Federal Deposit Insurance Corporation Improvement Act of 1991
PL 102-242 (S.543), enacted 12/19/1991

105 STAT. 2236 
PUBLIC LAW 102-242—DEC. 19, 1991 
Public Law 102-242 
102d Congress 
An Act 
Dec. 19, 1991 
[S. 543] 
Federal Deposit 
Insurance 
Corporation 
Improvement 
Act of 1991. 
12 use 1811 
note. 
To require the least-cost resolution of insured depository institutions, to improve 
supervision and examinations, to provide additional resources to the Bank Insur-
ance Fund, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Federal Deposit Insurance Corpora-
tion Improvement Act of 1991". 
TITLE I—SAFETY AND SOUNDNESS 
Subtitle A—Deposit Insurance Funds 
SEC. 1
0
1
. 
FUNDING 
FOR 
THE 
FEDERAL 
DEPOSIT 
INSURANCE 
FUNDS. 
Section 14(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1824(a)) is amended by striking "$5,000,000,000" and inserting 
"$30,000,000,000". 
SEC. 102. LIMITATION ON OUTSTANDING BORROWING. 
(a) IN GENERAL.—Section 15(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1825(c)) is amended by striking paragraphs (5) and (6) 
and inserting the following new paragraphs: 
"(5) MAXIMUM AMOUNT UMITATION ON OUTSTANDING OBUGA-
TiONS.—Notwithstanding any other provisions of this Act, the 
Corporation may not issue or incur any obligation, if, after 
issuing or incurring the obligation, the aggregate amount of 
obligations of the Bank Insurance Fund or Savings Association 
Insurance Fund, respectively, outstanding would exceed the 
sum of— 
"(A) the amount of cash or the equivalent of cash held by 
the Bank Insurance Fund or Savings Association Insurance 
Fund, respectively; 
"(B) the amount which is equal to 90 percent of the 
Corporation's estimate of the fair market value of assets 
held by the Bank Insurance Fund or the Savings Associa-
tion Insurance Fund, respectively, other than 
assets 
described in subparagraph (A); and 
"(C) the total of the amounts authorized to be borrowed 
from the Secretary of the Treasury pursuant to section 
14(a). 
"(6) OBLIGATION DEFINED.— 
"(A) IN GENERAL.—For purposes of paragraph (5), the 
term 'obligation' includes— 
"(i) any guarantee issued by the Corporation, other 
than deposit guarantees; 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2237 
"(ii) any amount borrowed pursuant to section 14; 
and 
"(iii) any other obligation for which the Corporation 
has a direct or contingent liability to pay any amount, 
"(B) VALUATION OF CONTINGENT LIABILITIES.—The Cor-
poration shall value anv contingent liability at its expected 
cost to the Corporation.'. 
(b) GAO 
REPORTS.— 
12 USC 1825 
(1) QUARTERLY REPORTING.—The Comptroller General of the ^°^-
United States shall submit a report each calendar quarter on 
the Federal Deposit Insurance Corporation's compliance with 
section 15(c)(5) of the Federal Deposit Insurance Act for the 
preceding quarter to the Committee on Banking, Finance and 
Urban Affairs of the House of Representatives and the (Uommit-
tee on Banking, Housing, and Urban Affairs of the Senate. 
(2) ANALYSES TO BE INCLUDED.—Each report submitted under 
paragraph (1) shall include— 
(A) an analysis of the performance of the Federal Deposit 
Insurance Corporation in meeting any repayment schedule 
under section 14(c) of the Federal Deposit Insurance Act (as 
added by section 103 of this Act); and 
(B) an analysis of the actual recovery on asset sales 
compared to the estimated fair market value of the assets 
as determined for the purposes of section 15(c)(5)(B) of such 
Act. 
(c) TECHNICAL AND CONFORMING AMENDMENT.—Section 15(c) 
of 
the Federal Deposit Insurance Act (12 U.S.C. 1825(c)) is amended by 
striking paragraph (7). 
SEC. 103. REPAYMENT SCHEDULE. 
(a) IN GENERAL.—Section 14 of the Federal Deposit Insurance Act 
(12 U.S.C. 1824) is amended by adding at the end the following new 
subsection: 
"(c) REPAYMENT SCHEDULES REQUIRED FOR ANY BORROWING.— 
"(1) IN GENERAL.—No amount may be provided by the Sec-
retary of the Treasury to the Corporation under subsection (a) 
unless an agreement is in effect between the Secretary and the 
Corporation which— 
"(A) provides a schedule for the repayment of the 
outstanding amount of any borrowing under such subsec-
tion; and 
"(B) demonstrates that income to the Corporation from 
assessments under this Act will be sufficient to amortize 
the outstanding balance within the period established in 
the repayment schedule and pay the interest accruing on 
such balance. 
"(2) CONSULTATION WITH AND REPORT TO CONGRESS.—The Sec-
retary of the Treasury and the Corporation shall— 
"(A) consult with the Committee on Banking, Finance 
and Urban Affairs of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of the 
Senate on the terms of any repayment schedule agreement 
described in paragraph (1) relating to repayment, including 
terms relating to any emergency special assessment under 
section 7(b)(7); and 
"(B) submit a copy of each repayment schedule agree-
ment entered into under paragraph (1) to the Committee on 
105 STAT. 2238 
PUBLIC LAW 102-242—DEC. 19, 1991 
Banking, Finance and Urban Affairs of the House of Rep-
resentatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate before the end of the 30-day 
period beginning on the date any amount is provided by the 
Secretary of the Treasury to the Corporation under subsec-
tion (a).", 
(b) EMERGENCY SPECIAL ASSESSMENTS.—Section 7(b) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)) is amended— 
(1) by redesignating parsigraphs (7), (8), and (9) as paragraphs 
(8), (9), and (10), respectively; and 
(2) by inserting after paragraph (6) the following new para-
graph: 
"(7) EMERGENCY SPECIAL ASSESSMENTS,—In addition to the 
other assessments imposed on insured depository institutions 
under this subsection, the Corporation may impose 1 or more 
special assessments on insured depository institutions in an 
amount determined by the Corporation if the amount of any 
such assessment— 
"(A) is necessary— 
"(i) to provide sufficient assessment income to repay 
amounts borrowed from the Secretary of the Treasury 
under section 14(a) in accordance with the repayment 
schedule in effect under section 14(c) during the period 
with respect to which such assessment is imposed; 
"(ii) to provide sufficient assessment income to repay 
obligations issued to and other amounts borrowed from 
:^nk Insurance Fund members under section 14(d); or 
"(iii) for any other purpose the Corporation may 
deem necessary; and 
"(B) is allocated between Bank Insurance Fund members 
and Savings Association Insurance Fund members in 
amounts which reflect the degree to which the proceeds of 
the amounts borrowed are to be used for the benefit of the 
respective insurance funds.". 
SEC. 104. RECAPITALIZING THE BANK INSURANCE FUND. 
(a) IN GENERAL.—Section 7(b)(1)(C) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1817(b)(1)(C)) is amended to read as follows: 
"(C) ASSESSMENT RATES FOR BANK INSURANCE FUND MEM-
BERS.— 
"(i) IN GENERAL.—If the reserve ratio of the Bank 
Insurance Fund equals or exceeds the fund's designated 
reserve ratio under subparagraph (B), the Board of 
Directors shall set semiannual assessment rates for 
members of that fund £is appropriate to maintain the 
reserve ratio at the designated reserve ratio. 
