Source: http://ecfr.io/Title-12/pt12.10.1777
Timestamp: 2018-07-23 05:35:39
Document Index: 405518547

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[12 CFR 1777] Title 12 Part 1777 : Code of Federal Regulations ';
Title 12 Part 1777
Title 12 → Chapter XVII → Subchapter C → Part 1777
§1777.1 Authority, purpose, scope, and implementation dates.
§1777.2 Preservation of other authority.
§1777.3 Definitions.
§1777.10 Developments prompting supervisory response.
§1777.11 Supervisory response.
§1777.12 Other supervisory action.
§1777.20 Capital classifications.
§1777.21 Notice of capital category, and adjustments.
§1777.22 Limitation on capital distributions.
§1777.23 Capital restoration plans.
§1777.24 Notice of intent to issue an order.
§1777.25 Response to notice.
§1777.26 Final notice of order.
§1777.27 Exhaustion and review.
§1777.28 Appointment of conservator for a significantly undercapitalized or critically undercapitalized Enterprise.
Source: 67 FR 3598, Jan. 25, 2002, unless otherwise noted.
(b) Authority, purpose and scope of subpart A. In addition to the authority set forth in paragraph (a) of this section, subpart A of this part is also issued pursuant to section 1314 of the 1992 Act (12 U.S.C. 4514), section 307(c) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(c)), and section 309(k) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(k)), requiring each Enterprise to submit such reports to OFHEO as the Director of OFHEO determines, in his or her judgment, are necessary to carry out the purposes of the 1992 Act. Subpart A of this part is also issued in reliance on section 1317 of the 1992 Act (12 U.S.C. 4517) authorizing OFHEO to conduct examinations of the Enterprises. The purpose of subpart A of this part is to set forth a framework of early intervention supervisory measures, other than formal enforcement actions, that OFHEO may take to address emerging developments that merit supervisory review to ensure they do not pose a current or future threat to the safety and soundness of an Enterprise. OFHEO's initiation of procedures under subpart A does not necessarily indicate that any unsound condition exists. The supervisory responses enumerated in §1777.11 do not constitute orders under the 1992 Act for purposes of sections 1371 and 1376 thereof (12 U.S.C. 4631 and 4636).
(a) Supervisory standards. Notwithstanding the existence of procedures in §1777.10 for the Director of OFHEO to designate certain developments for supervisory response under subpart A of this part, nothing in this part in any way limits the authority of OFHEO otherwise to take such actions with respect to any issue as is deemed appropriate by the Director of OFHEO to ensure that the Enterprises maintain adequate capital, operate in a safe and sound manner, and comply with the 1992 Act and regulations, orders, and agreements thereunder.
(2) Any payment made by an Enterprise to repurchase, redeem, retire, or otherwise acquire any of its shares or other ownership interests, including any extension of credit made to finance an acquisition by the Enterprise of such shares or other ownership interests, except to the extent the Enterprise makes a payment to repurchase its shares for the purpose of fulfilling an obligation of the Enterprise under an employee stock ownership plan that is qualified under section 401 of the Internal Revenue Code of 1986 (26 U.S.C. 401 et seq.) or any substantially equivalent plan as determined by the Director of OFHEO in writing in advance.
In the event of any of the following developments, OFHEO shall undertake one of the supervisory responses enumerated in §1777.11, or a combination thereof:
(a) Level I supervisory response—(1) Supervisory letter. Not later than five business days after OFHEO determines that a development enumerated in §1777.10 has transpired, OFHEO shall deliver a supervisory letter alerting the chief executive officer or the board of directors of the Enterprise to OFHEO's determination.
(d) Level IV supervisory response—(1) Notice to show cause. In addition to any other supervisory response described in this section, OFHEO may issue written notice to the chief executive officer or the board of directors of the Enterprise directing the Enterprise to show cause, on or before the date specified in the notice, why OFHEO should not issue one or more of the following:
Notwithstanding the pendency or completion of one or more supervisory responses described in §1777.11, OFHEO may at any time undertake additional supervisory steps and actions in the form of any informal or formal supervisory tool available to OFHEO under the 1992 Act, including, but not limited to, issuing guidance or directives under section 1313 (12 U.S.C. 4513), requiring reports under section 1314 (12 U.S.C. 4514), conducting other examinations under section 1317 (12 U.S.C. 4517), issuing discretionary reclassification under section 1364 (12 U.S.C. 4614), initiating discretionary action under section 1366(b) (12 U.S.C. 4616(b)), appointing a conservator under section 1369(a) (12 U.S.C. 4619(a)), or initiating administrative enforcement action under sections 1371, 1372, and 1376 (12 U.S.C. 4631, 4632 and 4636). In addition, OFHEO may take any such steps or actions with respect to an Enterprise that fails to make a submission or comply with a directive as required by §1777.11, or to address an Enterprise's failure to implement an appropriate action in response to a supervisory letter or under an action plan under §1777.11.
