreign bank or financial institution
(C) Transfer of contracts subject to the rules of a clearing organization
(D) DefinitionsFor purposes of this paragraph—
(i) the term “financial institution” means a broker or dealer, a depository institution, a futures commission merchant, a credit union, or any other institution, as determined by the Board by regulation to be a financial institution; and
(ii) the term “clearing organization” has the same meaning as in section 4402 of this title.
(10) Notification of transfer
(A) In generalIf—
(i) the conservator or liquidating agent for an insured credit union in default makes any transfer of the assets and liabilities of such credit union; and
(ii) the transfer includes any qualified financial contract,
the conservator or liquidating agent shall notify any person who is a party to any such contract of such transfer by 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent in the case of a liquidation, or the business day following such transfer in the case of a conservatorship.
(B) Certain rights not enforceable
(i) LiquidationA person who is a party to a qualified financial contract with an insured credit union may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(A) of this subsection or section 4403 or 4404 of this title, solely by reason of or incidental to the appointment of a liquidating agent for the credit union institution (or the insolvency or financial condition of the credit union for which the liquidating agent has been appointed)—(I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent; or(II) after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A).
(ii) Conservatorship
(iii) Notice
(C) Treatment of bridge banks 4
4 So in original. Probably should be “bridge depository institutions”.
The following institutions shall not be considered to be a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding for purposes of paragraph (9):(i) A bridge depository institution.
(ii) A credit union organized by the Board, for which a conservator is appointed either—(I) immediately upon the organization of the credit union; or(II) at the time of a purchase and assumption transaction between the credit union and the Board as receiver for a credit union in default.
(D) “Business day” defined
(11) Disaffirmance or repudiation of qualified financial contractsIn exercising the rights of disaffirmance or repudiation of a conservator or liquidating agent with respect to any qualified financial contract to which an insured credit union is a party, the conservator or liquidating agent for such credit union shall either—
(A) disaffirm or repudiate all qualified financial contracts between—
(i) any person or any affiliate of such person; and
(ii) the credit union in default; or
(B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such person or any affiliate of such person).
(12) Certain security interests not avoidable
(13) Authority to enforce contracts
(A) In general
(B) Certain rights not affected
(C) Consent requirement
(i) In general
(ii) Certain exceptions
(iii) Rule of construction
(14) Exception for Federal Reserve and Federal home loan banksNo provision of this subsection shall apply with respect to—
(A) any extension of credit from any Federal home loan bank or Federal Reserve bank to any insured depository institution; or
(B) any security interest in the assets of the institution securing any such extension of credit.
(15) Savings clause
(d) Payment of insured deposits
(1) In general
(2) Proof of claims
(3) Resolution of disputes
(4) Statute of limitations
(e) Subrogation of Board
(1) In general
(2) Dividends on subrogated amounts
(f) Valuation of claims in default
(1) In general
(2) Maximum liability
(3) Additional payments authorized
(A) In general
(B) Manner of payment
(g) Limitation on court action
(h) Liability of directors and officersA director or officer of an insured credit union may be held personally liable for monetary damages in any civil action by, on behalf of, or at the request or direction of the Board, which action is prosecuted wholly or partially for the benefit of the Board—
(1) acting as conservator or liquidating agent of such insured credit union,
(2) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by such liquidating agent or conservator, or
(3) acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed in whole or in part by an insured credit union or its affiliate in connection with assistance provided under section 1788 of this title,
for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law. Nothing in this paragraph shall impair or affect any right, if any, of the Board under other applicable law.
(i) Damages
(j) Board as liquidating agent of State-chartered credit unions
(k) Insured amounts payable
(1) Net insured amount
(A) In general
(B) Aggregation
(C) Authority to define the extent of coverage
(2) Government depositors or members
(A) In general
(B) Government depositorIn this paragraph, the term “government depositor” means a depositor that is—
(i) an officer, employee, or agent of the United States having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter;
(ii) an officer, employee, or agent of any State of the United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in such State;
(iii) an officer, employee, or agent of the District of Columbia having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in the District of Columbia;
(iv) an officer, employee, or agent of the Commonwealth of Puerto Rico, of the Panama Canal Zone, or of any territory or possession of the United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in the Commonwealth of Puerto Rico, the Panama Canal Zone, or any such territory or possession, respectively; or
(v) an officer, employee, or agent of any Indian tribe (as defined in section 1452(c) of title 25) or agency thereof having official custody of tribal funds and lawfully investing the same in a credit union insured in accordance with this subchapter.