"(ii) 
SPECIAL 
RULES 
FOR 
RECAPITALIZING 
UNDERCAPiTAUZED FUND.—If the reserve ratio of the 
Bank Insurance Fund is less than the designated re-
serve ratio under subparagraph (B), the Board of Direc-
tors shall set semiannual assessment rates for members 
of that fund— 
"(I) that are sufficient to increase the reserve 
ratio for that fund to the designated reserve ratio 
not later than 1 year after such rates are set; or 
"(II) in accordance with a schedule promulgated 
by the Corporation under clause (iii). 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2239 
"(iii) RECAPITAUZATION SCHEDULES.—For purposes of Regulations. 
clause (iiXII), the Corporation shall, by regulation, 
promulgate a schedule that specifies, at semiannual 
intervals, target reserve ratios for the Bank Insurance 
Fund, culminating in a reserve ratio that is equal to 
the designated reserve ratio no later than 15 years 
after the date on which the schedule becomes effective. 
"(iv) AMENDING SCHEDULE.—The Corporation may, by 
regulation, amend a schedule promulgated under 
clause (iii), but such an amendment may not extend the 
date for achieving the designated reserve ratio.". 
(b) ASSESSMENT RATE CHANGES.—Section 7(b)(1)(A) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)(1)(A)) is amended by strik-
ing clause (iii) and inserting the following: 
"(iii) RATE CHANGES.—The Corporation shall notify 
each insured depository institution of that institution's 
semiannual assessment. The (Corporation may establish 
and, from time to time, adjust the assessment rates for 
such institutions.". 
SEC. 105. BORROWING FOR BIF FROM BIF MEMBERS. 
Section 14 of the Federal Deposit Insurance Act (12 U.S.C. 1824) is 
amended by inserting after subsection (c) (as added by section 103 of 
this subtitle) the following new subsection: 
"(d) BORROWING FOR BIF FROM BIF MEMBERS.— 
"(1) BORROWING AUTHORITY.—The Corporation may issue 
obligations to Bank Insurance Fund members, and may borrow 
from Bank Insurance Fund members and give security for any 
amount borrowed, and may pay interest on (and any redemp-
tion premium with respect to) any such obligation or amount to 
the extent— 
"(A) the proceeds of any such obligation or amount are 
used by the Corporation solely for purposes of carrying out 
the Corporation s functions with respect to the Bank Insur-
ance Fund; and 
"(B) the terms of the obligation or instrument limit the 
liability of the Corporation or the Bank Insurance Fund for 
the payment of interest and the repayment of principal to 
the amount which is equal to the amount of assessment 
income received by the Fund from assessments under sec-
tion 7. 
"(2) LIMITATIONS ON BORROWING.— 
"(A) APPUCABILITY OF PUBUC DEBT LIMIT.—For purposes 
of the public debt limit established in section 3101(b) of title 
31, United States Code, any obligation issued, or amount 
borrowed, by the Corporation under paragraph (1) shall be 
considered to be an obligation to which such limit applies. 
"(B) APPLICABILITY OF FDIC BORROWING LIMIT.—For pur-
poses of the dollar amount limitation established in section 
14(a) of the Federal Deposit Insurance Act (12 U.S.C, 
1824(a)), any obligation issued, or amount borrowed, by the 
Corporation under paragraph (1) shall be considered to be 
an amount borrowed from the Treasury under such section. 
"(C) INTEREST RATE LIMIT.—The rate of interest payable in 
connection with any obligation issued, or amount borrowed, 
by the Corporation under paragraph (1) shall not exceed an 
amount determined by the Secretary of the Treasury, 
105 STAT. 2240 
PUBLIC LAW 102-242—DEC. 19, 1991 
taking into consideration 
current 
market 
yields on 
outstanding marketable obligations of the United States of 
comparable maturities. 
"(D) OBUGATIONS TO BE HELD ONLY BY BIF MEMBERS.—The 
terms of any obligation issued by the Corporation under 
paragraph (1) shall provide that the obligation will be valid 
only if held by a Bank Insurance Fund Member. 
"(3) LIABILITY OF BIF.—Any obligation issued or amount bor-
rowed under paragraph (1) shall be a liability of the Bank 
Insurance Fund. 
"(4) TERMS AND CONDITIONS.—Subject to paragraphs (1) and 
(2), the Corporation shall establish the terms and conditions for 
obligations issued or amounts borrowed under paragraph (1), 
including interest rates and terms to maturity. 
"(5) INVESTMENT BY BIF MEMBERS.— 
"(A) AUTHORITY TO INVEST.—Subject to subparagraph (B) 
and notwithstanding any other provision of Federal law or 
the law of any State, any Bank Insurance Fund member 
may purchase and hold for investment any obligation 
issued by the Corporation under paragraph (1) without 
limitation, other than any limitation the appropriate Fed-
eral banking agency may impose specifically with respect to 
such obligations. 
"(B) INVESTMENT ONLY FROM CAPITAL AND RETAINED EARN-
INGS.—Any Bank Insurance Fund member may purchase 
obligations or make loans to the Corporation under para-
graph (1) only to the extent the purchase money or the 
money loaned is derived from the member's capital or 
retained earnings. 
"(6) ACCOUNTING TREATMENT.—In accounting for any invest-
ment in an obligation purchased from, or any loan made to, the 
Corporation for purposes of determining compliance with any 
capital standard and preparing any report required pursuant to 
section 7(a), the amount of such investment or loan shall be 
treated as an asset.". 
Subtitle B—Supervisory Reforms 
SEC. 111. IMPROVED EXAMINATIONS. 
(a) IN GENERAL.—Section 10 of the Federal Deposit Insurance Act 
(12 U.S.C. 1820) is amended by inserting after subsection (c) the 
following new subsection: 
"(d) ANNUAL ON-SITE EXAMINATIONS OF ALL INSURED DEPOSITORY 
INSTITUTIONS REQUIRED.— 
"(1) IN GENERAL.—The appropriate Federal banking agency 
shall, not less than once during each 12-month period, conduct a 
full-scope, on-site examination of each insured depository 
institution. 
"(2) EXAMINATIONS BY CORPORATION.—Paragraph (1) shall not 
apply during any 12-month period in which the Corporation has 
conducted a full-scope, on-site examination of the insured 
depository institution. 
"(3) STATE EXAMINATIONS ACCEPTABLE.—The examinations 
required by paragraph (1) may be conducted in alternate 12-
month periods, as appropriate, if the appropriate Federal bank-
ing agency determines that an examination of the insured 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2241 
depository institution conducted by the State during the inter-
vening 12-month period carries out the purpose of this subsec-
tion. 
"(4) 18-MONTH RULE FOR CERTAIN SMALL INSTITUTIONS.—Para-
graphs (1), (2), and (3) shall apply with '18-month' substituted for 
'12-month' if— 
"(A) the insured depository institution has total assets of 
less than $100,000,000; 
"(B) the institution is well capitalized, as defined in sec-
tion 38; 
"(C) when the institution was most recently examined, it 
was found to be well managed, and its composite condition 
was found to be outstanding; and 
"(D) no person acquired control of the institution during 
the 12-month period in which a full-scope, on-site examina-
tion would be required but for this paragraph. 