(2) Undercapitalized. Except as otherwise provided under paragraph (a)(5) of this section or §1777.23(c) or §1777.23(h), an Enterprise will be classified as undercapitalized if the Enterprise:
(3) Significantly undercapitalized. Except as otherwise provided under paragraph (a)(5) of this section or §1777.23(c) or §1777.23(h), an Enterprise will be classified as significantly undercapitalized if the Enterprise:
(3) Significantly undercapitalized. Except as otherwise provided under paragraph (c)(5) of this section or §1777.23(c) or §1777.23(h), an Enterprise will be classified as significantly undercapitalized if the Enterprise:
(a) Notice of capital classification. OFHEO will classify each Enterprise according to the capital classifications in §1777.20(a) or §1777.20(c) on at least a quarterly basis. OFHEO may classify an Enterprise according to the capital classifications in §1777.20(a) or §1777.20(c), or reclassify an Enterprise as set out in §1777.20(a)(5), §1777.20(c)(5), §1777.23(c), or §1777.23(h), at such other times as OFHEO deems appropriate.
(1) Notice of proposed capital classification. (i) Before OFHEO classifies or reclassifies an Enterprise, OFHEO will provide the Enterprise with written notice containing the proposed capital classification, the information upon which the proposed classification is based, and the reason for the proposed classification.
(ii) Notices proposing to classify or reclassify an Enterprise as undercapitalized or significantly undercapitalized may be combined with a notice that OFHEO may further reclassify the Enterprise under §1777.23(c), without additional notice.
(iii) Notices proposing to classify or reclassify an Enterprise as significantly undercapitalized or critically undercapitalized may be combined with a notice under §1777.24 that OFHEO intends to issue an order under section 1366 of the 1992 Act (12 U.S.C. 4616).
(iv) Notices proposing to classify an Enterprise as undercapitalized or significantly undercapitalized may be combined with a notice proposing to simultaneously reclassify the Enterprise under §1777.20(a)(5) or §1777.20(c)(5).
(a) Schedule for filing plans—(1) In general. An Enterprise shall file a capital restoration plan in writing with OFHEO within ten days of receiving a notice of capital classification under §1777.21(a)(3) stating that the Enterprise is classified as undercapitalized, significantly undercapitalized, or critically undercapitalized, unless OFHEO in its discretion determines an extension of the ten-day period is necessary and provides the Enterprise with written notice of the date the plan is due.
(vi) To the extent the Enterprise is required to submit or revise a capital restoration plan as the result of a reclassification of the Enterprise under §1777.20(a)(5) or §1777.20(c)(5), describe the steps the Enterprise will take to cease or eliminate and remedy the action, inaction, or conditions that caused the reclassification; and
(c) Failure to submit—(1) Failure to submit; submission of unacceptable plan. If, upon the expiration of the period provided in paragraph (a)(1) or (2) of this section for an Enterprise to submit a capital restoration plan, an Enterprise fails to comply with the requirement to file a complete capital restoration plan, or if the capital restoration plan is disapproved after review under paragraph (d) of this section, OFHEO may, in accordance with §1777.21(a)(1)(ii) without additional notice, reclassify the Enterprise:
(3) Successive reclassifications. If an Enterprise has not remedied its failure to file a complete capital restoration plan or an acceptable capital restoration plan within such period as is determined by OFHEO to be appropriate, OFHEO may consider such failure to be the basis for additional reclassification under paragraph (c)(1) of this section into a lower capital classification. Such reclassification may be made without additional notice in accordance with §1777.21(a)(1)(ii).
(h) Implementation—(1) An Enterprise that has received an order approving its capital restoration plan is required to implement the plan.
(a) Determination and notice. After the Enterprise has submitted its response under §1777.25 or the response period (as extended or shortened, if applicable) has expired, whichever occurs first, OFHEO will determine, in its discretion, whether to take into consideration such relevant information as is provided by the Enterprise in its response, if any, under §1777.25. OFHEO will provide the Enterprise with a written final notice of any order issued by OFHEO under this subpart, which is to include a description of the basis for OFHEO's determination.
(a) Judicial review—(1) Review of certain actions. An Enterprise that is not classified as critically undercapitalized may seek judicial review of a final notice of capital classification issued pursuant to §1777.21(a)(3) or a final notice of order issued pursuant to §1777.26(a) in accordance with section 1369D of the 1992 Act (12 U.S.C. 4623)
(2) Other review barred. Except as set out in paragraph (a)(1) of this section, or review of conservatorship appointments to the limited extent provided in section 1369(b) of the 1992 Act (12 U.S.C. 4619(b)) and §1777.28(c), no court shall have jurisdiction to affect, by injunction or otherwise, the issuance or effectiveness of a capital classification or any other action of OFHEO pursuant to this subpart B, as provided in section 1369D of the 1992 Act (12 U.S.C. 4623).
(b) Exhaustion of administrative remedies. In connection with any issue for which an Enterprise seeks judicial review in connection with an action described in paragraph (a)(1) of this section, the Enterprise must have first exhausted its administrative remedies, by presenting all its objections, arguments, and information relating to such issue for OFHEO's consideration pursuant to §1777.21(a)(2), as part of the Enterprise's response to OFHEO's notice of capital classification, or pursuant to §1777.25, as part of the Enterprise's response to OFHEO's notice of intent to issue an order.
(b) Critically undercapitalized Enterprise—(1) Appointment upon classification. Not later than thirty days after issuing a final notice of capital classification pursuant to §1777.21(a)(3) classifying an Enterprise as significantly undercapitalized, OFHEO shall issue an order appointing a conservator for the Enterprise.
(d) Termination—(1) Upon reaching the minimum capital level. OFHEO will issue an order terminating a conservatorship appointment under paragraph (a) or (b) of this section upon a determination that the Enterprise has maintained an amount of core capital that is equal to or exceeds the minimum capital level.