(C) Authority to limit deposits
(3) Notwithstanding any limitation in this subchapter or in any other provision of law relating to the amount of insurance available for the account of any one depositor or member, funds invested in a credit union insured in accordance with this subchapter pursuant to a pension or profit-sharing plan described in section 401(d) of title 26, and funds invested in such an insured credit union in the form of individual retirement accounts as described in section 408(a) of title 26, shall be insured in the amount of “$250,000 6
6 So in original. Quotation marks probably should not appear.
(which amount shall be subject to inflation adjustments as provided under section 1821(a)(1)(F) of this title, except that $250,000 77 So in original. Probably should be set off by quotation marks.
shall be substituted for $100,000 7 wherever such term appears in such section)” 6 per account. As to any plan qualifying under section 401(d) or section 408(a) of title 26, the term “per account” means the present vested and ascertainable interest of each beneficiary under the plan, excluding any remainder interest created by, or as a result of, the plan.(4) Coverage for certain employee benefit plan deposits
(A) Pass-through insurance
(B) Prohibition on acceptance of deposits
(C) DefinitionsFor purposes of this paragraph, the following definitions shall apply:
(i) Capital standards
(ii) Employee benefit planThe term “employee benefit plan”—(I) has the meaning given to such term in section 1002(3) of title 29;(II) includes any plan described in section 401(d) of title 26; and(III) includes any eligible deferred compensation plan described in section 457 of title 26.
(iii) Pass-through share insurance
(D) Rule of construction
(5) Coverage for interest on lawyers trust accounts (IOLTA) and other similar escrow accounts
(A) Pass-through insurance
(B) Treatment of IOLTAs
(i) Treatment as escrow accounts
(ii) Treatment as member accounts
(C) DefinitionsFor purposes of this paragraph:
(i) Interest on lawyers trust account
(ii) Pass-through share insurance
(D) Rule of construction
(6) Standard maximum share insurance amount defined
(l) Payment; discharge of liability
(m) Undisclosed names
(n) Withholding of payment due to liability of credit union member
(o) Unclaimed insured accounts; limitations
(p) Sale of assets; security for loans; approval of court; agreements affecting interest of Board in any asset acquired by it
(1) Liquidating agents of insured credit unions closed for liquidation on account of bankruptcy or insolvency may offer the assets of such credit unions for sale to the Board or as security for loans from the Board, upon receiving permission from the commission, board, or authority having supervision of such credit union, in the case of an insured State-chartered credit union, in accordance with express provisions of State law. The proceeds of every such sale or loan shall be utilized for the same purposes and in the same manner as other funds realized from the liquidation of the assets of such credit unions. The Board, in its discretion, may make loans on the security of or may purchase and liquidate or sell any part of the assets of an insured credit union closed for liquidation on account of bankruptcy or insolvency, but in any case in which the Board is acting as liquidating agent of a closed insured credit union, no such loan or purchase shall be made without the approval of a court of competent jurisdiction.
(2) No agreement which tends to diminish or defeat the right, title, or interest of the Board in any asset acquired by it under this subsection, either as security for a loan or by purchase, shall be valid against the Board unless such agreement—
(A) shall be in writing;
(B) shall have been executed by the credit union and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the credit union;
(C) shall have been approved by the board of directors of the credit union, which approval shall be reflected in the minutes of such board; and
(D) shall have been, continuously, from the time of its execution, an official record of the credit union.
(q) Prohibition on certain acquisitions of assets
(1)Except as provided in paragraph (2), any individual who—
(A) has been convicted of an offense under section 215, 657, 1006, 1014, 1032, 1341, 1343, or 1344 of title 18 or of conspiring to commit any such offense, affecting any insured credit union for which the Board is appointed conservator or liquidating agent; and
(B) is in default on any loan or other extension of credit from such insured credit union which, if not paid, will cause substantial loss to the credit union, the National Credit Union Share Insurance Fund, or the Board,
may not purchase any asset of such credit union from the conservator or liquidating agent.
(2) Settlement of claimsParagraph (1) shall not apply to the sale or transfer by the Board of any asset of any insured credit union to any individual if the sale or transfer of the asset resolves or settles, or is part of the resolution or settlement, of—
(A) 1 or more claims that have been, or could have been, asserted by the Board against the individual; or
(B) obligations owed by the individual to the insured credit union or the Board.