"(5) 
CERTAIN 
GOVERNMENT-CONTROLLED 
INSTITUTIONS 
EXEMPTED.—Paragraph (1) does not apply to— 
"(A) any institution for which the Corporation is con-
' 
servator; or 
"(B) any bridge bank none of the voting securities of 
which are owned by a person or agency other than the 
Corporation. 
^ ^ 
"(6) CONSUMER COMPLIANCE EXAMINATIONS EXCLUDED.—For 
purposes of this subsection, the term 'full-scope, on-site exam-
ination' does not include a consumer compliance examination, 
as defined in section 41(b).". 
03) EFFECTIVE DATE.—The amendment made by subsection (a) 12 USC 1820 
shall become effective 1 year after the date of enactment of this Act. ^°^-
(c) TRANSITION RULE.—Notwithstanding section 10(d) of the Fed- 
12 USC 1820 
eral Deposit Insurance Act (as added by subsection (a)), during the 
"°^-
period beginning on the date of enactment of this Act and ending on 
December 31, 1993, a full-scope, on-site examination of an insured 
depository institution is not required more often than once during 
every 18-month period, unless— 
(1) the institution, when most recently examined, was found 
to be in a less than satisfactory condition; or 
(2) 1 or more persons acquired control of the institution. 
(d) EXAMINATION IMPROVEMENT PROGRAM.— 
12 USC 3305 
(1) IN GENERAL.—The appropriate Federal banking agencies, ^°**-
acting through the Federal Financial Institutions Examination 
Council, shall each establish a comparable 
examination 
improvement program that meets the requirements of para-
graph (2). 
(2) REQUIREMENTS.—An examination improvement program 
meets the requirements of this paragraph if, under the pro-
gram, the agency is required— 
(A) to periodically review the organization and training of 
the staff of the agency who are responsible for conducting 
examinations of insured depository institutions and to 
make such improvements as the agency determines to be 
appropriate to ensure frequent, objective, and thorough . 
examinations of such institutions; and 
(B) to increase the number of examiners, supervisors, and 
other individuals employed by the agency in connection 
with conducting or supervising examinations of insured 
depository institutions to the extent necessary to ensure 
105 STAT. 2242 
PUBLIC LAW 102-242—DEC. 19, 1991 
frequent, objective, and thorough examinations of such 
institutions, 
(e) TECHNICAL AND CONFORMING AMENDMENT.—Section 3(s) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(s)) is amended to read 
as follows: 
"(s) DEFINITIONS RELATING TO FOREIGN BANKS AND BRANCHES.— 
"(1) FOREIGN BANK.—The term 'foreign bank' has the mean-
ing given to such term by section 1(b)(7) of the International 
Banking Act of 1978. 
"(2) FEDERAL BRANCH.—The term 'Federal branch' has the 
meaning given to such term by section 1(b)(6) of the Inter-
national Banking Act of 1978. 
"(3) INSURED BRANCH.—The term 'insured branch' means any 
branch (as defined in section 1(b)(3) of the International Bank-
ing Act of 1978) of a foreign bank any deposits in which are 
insured pursuant to this Act.". 
SEC. 112. INDEPENDENT ANNUAL AUDITS OF INSURED DEPOSITORY 
INSTITUTIONS. 
(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 
1811 et seq.) is amended by adding at the end the following new 
section: 
12 u s e 1831m. 
"SEC. 36. EARLY IDENTIFICATION OF NEEDED IMPROVEMENTS IN FINAN-
CIAL MANAGEMENT. 
"(a) 
ANNUAL REPORT ON FINANCIAL CONDITION AND MANAGE-
MENT.— 
"(1) REPORT REQUIRED.—Each insured depository institution 
shall submit an annual report to the Corporation, the appro-
priate Federal banking agency, and any appropriate State bank 
supervisor (including any State bank supervisor of a host State). 
"(2) CONTENTS OF REPORT.—Any annual report required under 
paragraph (1) shall contain— 
"(A) the information required to be provided by— 
"(i) the institution s management under subsection 
(b); and 
"(ii) an independent public accountant under subsec-
tions (c) and (d); and 
"(B) such other information as the Corporation and the 
appropriate Federal banking agency may determine to be 
necessary to assess the financial condition and manage-
ment of the institution. 
"(3) PuBUC AVAILABILITY.—Any annual report required under 
par£igraph (1) shall be available for public inspection. 
"(b) 
MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS 
AND INTERNAL CONTROLS.—Each insured depository institution shall 
prepare— 
"(1) annual financial statements in accordance with generally 
accepted accounting principles and such other disclosure 
requirements as the Corporation and the appropriate Federal 
banking agency may prescribe; and 
Reports. 
"(2) a report signed by the chief executive officer and the 
chief accounting or financial officer of the institution which 
contains— 
"(A) a statement of the management's responsibilities 
for— 
"(i) preparing financial statements; 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2243 
• ^ 
"(ii) establishing and maintaining an adequate in-
ternal control structure and procedures for financial 
reporting; and 
"(iii) complying with the laws and regulations relat-
ing to safety and soundness which are designated by 
the Corporation or the appropriate Federal banking 
agency; and 
"(B) an assessment, as of the end of the institution's most 
recent fiscal year, of— 
"(i) the effectiveness of such internal control struc-
ture and procedures; and 
"(ii) the institution's compliance with the laws and 
regulations relating to safety and soundness which are 
designated by the Corporation and the appropriate Fed-
eral banking agency. 
"(c) INTERNAL CONTROL EVALUATION AND REPORTING REQUIRE-
MENTS F
O
R INDEPENDENT PUBLIC ACCOUNTANTS.— 
"(1) IN GENERAL.—With respect to any internal control report 
required by subsection (b)(2) of any institution, the institution's 
independent public accountant shall attest to, and report sepa-
rately on, the assertions of the institution's management con-
tained in such report. 
"(2) ATTESTATION REQUIREMENTS.—Any attestation pursuant 
to paragraph (1) shall be made in accordance with generally 
accepted standards for attestation engagements. 
"(d) ANNUAL INDEPENDENT AUDITS OF FINANCIAL STATEMENTS.— 
"(1) AUDITS REQUIRED.—The Corporation, in consultation with Regulations, 
the appropriate Federal banking agencies, shall prescribe regu-
lations requiring that each insured depository institution shall 
have an annual independent audit made of the institution's 
financial statements by an independent public accountant in 
accordance with generally accepted auditing standards and 
section 37. 
"(2) SCOPE OF AUDIT.—In connection with any audit under this 
subsection, the independent public accountant shall determine 
and report whether the financial statements of the institution— 
"(A) are presented fairly in accordance with generally 
accepted accounting principles; and 
"(B) comply with such other disclosure requirements as 
the Corporation and the appropriate Federal banking 
agency may prescribe. 
"(3) REQUIREMENTS FOR INSURED SUBSIDIARIES OF HOLDING 
COMPANIES.—The requirements for an independent audit under 
this subsection may be satisfied for insured depository institu-
tions that are subsidiaries of a holding company by an 
independent audit of the holding company. 
"(e) 
DETECTING AND REPORTING VIOLATIONS OF LAWS AND 
REGULATIONS.— 
"(1) IN GENERAL.—An independent public accountant shall 
apply procedures agreed upon by the Corporation to objectively 
determine the extent of the compliance of any insured deposi-
tory institution or depository institution holding company with 
laws and regulations designated by the Corporation, in consulta-
tion with the appropriate Federal banking agencies. 
"(2) ATTESTATION REQUIREMENTS.—Any attestation pursuant 
to paragraph (1) shall be made in accordance with generally 
accepted standards for attestation engagements. 
