12 USC 4615 - Supervisory actions applicable to undercapitalized regulated entities

United States Code

USC most recently checked for updates: Jun 09, 2025

§ 4614. Capital classifications

§ 4616. Supervisory actions applicable to significantly undercapitalized regulated entities

U.S. Code
Notes

§ 4615.

Supervisory actions applicable to undercapitalized regulated entities

(a)

Mandatory actions

(1)

Required monitoring

The Director shall—

(A)

closely monitor the condition of any undercapitalized regulated entity;

(B)

closely monitor compliance with the capital restoration plan, restrictions, and requirements imposed on an undercapitalized regulated entity under this section; and

(C)

periodically review the plan, restrictions, and requirements applicable to an undercapitalized regulated entity to determine whether the plan, restrictions, and requirements are achieving the purpose of this section.

(2)

Capital restoration plan

A regulated entity that is classified as undercapitalized shall, within the time period provided in section 4622(b) and (d) of this title, submit to the Director a capital restoration plan that complies with section 4622 of this title and carry out the plan after approval.

(3)

Restriction on capital distributions

A regulated entity that is classified as undercapitalized may not make any capital distribution that would result in the regulated entity being reclassified as significantly undercapitalized or critically undercapitalized.

(4)

Restriction of asset growth

An undercapitalized regulated entity shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter, unless—

(A)

the Director has accepted the capital restoration plan of the regulated entity;

(B)

any increase in total assets is consistent with the capital restoration plan; and

(C)

the ratio of tangible equity to assets of the regulated entity increases during the calendar quarter at a rate sufficient to enable the regulated entity to become adequately capitalized within a reasonable time.

(5)

Prior approval of acquisitions and new activities

An undercapitalized regulated entity shall not, directly or indirectly, acquire any interest in any entity or engage in any new activity, unless—

(A)

the Director has accepted the capital restoration plan of the regulated entity, the regulated entity is implementing the plan, and the Director determines that the proposed action is consistent with and will further the achievement of the plan; or

(B)

the Director determines that the proposed action will further the purpose of this subchapter.

(b)

Reclassification from undercapitalized to significantly undercapitalized

The Director shall reclassify as significantly undercapitalized a regulated entity that is classified as undercapitalized (and the regulated entity shall be subject to the provisions of section 4616 of this title) if—

(1)

the regulated entity does not submit a capital restoration plan that is substantially in compliance with section 4622 of this title within the applicable period or the Director does not approve the capital restoration plan submitted by the regulated entity; or

(2)

the Director determines that the regulated entity has failed to comply with the capital restoration plan and fulfill the schedule for the plan approved by the Director in any material respect.

(c)

Other discretionary safeguards

The Director may take, with respect to an undercapitalized regulated entity, any of the actions authorized to be taken under section 4616 of this title with respect to a significantly undercapitalized regulated entity, if the Director determines that such actions are necessary to carry out the purpose of this subchapter.

(Pub. L. 102–550, title XIII, § 1365, Oct. 28, 1992, 106 Stat. 3978; Pub. L. 110–289, div. A, title I, § 1143, July 30, 2008, 122 Stat. 2732.)

cite as: 12 USC 4615