(r) Foreign investigationsThe Board, as conservator or liquidating agent of any insured credit union and for purposes of carrying out any power, authority, or duty with respect to an insured credit union—
(1) may request the assistance of any foreign banking authority and provide assistance to any foreign banking authority in accordance with section 1786(u) of this title; and
(2) may maintain an office to coordinate foreign investigations or investigations on behalf of foreign banking authorities.
(June 26, 1934, ch. 750, title II, § 207, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1010; amended Pub. L. 93–495, title I, §§ 101(c), 104(a), Oct. 28, 1974, 88 Stat. 1501, 1503; Pub. L. 95–630, title V, § 502(b), title XIV, § 1401(c), Nov. 10, 1978, 92 Stat. 3681, 3712; Pub. L. 96–153, title III, § 323(c), Dec. 21, 1979, 93 Stat. 1120; Pub. L. 96–221, title III, § 308(c)(1), Mar. 31, 1980, 94 Stat. 148; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100–86, title VII, § 714(a), (b), Aug. 10, 1987, 101 Stat. 654, 655; Pub. L. 101–73, title IX, § 915(c), title XII, § 1217(a), Aug. 9, 1989, 103 Stat. 486, 530; Pub. L. 101–647, title XXV, §§ 2521(a)(2), 2526(b), 2528(b), 2532(d), 2534(b), Nov. 29, 1990, 104 Stat. 4864, 4876, 4878, 4882, 4883; Pub. L. 103–394, title V, § 501(c)(1), Oct. 22, 1994, 108 Stat. 4143; Pub. L. 105–219, title III, § 301(b)(2), Aug. 7, 1998, 112 Stat. 930; Pub. L. 109–8, title IX, §§ 901(a)(2), (b)(2), (c)(2), (d)(2), (e)(2), (f)(2), (g)(2), (h)(2), (i)(2), 902(b), 903(b), 904(b), 905(b), 908(b), Apr. 20, 2005, 119 Stat. 147, 148, 150, 152, 154, 156–159, 162, 166, 183; Pub. L. 109–173, § 2(d)(1), (2), Feb. 15, 2006, 119 Stat. 3602, 3604; Pub. L. 109–351, title VII, §§ 718(b), 720(b), 721(b), 722(b), 726(21)–(23), Oct. 13, 2006, 120 Stat. 1997–1999, 2003; Pub. L. 109–390, §§ 2(a)(2), (b)(2), (c)(2), 3(b), 6(b), Dec. 12, 2006, 120 Stat. 2693–2695, 2699; Pub. L. 110–289, div. A, title VI, § 1604(b)(2), July 30, 2008, 122 Stat. 2829; Pub. L. 111–203, title III, §§ 335(b), 343(b)(1), (3), July 21, 2010, 124 Stat. 1540, 1545; Pub. L. 113–252, § 2, Dec. 18, 2014, 128 Stat. 2893.)
§ 1788. Special assistance to avoid liquidation
(a) Loans; purchase of assets; accounts; agreements affecting interest of Board in any asset acquired by it
(1) In order to reopen a closed insured credit union or in order to prevent the closing of an insured credit union which the Board has determined is in danger of closing or in order to assist in the voluntary liquidation of a solvent credit union, the Board, in its discretion, is authorized to make loans to, or purchase the assets of, or establish accounts in such insured credit union upon such terms and conditions as it may prescribe. Except with respect to the voluntary liquidation of a solvent credit union, such loans shall be made and such accounts shall be established only when, in the opinion of the Board, such action is necessary to protect the fund or the interests of the members of the credit union.
(2) Whenever in the judgment of the Board such action will reduce the risk or avert a threatened loss to the fund and will facilitate a merger or consolidation of an insured credit union with another insured credit union, or will facilitate the sale of the assets of an open or closed insured credit union to and assumption of its liability by another person, the Board may, upon such terms and conditions as it may determine, make loans secured in whole or in part by assets of an open or closed insured credit union, which loans may be in subordination to the rights of members and creditors of such credit union, or the Board may purchase any of such assets or may guarantee any person against loss by reason of its assuming the liabilities and purchasing the assets of an open or closed insured credit union. For purposes of this paragraph, the term “person” means any credit union, individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.
(3) No agreement which tends to diminish or defeat the right, title, or interest of the Board, in any asset acquired by it under this subsection, either as security for a loan or by purchase, shall be valid against the Board unless such agreement—
(A) shall be in writing;
(B) shall have been executed by the credit union and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the credit union;
(C) shall have been approved by the board of directors of the credit union, which approval shall be reflected in the minutes of such board; and
(D) shall have been continuously, from the time of its execution, an official record of the credit union.