105 STAT. 2244 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(f) FORM AND CONTENT OF REPORTS AND AUDITING STANDARDS.— 
"(1) IN GENERAL.—The scope of each report by an independent 
public accountant pursuant to this section, and the procedures 
followed in preparing such report, shall meet or exceed the 
scope and procedures required by generally accepted auditing 
standards and other applicable standards recognized by the 
Corporation. 
"(2) CONSULTATION.—The Corporation shall consult with the 
other appropriate Federal banking agencies in implementing 
this subsection. 
"(g) IMPROVED ACCOUNTABILITY.— 
"(1) INDEPENDENT AUDIT COMMITTEE.— 
"(A) ESTABLISHMENT,—Each insured depository institu-
tion (to which this section applies) shall have an independ-
ent audit committee entirely made up of outside directors 
who are independent of management of the institution, and 
who satisfy any specific requirements the Corporation may 
establish. 
"(B) DUTIES.—An independent audit committee's duties 
shall 
include 
reviewing with 
management 
and the 
independent public accountant the basis for the reports 
issued under subsections (b)(2), (c), and (d). 
"(C) 
CRITERIA APPLICABLE TO COMMITTEES OF LARGE 
INSURED DEPOSITORY INSTITUTIONS.—In the case of each 
.. insured depository institution which the Corporation deter-
mines to be a large institution, the audit committee 
required by subparagraph (A) shall— 
"(i) include members with banking or related finan-
cial management expertise; 
"(ii) have access to the committee's own outside coun-
sel; and 
"(iii) not include any large customers of the 
institution. 
"(2) REVIEW OF QUARTERLY REPORTS OF LARGE INSURED DEPOSI-
TORY INSTITUTIONS.— 
"(A) IN GENERAL.—In the case of any insured depository 
institution which the Corporation has determined to be a 
large 
institution, the Corporation 
may require the 
independent public accountant retained by such institution 
to perform reviews of the institution's quarterly financial 
reports in accordance with procedures agreed upon by the 
Corporation. 
"(B) REPORT TO AUDIT COMMITTEE.—The independent 
public accountant referred to in subparagraph (A) shall 
provide the audit committee of the insured depository 
institution with reports on the reviews under such subpara-
graph and the audit committee shall provide such reports to 
the Corporation, any appropriate Federal banking agency, 
and any appropriate State bank supervisor. 
"(C) LIMITATION ON NOTICE.—Reports provided under 
subparagraph (B) shall be only for the information and use 
of the insured depository institution, the Corporation, any 
appropriate Federal banking agency, and any State bank 
supervisor that received the report. 
"(3) QUALIFICATIONS OF INDEPENDENT PUBLIC ACCOUNTANTS.— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2245 
Public 
information. 
"(A) IN GENERAL.—All audit services required by this 
section shall be performed only by an independent public 
accountant who— 
"(i) has agreed to provide related working papers, 
policies, and procedures to the Corporation, an appro-
priate Federal banking agency, and any State bank 
supervisor, if requested; and 
"(ii) has received a peer review that meets guidelines 
acceptable to the Corporation, 
"(B) REPORTS ON PEER REVIEWS.—Reports on peer reviews 
shall be filed with the Corporation and made available for 
public inspection. 
"(4) ENFORCEMENT ACTIONS.— 
"(A) IN GENERAL.—In addition to any authority contained 
in section 8, the Corporation or an appropriate Federal 
banking agency may remove, suspend, or bar an independ-
ent public accountant, upon a showing of good cause, from 
performing audit services required by this section. 
"(B) JOINT RULEMAKING.—The appropriate Federal bank-
ing agencies shall jointly issue rules of practice to imple-
ment this paragraph. 
"(5) NOTICE BY ACCOUNTANT OF TERMINATION OF SERVICES.— Regulations. 
Any independent public accountant performing an audit under 
this section who subsequently ceases to be the accountant for 
the institution shall promptly notify the Corporation pursuant 
to such rules as the Corporation shall prescribe. 
'(h) EXCHANGE OF REPORTS AND INFORMATION.— 
"(1) REPORT TO THE INDEPENDENT AUDITOR.— 
"(A) IN GENERAL.—Each insured depository institution 
which has engaged the services of an independent auditor 
to audit such institution shall transmit to the auditor a 
copy of the most recent report of condition made by the 
institution (pursuant to this Act or any other provision of 
law) and a copy of the most recent report of examination 
received by the institution. 
"(B) ADDITIONAL INFORMATION.—In addition to the copies 
of the reports required to be provided under subparagraph 
(A), each insured depository institution shall provide the 
auditor with— 
"(i) a copy of any supervisory memorandum of under-
standing with such institution and any written agree-
ment between such institution and any appropriate 
Federal banking gigency or any appropriate State bank 
supervisor which is in effect during the period covered 
by the audit; and 
"(ii) a report of— 
"(I) any action initiated or taken by the appro-
priate Federal banking agency or the Corporation 
during such period under subsection (a), (b), (c), (e), 
(g), (i), (s), or (t) of section 8; 
"(II) any action taken by any appropriate State 
bank supervisor under State law which is similar 
to any action referred to in subclause (I); or 
"(III) any assessment of any civil money penalty 
under any other provision of law with respect to 
the institution or any institution-affiliated party. 
"(2) REPORTS TO BANKING AGENCIES.— 
105 STAT. 2246 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(A) 
INDEPENDENT 
AUDITOR 
REPORTS.—Each 
insured 
depository institution shall provide to the Corporation, any 
appropriate Federal banking agency, and any appropriate 
State bank supervisor, a copy of each audit report and any 
qualification to such report, any mansigement letter, and 
any other report within 15 days of receipt of any such 
report, qualification, or letter from the institution's 
independent auditors. 
"(B) NOTICE OF CHANGE OF AUDITOR.—Each insured 
depository institution shall provide written notification to 
* 
the Corporation, the appropriate Federal banking agency, 
and any appropriate State bank supervisor of the resigna-
tion or dismissal of the institution's independent auditor or 
the engagement of a new independent auditor by the 
institution, including a statement of the reasons for such 
change within 15 calendar days of the occurrence of the 
event. 
"(i) REQUIREMENTS FOR INSURED SUBSIDIARIES OF HOLDING COMPA-
NIES.—Except with respect to any audit requirements established 
under or pursuant to subsection (d), the requirements of this section 
may be satisfied for insured depository institutions that are subsidi-
aries of a holding company, i
f
— 
"(1) services and functions comparable to those required 
under this section are provided at the holding company level; 
and 
"(2) either— 
"(A) the institution has total assets, as of the beginning of 
such fiscal year, of less than $5,000,000,000; or 
"(B) the institution— 
"(i) has total assets, as of the beginning of such fiscal 
year, of more than $5,000,000,000 and less than 
$9,000,000,000; and 
"(ii) has a CAMEL composite rating of 1 or 2 under 
the Uniform Financial Institutions Rating System (or 
an equivalent rating by any such agency under a com-
parable rating system) as of the most recent examina-
tion of such institution by the Corporation or the 
appropriate Federal banking agency. 
"0') EXEMPTION FOR SMALL DEPOSITORY INSTITUTIONS.—This section 
shall not apply with respect to any fiscal year of any insured 
depository institution the total assets of which, as of the beginning 
of such fiscal year, are less than the greater of— 
"(1) $150,000,000; or 
"(2) such amount (in excess of $150,000,000) as the Corpora-
tion may prescribe by regulation.". 
