View all text of Chapter 16 [§ 1811 - § 1835a]
§ 1835. Insured depository institution capital requirements for transfers of small business obligations
(a) Accounting principles
(b) Capital and reserve requirements
With respect to the transfer of a small business loan or lease of personal property with recourse that is a sale under generally accepted accounting principles, each qualified insured depository institution shall—
(1) establish and maintain a reserve equal to an amount sufficient to meet the reasonable estimated liability of the institution under the recourse arrangement; and
(2) include, for purposes of applicable capital standards and other capital measures, only the amount of the retained recourse in the risk-weighted assets of the institution.
(c) Qualified institutions criteria
An insured depository institution is a qualified insured depository institution for purposes of this section if, without regard to the accounting principles or capital requirements referred to in subsections (a) and (b), the institution is—
(1) well capitalized; or
(2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized.
(d) Aggregate amount of recourse
The total outstanding amount of recourse retained by a qualified insured depository institution with respect to transfers of small business loans and leases of personal property under subsections (a) and (b) shall not exceed—
(1) 15 percent of the risk-based capital of the institution; or
(2) such greater amount, as established by the appropriate Federal banking agency by regulation or order.
(e) Institutions that cease to be qualified or exceed aggregate limits
(f) Prompt corrective action not affected
(g) Regulations required
(h) Alternative system permitted
(1) In general
(2) Existing transactions not affected
(i) Definitions
For purposes of this section—
(1) the term “adequately capitalized” has the same meaning as in section 1831o(b) of this title;
(2) the term “appropriate Federal banking agency” has the same meaning as in section 1813 of this title;
(3) the term “capital standards” has the same meaning as in section 1831o(c) of this title;
(4) the term “Federal banking agencies” has the same meaning as in section 1813 of this title;
(5) the term “insured depository institution” has the same meaning as in section 1813 of this title;
(6) the term “other capital measures” has the meaning as in section 1831o(c) of this title;
(7) the term “recourse” has the meaning given to such term under generally accepted accounting principles;
(8) the term “small business” means a business that meets the criteria for a small business concern established by the Small Business Administration under section 632(a) of title 15; and
(9) the term “well capitalized” has the same meaning as in section 1831o(b) of this title.
(Pub. L. 103–325, title II, § 208, Sept. 23, 1994, 108 Stat. 2201.)