(b) Protection of FundFor the protection of the Fund, the Board, without regard to chapters 1 to 11 of title 40 and division C (except sections 3302, 3307(e), 3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41, may—
(1) deal with, complete, reconstruct, rent, renovate, modernize, insure, make contracts for the management of, sell for cash or credit, or lease, in its discretion, any real property acquired or held by it under this section; and
(2) assign or sell at public or private sale, or otherwise dispose of, any evidence of debt, contract, claim, personal property, or security assigned to or held by it under this section.
Section 6101 of title 41 shall not apply to any purchase or contract for services or supplies made or entered into by the Board under this section if the amount thereof does not exceed $1,000, or to any contract for hazard insurance on any real property acquired or held by it under this section.
(c) Money paid into Fund
(June 26, 1934, ch. 750, title II, § 208, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1013; amended Pub. L. 92–221, § 3, Dec. 23, 1971, 85 Stat. 797; Pub. L. 93–383, title VII, § 729, Aug. 22, 1974, 88 Stat. 721; Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 100–86, title VII, § 714(b), (c), Aug. 10, 1987, 101 Stat. 655.)
§ 1789. Administrative provisions
(a) In carrying out the purposes of this subchapter, the Board may—
(1) make contracts;
(2) sue and be sued, complain and defend, in any court of law or equity, State or Federal. All suits of a civil nature at common law or in equity to which the Board shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy. The Board may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States district court for the district or division embracing the place where the same is pending by following any procedure for removal now or hereafter in effect, except that any such suit to which the Board is a party in its capacity as liquidating agent of a State-chartered credit union and which involves only the rights or obligations of members, creditors, and such State credit union under State law shall not be deemed to arise under the laws of the United States. No attachment or execution shall be issued against the Board or its property before final judgment in any suit, action, or proceeding in any State, county, municipal, or United States court. The Board shall designate an agent upon whom service of process may be made in any State, territory, or jurisdiction in which any insured credit union is located;
(3) pursue to final disposition by way of compromise or otherwise claims both for and against the United States (other than tort claims, claims involving administrative expenses, and claims in excess of $5,000 arising out of contracts for construction, repairs, and the purchase of supplies and materials) which are not in litigation and have not been referred to the Department of Justice;
(4) to appoint such officers and employees as are not otherwise provided for in this chapter, to define their duties, fix their compensation, require bonds of them and fix the penalty thereof, and to dismiss at pleasure such officers or employees. Nothing in this chapter or any other Act shall be construed to prevent the appointment and compensation as an officer or employee of the Administration of any officer or employee of the United States in any board, commission, independent establishment, or executive department thereof;
(5) employ experts and consultants or organizations thereof, as authorized by section 3109 of title 5;
(6) prescribe the manner in which its general business may be conducted and the privileges granted to it by law may be exercised and enjoyed;
(7) exercise all powers specifically granted by the provisions of this subchapter and such incidental powers as shall be necessary to carry out the power so granted;
(8) make examinations of and require information and reports from insured credit unions, as provided in this subchapter;
(9) act as liquidating agent;
(10) delegate to any officer or employee of the Administration such of its functions as it deems appropriate; and
(11) prescribe such rules and regulations as it may deem necessary or appropriate to carry out the provisions of this subchapter.
(b) With respect to the financial operations arising by reason of this subchapter, the Board shall—
(1) on an annual basis and prior to the submission of the detailed business-type budget required under paragraph (2)—
(A) make publicly available and publish in the Federal Register a draft of the detailed business-type budget; and
(B) hold a public hearing, with public notice provided of the hearing, during which the public may submit comments on the draft of the detailed business-type budget;
(2) prepare annually and submit a detailed business-type budget as provided for wholly owned Government corporations by chapter 91 of title 31, which shall address any comment submitted by the public under paragraph (1)(B); and
(3) maintain an integral set of accounts, which shall be audited by the Government Accountability Office in accordance with principles and procedures applicable to commercial corporate transactions, as provided by section 9105 1
1 See References in Text note below.
of title 31.(June 26, 1934, ch. 750, title II, § 209, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1014; amended Pub. L. 93–604, title VII, § 706, Jan. 2, 1975, 88 Stat. 1964; Pub. L. 95–630, title V, § 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 108–271, § 8(b), July 7, 2004, 118 Stat. 814; Pub. L. 109–351, title VII, § 726(24), Oct. 13, 2006, 120 Stat. 2003; Pub. L. 115–174, title II, § 212, May 24, 2018, 132 Stat. 1319.)