12 use 1831m 
(b) EFFECTIVE DATE.—The requirements established by the amend-
"°*®- 
ment made by subsection (a) shall apply with respect to fiscal years 
of insured depository institutions which begin after December 31, 
1992. 
SEC. 113. ASSESSMENTS REQUIRED TO COVER COSTS OF EXAMINATIONS. 
(a) IN GENERAL.—Section 10 of the Federal Deposit Insurance Act 
(12 U.S.C. 1820) is amended— 
(1) by redesignating subsection (e) as subsection (f); and 
(2) by inserting after subsection (d) (as added by section 
111(a)(1) of this subtitle) the following new subsection: 
"(e) EXAMINATION FEES.— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2247 
"(1) REGULAR AND SPECIAL EXAMINATIONS OF DEPOSITORY 
INSTITUTIONS.—The cost of conducting any regular examination 
or special examination of any depository institution under 
subsection (b)(2), (b)(3), or (d) may be assessed by the Corporation 
against the institution to meet the Corporation's expenses in 
carrying out such examinations. 
"(2) EXAMINATION OF AFFIUATES.—The cost of conducting any 
examination of any affiliate of any insured depository institu-
tion under subsection (bX4) may be assessed by the Corporation 
Eigainst each affiliate which is examined to meet the Corpora-
tion's expenses in carrying out such examination. 
"(3) ASSESSMENT AGAINST DEPOSITORY INSTITUTION IN CASE OF 
AFFILIATE'S REFUSAL TO PAY.— 
"(A) IN GENERAL.—Subject to subparagraph (B), if any 
affiliate of any insured depository institution— 
"(i) refuses to pay any assessment under paragraph 
(2); or 
"(ii) fails to pay any such assessment before the end 
of the 60-day period beginning on the date the affiliate 
receives notice of the assessment, 
the Corporation may assess such cost against, and collect 
such cost from, the depository institution. 
"(B) AFFIUATE OF MORE THAN 1 DEPOSITORY INSTITUTION.— 
If any affiliate referred to in subparagraph (A) is an affili-
ate of more than 1 insured depository institution, the 
assessment under subparagraph (A) may be assessed 
against the depository institutions in such proportions as 
the Corporation determines to be appropriate. 
"(4) CIVIL MONEY PENALTY FOR AFFILIATE'S REFUSAL TO 
COOPERATE.— 
"(A) PENALTY IMPOSED.—If any affiliate of any insured 
depository institution— 
"(i) refuses to permit an examiner appointed by the 
Board of Directors under subsection (b)(1) to conduct an 
examination; or 
"(ii) refuses to provide any information required to be 
disclosed in the course of any examination, 
the depository institution shall forfeit and pay a penalty of 
not more than $5,000 for each day that any such refusal 
continues. 
"(B) ASSESSMENT AND COLLECTION.—Any penalty imposed 
under subparagraph (A) shall be assessed and collected by 
the Corporation in the manner provided in section 8(i)(2), 
"(5) DEPOSITS OF EXAMINATION ASSESSMENT.—Amounts re-
ceived by the Corporation under this subsection (other than 
paragraph (4)) may be deposited in the manner provided in 
section 13.". 
(b) EXAMINATIONS OF APPUCANTS FOR DEPOSIT INSURANCE.—Sec-
tion 10(bX2)(B) of the Federal Deposit Insurance Act (12 U.S.C. 
1820(b)(2)(B)) is amended to read as follows: 
"(B) any depository institution which files an application 
with the Corporation to become an insured depository 
institution;". 
(c) TECHNICAL AND CONFORMING AMENDMENT.— 
(1) Section 7(b)(10) of the Federal Deposit Insurance Act (as so 
redesignated by section 103(b) of this Act) is amended by insert-
ing "or section 10(e)" after "under this section". 
105 STAT. 2248 
PUBLIC LAW 102-242—DEC. 19, 1991 
(2) Section 10(b)(4)(A) of the Federal Deposit Insurance Act (12 
U.S.C. 1820(b)(4)(A)) is amended by striking "insured" each 
place such term appears. 
SEC. 114. EXAMINATION AND SUPERVISION FEES FOR NATIONAL BANKS 
AND SAVINGS ASSOCIATIONS. 
(a) IN GENERAL.—Section 5240 of the Revised Statutes (12 U.S.C. 
482) is amended— 
(1) by striking the 4th undesignated paragraph and inserting 
the following: 
"The Comptroller of the Currency may impose and collect assess-
ments, fees, or other charges as necessary or appropriate to carry 
out the responsibilities of the duties of the Comptroller. Such assess-
ments, fees, and other charges shall be set to meet the Comptroller's 
expenses in carrying out authorized activities."; 
(2) by striking "In addition to the expense of examination" 
and all that follows through "to cover the expense thereof.". 
(b) TECHNICAL AMENDMENT.—Section 5240 of the Revised Statues 
is amended in the 2d undesignated paragraph (12 U.S.C. 481)— 
(1) by striking the 2d sentence; 
(2) by striking the 3d sentence and inserting "If any affiliate 
of a national bank refuses to pay any assessments, fees, or other 
charges imposed by the Comptroller of the Currency pursuant 
to this section or fails to make such payment not later than 60 
days after the date on which they are imposed, the Comptroller 
of the Currency may impose such assessments, fees, or charges 
against the affiliated national bank, and such assessments, fees, 
or charges shall be paid by such national bank. If the affiliation 
is with 2 or more national banks, such assessments, fees, or 
charges may be imposed on, and collected from, any or all of 
such national banks in such proportions as the Comptroller of 
the Currency may prescribe."; 
(3) in the 4th sentence, by inserting "or from other fees or 
charges imposed pursuant to this section" after "assessments on 
banks or affiliates thereof; and 
(4) in the 5th sentence— 
(A) by inserting ", fees, or charges" before "may be 
deposited"; and 
(B) by inserting "or of other fees or charges imposed 
pursuant to this section" before the period. 
(c) ASSESSMENT AUTHORITY OF THE OFFICE OF THRIFT SUPER-
VISION.—Section 9 of the Home Owners' Loan Act (12 U.S.C. 1467) is 
amended— 
(1) by striking subsections (a) and (b) and inserting the 
following: 
"(a) EXAMINATION OF SAVINGS ASSOCIATIONS.—The cost of conduct-
ing examinations of savings associations pursuant to section 5(d) 
shall be assessed by the Director against each such savings associa-
tion as the Director deems necessary or appropriate. 
"(b) 
EXAMINATION OF AFFILIATES.—'The cost of conducting 
examinations of affiliates of savings associations pursuant to this 
Act may be assessed by the Director against each affiliate that is 
examined as the Director deems necessary or appropriate."; 
(2) by amending subsection (k) to read £is follows: 
"(k) FEES FOR EXAMINATIONS AND SUPERVISORY ACTIVITIES.—The 
Director may assess against institutions for which the Director is 
the appropriate Federal banking agency, as defined in section 3 of 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2249 
the Federal Deposit Insurance Act, fees to fund the direct and 
indirect expenses of the Office as the Director deems necessary or 
appropriate. The fees may be imposed more frequently than an-
nually at the discretion of the Director.". 
SEC. 115. APPLICATION TO FDIC REQUIRED FOR INSURANCE. 
