If the Corporation is classified as within level III, the Corporation shall, within the time period determined by the Director, submit to the Director a capital restoration plan and, after approval, carry out the plan.
(2) Restrictions on dividends
(A) Prior approval
If the Corporation is classified as within level III, the Corporation—
(i)may not make any payment of dividends that would result in the Corporation being reclassified as within level IV; and
(ii)may make any other payment of dividends only if the Director approves the payment before the payment.
(B) Standard for approval
If the Corporation is classified as within level III, the Director may approve a payment of dividends by the Corporation only if the Director determines that the payment
(i) will enhance the ability of the Corporation to meet the risk-based capital level and the minimum capital level promptly,
(ii) will contribute to the long-term safety and soundness of the Corporation, or
(iii) is otherwise in the public interest.
(3) Reclassification from level III to level IV
The Director shall immediately reclassify the Corporation as within level IV if—
(A)the Corporation is classified as within level III; and
(i)the Corporation does not submit a capital restoration plan that is approved by the Director; or
(ii)the Director determines that the Corporation has failed to make, in good faith, reasonable efforts necessary to comply with such a capital restoration plan and fulfill the schedule for the plan approved by the Director.
(b) Discretionary supervisory actions
In addition to any other actions taken by the Director (including actions under subsection (a) of this section), the Director may, at any time, take any of the following actions if the Corporation is classified as within level III:
(1) Limitation on increase in obligations
Limit any increase in, or order the reduction of, any obligations of the Corporation, including off-balance sheet obligations.
(2) Limitation on growth
Limit or prohibit the growth of the assets of the Corporation or require contraction of the assets of the Corporation.
(3) Prohibition on dividends
Prohibit the Corporation from making any payment of dividends.
(4) Acquisition of new capital
Require the Corporation to acquire new capital in any form and in any amount sufficient to provide for the reclassification of the Corporation as within level II.
(5) Restriction of activities
Require the Corporation to terminate, reduce, or modify any activity that the Director determines creates excessive risk to the Corporation.
Appoint a conservator for the Corporation consistent with this chapter.
(c) Effective date
This section shall take effect on January 1, 1992.
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.