§ 1789a. Credit unions as depositaries of public money; fiscal agents; duties
Any credit union the accounts of which are insured under this subchapter shall be a depositary of public money and may be employed as fiscal agent of the United States. The Secretary of the Treasury is authorized to deposit public money in any such insured credit union, and shall prescribe such regulations as may be necessary to enable such credit unions to become depositaries of public money and fiscal agents of the United States. Each credit union shall perform all such reasonable duties as depositaries of public money and fiscal agent of the United States as may be required of it including services in connection with the collection of taxes and other obligations owed the United States.
(June 26, 1934, ch. 750, title II, § 210, as added Pub. L. 95–147, § 2(c)(1), Oct. 28, 1977, 91 Stat. 1227.)
§ 1790. Nondiscriminatory provision
It is not the purpose of this subchapter to discriminate in any manner against State-chartered credit unions and in favor of Federal credit unions, but it is the purpose of this subchapter to provide all credit unions with the same opportunity to obtain and enjoy the benefits of this subchapter.
(June 26, 1934, ch. 750, title II, § 211, formerly § 210, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1015; renumbered § 211, Pub. L. 95–147, § 2(c)(2), Oct. 28, 1977, 91 Stat. 1228.)
§ 1790a. Board disapproval of directors, committee members, and senior executive officers of insured credit unions
(a) Prior notice required
An insured credit union shall notify the Board of the proposed addition of any individual to the board of directors or committee or the employment of any individual as a senior executive officer of such credit union at least 30 days before such addition or employment becomes effective, if the insured credit union—
(1) has been chartered less than 2 years; or
(2) is in troubled condition, as determined on the basis of such credit union’s most recent report of condition or report of examination.
(b) Disapproval by Board
(c) Exception in extraordinary circumstances
(1) In general
(2) No effect on disapproval authority of Board
(d) Additional information
Any notice submitted to the Board by any insured credit union pursuant to subsection (a) shall include—
(1) the information described in section 1817(j)(6)(A) of this title about the individual; and
(2) such other information as the Board may prescribe by regulation.
(e) Standard for disapproval
(f) Definition regulations
(June 26, 1934, ch. 750, title II, § 212, as added Pub. L. 101–73, title IX, § 914(b), Aug. 9, 1989, 103 Stat. 485.)
§ 1790b. Credit union employee protection remedy
(a) In general
(1) Employees of credit unions
(2) Employees of the Administration
The Administration may not discharge or otherwise discriminate against any employee (including any employee of the National Credit Union Central Liquidity Facility) with respect to compensation, terms, conditions, or privileges of employment because the employee (or any person acting pursuant to the request of the employee) provided information to the Administration or the Attorney General regarding any possible violation of any law or regulation by—
(A) any credit union or the Administration;
(B) any director, officer, committee member, or employee of any credit union; or
(C) any officer or employee of the Administration.
(b) Enforcement
(c) Remedies
If the district court determines that a violation of subsection (a) has occurred, it may order the credit union or the Administration which committed the violation—
(1) to reinstate the employee to his former position,
(2) to pay compensatory damages, or
(3) take other appropriate actions to remedy any past discrimination.
(d) Limitations
The protections of this section shall not apply to any employee who—
(1) deliberately causes or participates in the alleged violation of law or regulation, or
(2) knowingly or recklessly provides substantially false information to such an agency or the Attorney General.
(June 26, 1934, ch. 750, title II, § 213, as added Pub. L. 101–73, title IX, § 932(b), Aug. 9, 1989, 103 Stat. 494; amended Pub. L. 102–242, title II, § 251(b)(1), (2), Dec. 19, 1991, 105 Stat. 2332, 2333; Pub. L. 102–550, title XVI, § 1604(d), Oct. 28, 1992, 106 Stat. 4084.)
§ 1790c. Reward for information leading to recoveries or civil penalties
The Board may pay rewards in connection with an offense affecting an insured credit union, under the same circumstances and subject to the same limitations that a Federal banking agency may pay rewards under section 1831j of this title in connection with an offense affecting a depository institution insured by the Federal Deposit Insurance Corporation.
(June 26, 1934, ch. 750, title II, § 214, as added Pub. L. 101–73, title IX, § 933(b), Aug. 9, 1989, 103 Stat. 496.)
§ 1790d. Prompt corrective action
(a) Resolving problems to protect Fund
(1) Purpose
(2) Prompt corrective action required
(b) Regulations required
(1) Insured credit unions
(A) In generalThe Board shall, by regulation, prescribe a system of prompt corrective action for insured credit unions that is—
(i) consistent with this section; and
(ii) comparable to section 1831o of this title.