(a) IN GENERAL.—Section 5 of the Federal Deposit Insurance Act 
(12 U.S.C. 1815(a)) is amended by striking all that precedes subsec-
tion (b) and inserting the following: 
"SEC. 5. DEPOSIT INSURANCE. 
"(a) APPUCATION TO CORPORATION REQUIRED,— 
"(1) IN GENERAL.—Except as provided in paragraphs (2) and 
(3), any depository institution which is engaged in the business 
of receiving deposits other than trust funds (as defined in 
section 3(p)), upon application to and examination by the Cor-
poration and approval by the Board of Directors, may become 
an insured depository institution. 
"(2) INTERIM DEPOSITORY INSTITUTIONS.—In the case of any 
interim Federal depository institution that is chartered by the 
appropriate Federal banking agency and will not open for 
business, the depository institution shall be an insured deposi-
tory institution upon the issuance of the institution's charter by 
the agency. 
"(3) APPLICATION AND APPROVAL NOT REQUIRED IN CASES OF 
CONTINUED INSURANCE.—Par£igraph (1) shall not apply in the 
case of any depository institution whose insured status is contin-
ued pursuant to section 4, 
"(4) REVIEW REQUIREMENTS.—In reviewing any application 
under this subsection, the Board of Directors shall consider the 
factors described in section 6 in determining whether to approve 
the application for insurance. 
"(5) NOTICE OF DENIAL OF APPLICATION FOR INSURANCE.—If the 
Board of Directors votes to deny any application for insurance 
by any depository institution, the Board of Directors shall 
promptly notify the appropriate Federal banking agency and, in 
the case of any State depository institution, the appropriate 
State banking supervisor of the denial of such application, 
giving specific reasons in writing for the Board of Directors' 
determination with reference to the factors described in section 
6. 
"(6) 
NONDELEGATION REQUIREMENT.—The authority of 
the 
Board of Directors to make any determination to deny any 
application under this subsection may not be delegated by the 
Board of Directors.". 
(b) CONTINUATION OF INSURANCE UPON BECOMING A MEMBER 
BANK.—4(b) of the Federal Deposit Insurance Act (12 U.S.C. 1814(b)) 
is amended to read as follows: 
"(b) 
CONTINUATION OF INSURANCE UPON BECOMING A MEMBER 
BANK.—In the case of an insured bank which is admitted to mem-
bership in the Federal Reserve System or an insured State bank 
which is converted into a national member bank, the bank shall 
continue as an insured bank.". 
105 STAT. 2250 
PUBLIC LAW 102-242—DEC. 19, 1991 
Subtitle C—Accounting Reforms 
SEC. 121. ACCOUNTING OBJECTIVES, STANDARDS, AND REQUIREMENTS. 
(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 
1811 et seq.) is amended by inserting after section 36 (as added by 
section 112 of this title) the following new section: 
12 u s e 1831n. 
"SEC. 37. ACCOUNTING OBJECTIVES, STANDARDS, AND REQUIREMENTS. 
"(a) IN GENERAL.— 
"(1) OBJECTIVES.—Accounting principles applicable to reports 
or statements required to be filed with Federal banking agen-
cies by insured depository institutions should— 
"(A) result in financial statements and reports of condi-
tion that accurately reflect the capital of such institutions; 
"(B) facilitate effective supervision of the institutions; 
and 
"(C) facilitate prompt corrective action to resolve the 
institutions at the least cost to the insurance funds. 
"(2) STANDARDS.— 
"(A) UNIFORM ACCOUNTING PRINCIPLES CONSISTENT WITH 
GAAP.—Subject to the requirements of this Act and any 
other provision of Federal law, the accounting principles 
applicable to reports or statements required to be filed with 
Federal banking agencies by all insured depository institu-
tions shall be uniform and consistent with generally 
accepted accounting principles. 
"(B) STRINGENCY.—If the appropriate Federal banking 
agency or the Corporation determines that the application 
of any generally accepted accounting principle to any in-
sured depository institution is inconsistent with the objec-
. : tives described in paragraph (1), the agency or the Corpora-
tion may, with respect to reports or statements required to 
be filed with such agency or Corporation, prescribe an 
accounting principle which is applicable to such institutions 
which is no less stringent than generally accepted account-
ing principles. 
"(3) REVIEW AND IMPLEMENTATION OF ACCOUNTING PRINCIPLES 
REQUIRED.—Before the end of the 1-year period beginning on the 
date of the enactment of the Federal Deposit Insurance Cor-
poration Improvement Act of 1991, each appropriate Federal 
banking agency shall take the following actions: 
"(A) REVIEW OF ACCOUNTING PRINCIPLES.—Review— 
"(i) all accounting principles used by depository 
institutions with respect to reports or statements re-
quired to be filed with a Federal banking agency; 
"(ii) all requirements established by the agency with 
respect to such accounting procedures; and 
"(iii) the procedures and format for reports to the 
agency, including reports of condition. 
"(B) MODIFICATION OF NONCOMPLYING MEASURES.—Modify 
or eliminate any accounting principle or reporting require-
ment of such Federal agency which the agency determines 
fails to comply with the objectives and standards estab-
lished under paragraphs (1) and (2), 
Regulations. 
"(C) INCLUSION OF 'OFF BALANCE SHEET' ITEMS.—Develop 
and prescribe regulations which require that all assets and 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2251 
liabilities, including contingent assets and liabilities, of 
insured depository institutions be reported in, or otherwise 
taken into account in the preparation of any balance sheet, 
financial statement, report of condition, or other report of 
such institution, required to be filed with a Federal banking 
agency. 
"(D) MARKET VALUE DISCLOSURE.—Develop jointly with 
the other appropriate Federal banking agencies a method 
for insured depository institutions to provide supplemental 
disclosure of the estimated fair market value of assets and 
liabilities, to the extent feasible and practicable, in any 
balance sheet, financial statement, report of condition, or 
other report of any insured depository institution required 
to be filed with a Federal banking agency. 
"0)) UNIFORM ACCOUNTING OF CAPITAL STANDARDS.— 
"(1) IN GENERAL.—Each appropriate Federal banking agency 
shall maintain uniform accounting standards to be used for 
determining compliance with statutory or regulatory require-
ments of depository institutions. 
"(2) TRANSITION PROVISION.—Any standards in effect on the 
date of the enactment of the Federal Deposit Insurance Cor-
poration Improvement Act of 1991 under section 1215 of the 
Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 shall continue in effect after such date of enactment 
until amended by the appropriate Federal banking agency 
under paragraph (1). 
"(c) REPORTS TO BANKING COMMITTEES.— 
"(1) ANNUAL REPORTS REQUIRED.—Each appropriate Federal 
banking agency shall annually submit a report to the Commit-
tee on Banking, Finance and Urban Affairs of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate containing a description of any 
difference between any accounting or capital standard used by 
such agency and any accounting or capital standard used by any 
other agency. 
"(2) EXPLANATION OF REASONS FOR DISCREPANCY.—Each report 
submitted under paragraph (1) shall contain an explanation of 
the reasons for any discrepancy between any accounting or 
capital standard used by such agency and any accounting or 
capital standard used by any other agency. 
"(3) PUBLICATION.—Each report under this subsection shall be 
published in the Federal Register.", 
(b) REPEAL OF PROVISION SUPERSEDED BY SUBSECTION (a) AMEND-
MENTS.—Section 1215 of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989 (12 U.S.C. 1833d) is hereby 
repealed. 
