12 USC 1831 - Activities of insured State banks

View all text of Chapter 16 [§ 1811 - § 1835a]

§ 1831a. Activities of insured State banks

(a) Permissible activities

(1) In generalAfter the end of the 1-year period beginning on December 19, 1991, an insured State bank may not engage as principal in any type of activity that is not permissible for a national bank unless—

(A) the Corporation has determined that the activity would pose no significant risk to the Deposit Insurance Fund; and

(B) the State bank is, and continues to be, in compliance with applicable capital standards prescribed by the appropriate Federal banking agency.

(2) Processing period

(A) In general

(B) Extension of time period

(b) Insurance underwriting

(1) In general

(2) Exception for certain federally reinsured crop insurance

(1) In general

(2) Exception for certain subsidiaries

(3) Exception for qualified housing projects

(A) Exception

(B) Limitation

(i) Qualified housing project

(ii) Lower income

(4) Transition rule

(A) In general

(B) Treatment of noncompliance during divestment

(d) Subsidiaries of insured State banks

(1) In generalAfter the end of the 1-year period beginning on December 19, 1991, a subsidiary of an insured State bank may not engage as principal in any type of activity that is not permissible for a subsidiary of a national bank unless—

(A) the Corporation has determined that the activity poses no significant risk to the Deposit Insurance Fund; and

(B) the bank is, and continues to be, in compliance with applicable capital standards prescribed by the appropriate Federal banking agency.

(2) Insurance underwriting prohibited

(A) Prohibition

(B) Continuation of existing activities

(i) the insured State bank was required, before June 1, 1991, to provide title insurance as a condition of the bank’s initial chartering under State law; and

(ii) control of the insured State bank has not changed since that date.

(3) Processing period

(A) In general

(B) Extension of time period

(e) Savings bank life insurance

(1) In generalNo provision of this chapter shall be construed as prohibiting or impairing the sale or underwriting of savings bank life insurance, or the ownership of stock in a savings bank life insurance company, by any insured bank which—

(A) is located in the Commonwealth of Massachusetts or the State of New York or Connecticut; and

(B) meets applicable consumer disclosure requirements with respect to such insurance.

(2) FDIC finding and action regarding risk

(A) Finding

(B) Actions

(i) In general

(ii) Authorized actions

(f) Common and preferred stock investment

(1) In general

(2) Exception for banks in certain StatesNotwithstanding paragraph (1), an insured State bank may, to the extent permitted by the Corporation, acquire and retain ownership of securities described in paragraph (1) to the extent the aggregate amount of such investment does not exceed an amount equal to 100 percent of the bank’s capital if such bank—

(A) is located in a State that permitted, as of September 30, 1991, investment in common or preferred stock listed on a national securities exchange or shares of an investment company registered under the Investment Company Act of 1940 [15 U.S.C. 80a–1 et seq.]; and

(B) made or maintained an investment in such securities during the period beginning on September 30, 1990, and ending on November 26, 1991.

(3) Exception for certain types of institutionsNotwithstanding paragraph (1), an insured State bank may—

(A) acquire not more than 10 percent of a corporation that only—

(i) provides directors’, trustees’, and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions; or

(ii) reinsures such policies; and

(B) acquire or retain shares of a depository institution if—

(i) the institution engages only in activities permissible for national banks;

(ii) the institution is subject to examination and regulation by a State bank supervisor;

(iii) 20 or more depository institutions own shares of the institution and none of those institutions owns more than 15 percent of the institution’s shares; and

(iv) the institution’s shares (other than directors’ qualifying shares or shares held under or initially acquired through a plan established for the benefit of the institution’s officers and employees) are owned only by the institution.

(4) Transition period for common and preferred stock investments

(A) In general

(B) Compliance at end of period

(5) Loss of exception upon acquisition

(6) Notice and approvalAn insured State bank may only engage in any investment pursuant to paragraph (2) if—

(A) the bank has filed a 1-time notice of the bank’s intention to acquire and retain investments described in paragraph (1); and

(B) the Corporation has determined, within 60 days of receiving such notice, that acquiring or retaining such investments does not pose a significant risk to the Deposit Insurance Fund.

(7) Divestiture

(A) In general

(B) Reasonable standard

(g) Determinations

(h) “Activity” defined

(i) Other authority not affected

(j) Activities of branches of out-of-State banks

(1) Application of host State law

(2) Activities of branches

(3) Savings provisionNo provision of this subsection shall be construed as affecting the applicability of—

(A) any State law of any home State under subsection (b), (c), or (d) of section 1831u of this title; or

(B) Federal law to State banks and State bank branches in the home State or the host State.

(4) Definitions

(Sept. 21, 1950, ch. 967, § 2[24], as added Pub. L. 102–242, title III, § 303(a), Dec. 19, 1991, 105 Stat. 2349; amended Pub. L. 102–550, title XVI, § 1605(a)(8), Oct. 28, 1992, 106 Stat. 4086; Pub. L. 103–328, title I, § 102(b)(3)(B), Sept. 29, 1994, 108 Stat. 2351; Pub. L. 104–208, div. A, title II, §§ 2217, 2704(d)(14)(W), Sept. 30, 1996, 110 Stat. 3009–414, 3009–494; Pub. L. 105–24, § 2(a), July 3, 1997, 111 Stat. 238; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 8(a)(31), Feb. 15, 2006, 119 Stat. 3615.)