(B) Cooperative character of credit unionsThe Board shall design the system required under subparagraph (A) to take into account that credit unions are not-for-profit cooperatives that—
(i) do not issue capital stock;
(ii) must rely on retained earnings to build net worth; and
(iii) have boards of directors that consist primarily of volunteers.
(2) New credit unions
(A) In general
(B) Criteria for alternative systemThe Board shall design the system prescribed under subparagraph (A)—
(i) to carry out the purpose of this section;
(ii) to recognize that credit unions (as cooperatives that do not issue capital stock) initially have no net worth, and give new credit unions reasonable time to accumulate net worth;
(iii) to create adequate incentives for new credit unions to become adequately capitalized by the time that they either—(I) have been in operation for more than 10 years; or(II) have more than $10,000,000 in total assets;
(iv) to impose appropriate restrictions and requirements on new credit unions that do not make sufficient progress toward becoming adequately capitalized; and
(v) to prevent evasion of the purpose of this section.
(c) Net worth categories
(1) In generalFor purposes of this section the following definitions shall apply:
(A) Well capitalizedAn insured credit union is “well capitalized” if—
(i) it has a net worth ratio of not less than 7 percent; and
(ii) it meets any applicable risk-based net worth requirement under subsection (d).
(B) Adequately capitalizedAn insured credit union is “adequately capitalized” if—
(i) it has a net worth ratio of not less than 6 percent; and
(ii) it meets any applicable risk-based net worth requirement under subsection (d).
(C) UndercapitalizedAn insured credit union is “undercapitalized” if—
(i) it has a net worth ratio of less than 6 percent; or
(ii) it fails to meet any applicable risk-based net worth requirement under subsection (d).
(D) Significantly undercapitalizedAn insured credit union is “significantly undercapitalized”—
(i) if it has a net worth ratio of less than 4 percent; or
(ii) if—(I) it has a net worth ratio of less than 5 percent; and(II) it—(aa) fails to submit an acceptable net worth restoration plan within the time allowed under subsection (f); or(bb) materially fails to implement a net worth restoration plan accepted by the Board.
(E) Critically undercapitalized
(2) Adjusting net worth levels
(A) In general
(B) Determinations requiredThe Board may increase or decrease net worth ratios under subparagraph (A) only if the Board—
(i) determines, in consultation with the Federal banking agencies, that the reason for the increase or decrease in the required minimum level for the leverage limit also justifies the adjustment in net worth ratios; and
(ii) determines that the resulting net worth ratios are sufficient to carry out the purpose of this section.
(C) Transition period required
(d) Risk-based net worth requirement for complex credit unions
(1) In general
(2) Standard
(e) Earnings-retention requirement applicable to credit unions that are not well capitalized
(1) In general
(2) Board’s authority to decrease earnings-retention requirement
(A) In generalThe Board may, by order, decrease the 0.4 percent requirement in paragraph (1) with respect to a credit union to the extent that the Board determines that the decrease—
(i) is necessary to avoid a significant redemption of shares; and
(ii) would further the purpose of this section.
(B) Periodic review required
(f) Net worth restoration plan required
(1) In general
(2) Assistance to small credit unions
(3) Deadlines for submission and review of plansThe Board shall, by regulation, establish deadlines for submission of net worth restoration plans under this subsection that—
(A) provide insured credit unions with reasonable time to submit net worth restoration plans; and
(B) require the Board to act on net worth restoration plans expeditiously.
(4) Failure to submit acceptable plan within time allowed
(A) Failure to submit any planIf an insured credit union fails to submit a net worth restoration plan within the time allowed under paragraph (3), the Board shall—
(i) promptly notify the credit union of that failure; and
(ii) give the credit union a reasonable opportunity to submit a net worth restoration plan.
(B) Submission of unacceptable planIf an insured credit union submits a net worth restoration plan within the time allowed under paragraph (3), and the Board determines that the plan is not acceptable, the Board shall—
(i) promptly notify the credit union of why the plan is not acceptable; and
(ii) give the credit union a reasonable opportunity to submit a revised plan.
(5) Accepting plan
(g) Restrictions on undercapitalized credit unions
(1) Restriction on asset growthAn insured credit union that is undercapitalized shall not generally permit its average total assets to increase, unless—
(A) the Board has accepted the net worth restoration plan of the credit union for that action;
(B) any increase in total assets is consistent with the net worth restoration plan; and
(C) the net worth ratio of the credit union increases at a rate that is consistent with the net worth restoration plan.