SEC. 122. SMALL BUSINESS AND SMALL FARM LOAN INFORMATION. 
(a) IN GENERAL.—Before the end of the 180-day period beginning 
on the date of the enactment of this Act, the appropriate Federal 
banking agency shall prescribe regulations requiring insured deposi-
tory institutions to annually submit information on small businesses 
and small farm lending in their reports of condition. 
(b) CREDIT 
AVAILABILITY.—The regulations prescribed under 
subsection (a) shall require insured depository institutions to submit 
such information as the agency may need to assess the availability 
of credit to small businesses and small farms. 
Federal 
Register, 
publication. 
Regulations. 
12 use 1817 
note. 
105 STAT. 2252 
PUBLIC LAW 102-242—DEC. 19, 1991 
Discrimination. 
Disadvantaged. 
Discrimination. 
Disadvantaged. 
(d) CONTENTS.—The information required under subsection (a) 
may include information regarding the following: 
(1) The total number and aggregate dollar amount of commer-
cial loans and commercial mortgage loans to small businesses. 
(2) Charge-offs, interest, and interest fee income on commer-
cial loans and commercial mortgage loans to small businesses. 
(3) Agricultural loans to small farms. 
SEC. 123. FDIC PROPERTY DISPOSITION STANDARDS. 
(a) IN GENERAL.—Section ll(d)(13) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821(d)(13)) is amended by adding at the end the 
following new subparagraph: 
"(E) DISPOSITION OF ASSETS.—In exercising any right, 
power, privilege, or authority as conservator or receiver in 
connection with any sale or disposition of assets of any 
insured depository institution for which the Corporation 
has been appointed conservator or receiver, including any 
sale or disposition of assets acquired by the Corporation 
under section 13(d)(1), the Corporation shall conduct its 
operations in a manner which— 
"(i) maximizes the net present value return from the 
sale or disposition of such assets; 
"(ii) minimizes the amount of any loss realized in the 
resolution of cases; 
"(iii) ensures adequate competition and fair and 
consistent treatment of offerors; 
"(iv) prohibits discrimination on the basis of race, 
sex, or ethnic groups in the solicitation and consider-
ation of offers; and 
"(v) maximizes the preservation of the availability 
and affordability of residential real property for low-
and moderate-income individuals.". 
(b) CORPORATE CAPACITY.—Section 13(d)(3) of the Federal Deposit 
Insurance Act (12 U.S.C. 1823(d)(3)) is amended by adding at the end 
the following new subparagraph: 
"(D) DISPOSITION OF ASSETS.—In exercising any right, 
power, privilege, or authority described in subparagraph (A) 
regarding the sale or disposition of assets sold to the Cor-
poration pursuant to paragraph (1), the Corporation shall 
conduct its operations in a manner which— 
"(i) maximizes the net present value return from the 
sale or disposition of such assets; 
"(ii) minimizes the amount of any loss realized in the 
resolution of cases; 
"(iii) ensures adequate competition and fair and 
consistent treatment of offerors; 
"(iv) prohibits discrimination on the basis of race, 
sex, or ethnic groups in the solicitation and consider-
ation of offers; and 
"(v) maximizes the preservation of the availability 
and affordability of residential real property for low-
and moderate-income individuals.". 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2253 
Subtitle D—Prompt Regulatory Action 
SEC. 131. PROMPT REGULATORY ACTION. 
(a) ESTABLISHING SYSTEM OF PROMPT CORRECTIVE ACTION.—The 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by 
adding after section 37 (as added by section 121 of this Act) the 
following new section: 
"SEC. 38. PROMPT CORRECTIVE ACTION. 
12 USC 1831o. 
"(a) 
RESOLVING PROBLEMS TO 
PROTECT DEPOSIT INSURANCE 
FUNDS.— 
"(1) PURPOSE.—The purpose of this section is to resolve the 
problems of insured depository institutions at the least possible 
long-term loss to the deposit insurance fund. 
"(2) PROMPT CORRECTIVE ACTION REQUIRED.—Each appropriate 
Federal banking agency and the Corporation (acting in the 
Corporation's capacity as the insurer of depository institutions 
under this Act) shall carry out the purpose of this section by 
taking prompt corrective action to resolve the problems of 
insured depository institutions. 
"(b) DEFINITIONS.—For purposes of this section: 
"(1) CAPITAL CATEGORIES.— 
"(A) WELL CAPITALIZED.—An insured depository institu-
tion is 'well capitalized' if it significantly exceeds the re-
quired minimum level for each relevant capital measure. 
"(B) ADEQUATELY CAPITALIZED.—An insured depository 
institution is 'adequately capitalized' if it meets the re-
quired minimum level for each relevant capital measure. 
"(C) UNDERCAPITALIZED.—An insured depository institu-
tion is 'undercapitalized' if it fails to meet the required 
minimum level for any relevant capital measure. 
"(D) 
SIGNIFICANTLY 
UNDERCAPITALIZED.—An 
insured 
depository institution is 'significantly undercapitalized' if it 
is significantly below the required minimum level for any 
relevant capital measure. 
"(E) CRITICALLY UNDERCAPITALIZED.—An insured deposi-
tory institution is 'critically undercapitalized' if it fails to 
meet any level specified under subsection (c)(3)(A). 
"(2) OTHER DEFINITIONS.— 
"(A) AVERAGE.— 
"(i) IN GENERAL.—The 'average' of an accounting 
item (such as total assets or tangible equity) during a 
given period means the sum of that item at the close of 
business on each business day during that period di-
vided by the total number of business days in that 
period. 
"(ii) 
AGENCY MAY PERMIT WEEKLY AVERAGING FOR 
CERTAIN INSTITUTIONS.—In the case of insured deposi-
tory institutions that have total assets of less than 
$300,000,000 and normally file reports of condition 
reflecting weekly (rather than daily) averages of 
accounting items, the appropriate Federal banking 
agency may provide that the 'average' of an accounting 
item during a given period means the sum of that item 
at the close of business on the relevant business day 
105 STAT. 2254 
PUBLIC LAW 102-242—DEC. 19, 1991 
each week during that period divided by the total 
number of weeks in that period. 
"(B) CAPITAL DISTRIBUTION.—The term 'capital distribi^-
tion' means— 
"(i) a distribution of cash or other property by any 
insured depository institution or company to its owners 
made on account of that ownership, but not including— 
"(I) any dividend consisting only of shares of the 
institution or company or rights to purchase such 
shares; or 
"(ID any amount paid on the deposits of a 
mutual or cooperative institution that the appro-
priate Federal banking agency determines is not a 
distribution for purposes of this section; 
"(ii) a payment by an insured depository institution 
or company to repurchase, redeem, retire, or otherwise 
acquire any of its shares or other ownership interests, 
including any extension of credit to finance an affili-
ated company's acquisition of those shares or interests; 
or 
"(iii) a transaction that the appropriate Federal 
banking agency or the Corporation determines, by 
order or regulation, to be in substance a distribution of 
capital to the owners of the insured depository institu-
tion or company. 
"(C) CAPITAL RESTORATION PLAN.—The term 'capital res-
toration plan' means a plan submitted under subsection 
(e)(2). 
"(D) COMPANY.—The term 'company' has the same mean-
ing as in section 2 of the Bank Holding Company Act of 
1956. 
"(E) COMPENSATION.—The term 'compensation' includes 
any payment of money or provision of any other thing of 
value in consideration of employment. 