(2) Restriction on member business loans
(h) More stringent treatment based on other supervisory criteriaWith respect to the exercise of authority by the Board under regulations comparable to section 1831o(g) of this title—
(1) the Board may not reclassify an insured credit union into a lower net worth category, or treat an insured credit union as if it were in a lower net worth category, for reasons not pertaining to the safety and soundness of that credit union; and
(2) the Board may not delegate its authority to reclassify an insured credit union into a lower net worth category or to treat an insured credit union as if it were in a lower net worth category.
(i) Action required regarding critically undercapitalized credit unions
(1) In generalThe Board shall, not later than 90 days after the date on which an insured credit union becomes critically undercapitalized—
(A) appoint a conservator or liquidating agent for the credit union; or
(B) take such other action as the Board determines would better achieve the purpose of this section, after documenting why the action would better achieve that purpose.
(2) Periodic redeterminations required
(3) Appointment of liquidating agent required if other action fails to restore net worth
(A) In general
(B) ExceptionNotwithstanding subparagraph (A), the Board may continue to take such other action as the Board determines to be appropriate in lieu of appointment of a liquidating agent if—
(i) the Board determines that—(I) the insured credit union has been in substantial compliance with an approved net worth restoration plan that requires consistent improvement in the net worth of the credit union since the date of the approval of the plan; and(II) the insured credit union has positive net income or has an upward trend in earnings that the Board projects as sustainable; and
(ii) the Board certifies that the credit union is viable and not expected to fail.
(4) Nondelegation
(A) In general
(B) Exception
(j) Reviews required when share insurance fund experiences losses
(1) In generalIf the Fund incurs a material loss with respect to an insured credit union, the Inspector General of the Board shall—
(A) submit to the Board a written report reviewing the supervision of the credit union by the Administration (including the implementation of this section by the Administration), which shall include—
(i) a description of the reasons why the problems of the credit union resulted in a material loss to the Fund; and
(ii) recommendations for preventing any such loss in the future; and
(B) submit a copy of the report under subparagraph (A) to—
(i) the Comptroller General of the United States;
(ii) the Corporation;
(iii) in the case of a report relating to a State credit union, the appropriate State supervisor; and
(iv) to any Member of Congress, upon request.
(2) Material loss definedFor purposes of determining whether the Fund has incurred a material loss with respect to an insured credit union, a loss is material if it exceeds the sum of—
(A) $25,000,000; and
(B) an amount equal to 10 percent of the total assets of the credit union on the date on which the Board initiated assistance under section 1788 of this title or was appointed liquidating agent.
(3) Public disclosure required
(A) In generalThe Board shall disclose a report under this subsection, upon request under section 552 of title 5, without excising—
(i) any portion under section 552(b)(5) of title 5; or
(ii) any information about the insured credit union (other than trade secrets) under section 552(b)(8) of title 5.
(B) Rule of construction
(4) Losses that are not material
(A) Semiannual reportFor the 6-month period ending on March 31, 2010, and each 6-month period thereafter, the Inspector General of the Board shall—
(i) identify any losses that the Inspector General estimates were incurred by the Fund during such 6-month period, with respect to insured credit unions;
(ii) for each loss to the Fund that is not a material loss, determine—(I) the grounds identified by the Board or the State official having jurisdiction over a State credit union for appointing the Board as the liquidating agent for any Federal or State credit union; and(II) whether any unusual circumstances exist that might warrant an in-depth review of the loss; and
(iii) prepare and submit a written report to the Board and to Congress on the results of the determinations of the Inspector General that includes—(I) an identification of any loss that warrants an in-depth review, and the reasons such review is warranted, or if the Inspector General determines that no review is warranted, an explanation of such determination; and(II) for each loss identified in subclause (I) that warrants an in-depth review, the date by which such review, and a report on the review prepared in a manner consistent with reports under paragraph (1)(A), will be completed.
(B) Deadline for semiannual reportThe Inspector General of the Board shall—
(i) submit each report required under subparagraph (A) expeditiously, and not later than 90 days after the end of the 6-month period covered by the report; and
(ii) provide a copy of the report required under subparagraph (A) to any Member of Congress, upon request.
(5) GAO reviewThe Comptroller General of the United States shall, under such conditions as the Comptroller General determines to be appropriate—
(A) review each report made under paragraph (1), including the extent to which the Inspector General of the Board complied with the requirements under section 419 of title 5 with respect to each such report; and
(B) recommend improvements to the supervision of insured credit unions (including improvements relating to the implementation of this section).
(k) Appeals process
(l) Consultation and cooperation with State credit union supervisors
(1) In general
(2) Evaluating net worth restoration plan
(3) Deciding whether to appoint conservator or liquidating agentWith respect to any decision by the Board on whether to appoint a conservator or liquidating agent for a State-chartered insured credit union—
(A) the Board shall—
(i) seek the views of the State official having jurisdiction over the credit union; and
(ii) give that official an opportunity to take the proposed action;
(B) the Board shall, upon timely request of an official referred to in subparagraph (A), promptly provide the official with—
(i) a written statement of the reasons for the proposed action; and
(ii) reasonable time to respond to that statement;
(C) if the official referred to in subparagraph (A) makes a timely written response that disagrees with the proposed action and gives reasons for that disagreement, the Board shall not appoint a conservator or liquidating agent for the credit union, unless the Board, after considering the views of the official, has determined that—
(i) the Fund faces a significant risk of loss with respect to the credit union if a conservator or liquidating agent is not appointed; and
(ii) the appointment is necessary to reduce—(I) the risk that the Fund would incur a loss with respect to the credit union; or(II) any loss that the Fund is expected to incur with respect to the credit union; and
(D) the Board may not delegate any determination under subparagraph (C).
(m) Corporate credit unions exemptedThis section does not apply to any insured credit union that—
(1) operates primarily for the purpose of serving credit unions; and
(2) permits individuals to be members of the credit union only to the extent that applicable law requires that such persons own shares.
(n) Other authority not affected
(o) DefinitionsFor purposes of this section the following definitions shall apply:
(1) Federal banking agency
(2) Net worthThe term “net worth”—
(A) with respect to any insured credit union, means the retained earnings balance of the credit union, as determined under generally accepted accounting principles, together with any amounts that were previously retained earnings of any other credit union with which the credit union has combined;
(B) with respect to any insured credit union, includes, at the Board’s discretion and subject to rules and regulations established by the Board, assistance provided under section 1788 of this title to facilitate a least-cost resolution consistent with the best interests of the credit union system; and
(C) with respect to a low-income credit union, includes secondary capital accounts that are—
(i) uninsured; and
(ii) subordinate to all other claims against the credit union, including the claims of creditors, shareholders, and the Fund.
(3) Net worth ratio
(4) New credit unionThe term “new credit union” means an insured credit union that—
(A) has been in operation for less than 10 years; and
(B) has not more than $10,000,000 in total assets.
(June 26, 1934, ch. 750, title II, § 216, as added Pub. L. 105–219, title III, § 301(a), Aug. 7, 1998, 112 Stat. 923; amended Pub. L. 109–351, title V, § 504, title VII, § 726(25), Oct. 13, 2006, 120 Stat. 1975, 2003; Pub. L. 111–203, title IX, § 988(a), July 21, 2010, 124 Stat. 1938; Pub. L. 111–382, § 3, Jan. 4, 2011, 124 Stat. 4135; Pub. L. 117–286, § 4(b)(33), Dec. 27, 2022, 136 Stat. 4346.)
§ 1790e. Temporary Corporate Credit Union Stabilization Fund
(a) Establishment of Stabilization Fund
(b) Expenditures from Stabilization FundMoney in the Stabilization Fund shall be available upon requisition by the Board, without fiscal year limitation, for making payments for the purposes described in section 1783(a) of this title, subject to the following additional limitations:
(1) All payments other than administrative payments shall be connected to the conservatorship, liquidation, or threatened conservatorship or liquidation, of a corporate credit union.
(2) Prior to authorizing each payment the Board shall—
(A) certify that, absent the existence of the Stabilization Fund, the Board would have made the identical payment out of the National Credit Union Share Insurance Fund (Insurance Fund); and
(B) report each such certification to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.
(c) Authority to borrow
(1) In general
(2) Repayment of advances
(A) In general
(B) Variable rate of interest
(3) Repayment schedule
(d) Assessment authority
(1) Assessments relating to expenditures under subsection (b)
(2) Special premiums relating to repayments under subsection (c)(3)
(3) Computation
(e) Distributions from Insurance Fund
(f) Investment of Stabilization Fund assets
(g) Reports
(h) Closing of Stabilization Fund
(June 26, 1934, ch. 750, title II, § 217, as added Pub. L. 111–22, div. A, title II, § 204(f)(1), May 20, 2009, 123 Stat. 1651; amended Pub. L. 111–382, § 1, Jan. 4, 2011, 124 Stat. 4134.)