"(F) RELEVANT CAPITAL MEASURE.—The term 'relevant 
capital measure' means the measures described in subsec-
tion (c). 
"((jr) REQUIRED MINIMUM LEVEL.—The term 'required 
minimum level' means, with respect to each relevant 
capital measure, the minimum acceptable capital level 
specified by the appropriate Federal banking agency by 
regulation. 
"(H) SENIOR EXECUTIVE OFFICER.—The term 'senior execu-
tive officer' has the same meaning as the term 'executive 
officer' in section 22(h) of the Federal Reserve Act. 
"(I) SUBORDINATED DEBT.—The term 'subordinated debt' 
means debt subordinated to the claims of general creditors. 
"(c) CAPITAL STANDARDS.— 
"(1) RELEVANT CAPITAL MEASURES.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B)(ii), the capital standards prescribed by each appropriate 
Federal banking agency shall include— 
"(i) a leverage limit; and 
"(ii) a risk-based capital requirement. 
"(B) OTHER CAPITAL MEASURES.—An appropriate Federal 
banking agency may, by regulation— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2255 
"(i) establish any additional relevant capital meas-
ures to carry out the purpose of this section; or 
"(ii) rescind any relevant capital measure required 
under subparagraph (A) upon determining (with the 
concurrence of the other Federal banking agencies) 
., 
that the measure is no longer an appropriate means for 
carrying out the purpose of this section. 
"(2) CAPITAL CATEGORIES GENERALLY.—Each appropriate Fed- Regulations, 
eral banking agency shall, by regulation, specify for each rel-
evant capital measure the levels at which an insured depository 
institution 
is 
well 
capitalized, 
adequately 
capitalized, 
undercapitalized, and significantly undercapitalized. 
"(3) CRITICAL CAPITAL.— 
"(A) AGENCY TO SPECIFY LEVEL.— 
"(i) 
LEVERAGE 
UMIT.—Each appropriate 
Federal 
banking agency shall, by regulation, in consultation 
with the Corporation, specify the ratio of tangible 
equity to total assets at which an insured depository 
institution is critically undercapitalized. 
"(ii) 
OTHER 
RELEVANT 
CAPITAL 
MEASURES.—The 
agency may, by regulation, specify for 1 or more other 
relevant capital measures, the level at which an in-
sured 
depository 
institution 
is 
critically 
undercapitalized. 
"(B) LEVERAGE LIMIT RANGE.—The level specified under 
subparagraph (A)(i) shall require tangible equity in an 
amount— 
"(i) not less than 2 percent of total assets; and 
"(ii) except as provided in clause (i), not more than 65 
percent of the required minimum level of capital under 
the leverage limit. 
"(C) FDIC's CONCURRENCE REQUIRED.—The appropriate 
Federal banking agency shall not, without the concurrence 
of the Corporation, specify a level under subparagraph (AXi) 
lower than that specified by the Corporation for State 
nonmember insured banks. 
"(d) PROVISIONS APPUCABLE TO ALL INSTITUTIONS.— 
"(1) CAPITAL DISTRIBUTIONS RESTRICTED.— 
"(A) IN GENERAL.—An insured depository institution 
shall make no capital distribution if, after making the 
distribution, the institution would be undercapitalized. 
"(B) EXCEPTION.—Notwithstanding subparagraph (A), the 
appropriate Federal banking agency may permit, after con-
sultation with the Corporation, an insured depository 
institution to repurchase, redeem, retire, or otherwise ac-
quire shares or ownership interests if the repurchase, 
redemption, retirement, or other acquisition— 
"(i) is made in connection with the issuance of addi-
tional shares or obligations of the institution in at least 
an equivalent amount; and 
"(ii) will reduce the institution's financial obligations . 
or otherwise improve the institution's financial condi-
tion. 
"(2) MANAGEMENT FEES RESTRICTED.—An insured depository 
institution shall pay no management fee to any person having 
control of that institution if, after making the payment, the 
institution would be undercapitalized. 
105 STAT. 2256 . 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(e) PROVISIONS APPUCABLE TO UNDERCAPITALIZED INSTITUTIONS.— 
"(1) MONITORING REQUIRED.—Each appropriate Federal bank-
ing agency shall— 
"(A) closely monitor the condition of any undercapitalized 
insured depository institution; 
"(B) closely monitor compliance with capital restoration 
plans, restrictions, and requirements imposed under this 
section; and 
"(C) periodically review the plan, restrictions, and 
requirements applicable to any undercapitalized insured 
depository institution to determine whether the plan, 
restrictions, and requirements are achieving the purpose of 
this section. 
"(2) CAPITAL RESTORATION PLAN REQUIRED.— 
"(A) IN GENERAL.—Any undercapitalized insured deposi-
tory institution shall submit an acceptable capital restora-
tion plan to the appropriate Federal banking agency within 
the time allowed by the agency under subparagraph (D). 
"(B) CONTENTS OF PLAN.—The capital restoration plan 
shall— 
"(i) specify— 
"(I) the steps the insured depository institution 
will take to become adequately capitalized; 
"(II) the levels of capital to be attained during 
each year in which the plan will be in effect; 
"(III) how the institution will comply with the 
restrictions or requirements then in effect under 
this section; and 
"(IV) the types and levels of activities in which 
the institution will engage; and 
r 
"(ii) contain such other information as the approi. 
priate Federal banking agency may require. 
"(C) CRITERIA FOR ACCEPTING PLAN.—The appropriate 
Federal banking agency shall not accept a capital restora-
tion plan unless the agency determines that— 
"(i) the plan— 
"(I) complies with subparagraph (B); 
"(II) is based on realistic assumptions, and is 
likely to succeed in restoring the institution's cap-
ital; and 
"(III) would not appreciably increeuse the risk 
(including credit risk, interest-rate risk, and other 
types of risk) to which the institution is exposed; 
and 
"(ii) 
if 
the 
insured 
depository 
institution 
is 
undercapitalized, each company having control of the 
institution has— 
"(I) guaranteed that the institution will comply 
with the plan until the institution has been ade-
quately capitalized on average during each of 4 
consecutive calendar quarters; and 
"(II) provided appropriate assurances of perform-
ance. 
Regulations. 
"(D) DEADLINES FOR SUBMISSION AND REVIEW OF PLANS.— 
The appropriate Federal banking agency shall by regula-
tion establish deadlines that— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2257 
'•^"" 
"(i) provide insured depository institutions with 
reasonable time to submit capital restoration plans, 
, [^, 
and generally require an institution to submit a plan 
* 
not later than 45 days after the institution becomes 
undercapitalized; and 
"(ii) require the agency to act on capital restoration 
plans expeditiously, and generally not later than 60 
days after the plan is submitted; and 
"(iii) require the agency to submit a copy of any plan 
approved by the agency to the Corporation before the 
end of the 45-day period beginning on the date such 
approval is granted. 
"(E) GUARANTEE LIABILITY LIMITED.— 
"(i) IN GENERAL.—The aggregate liability under 
subparagraph (C)(ii) of all companies having control of 
an insured depository institution shall be the lesser 
of— 
"(I) an amount equal to 5 percent of the institu-
tion's total assets at the time the institution 
became undercapitalized; or 
"(II) the amount which is necessary (or would 
have been necessary) to bring the institution into 
compliance with all capital standards applicable 
with respect to such institution as of the time the 
institution fails to comply with a plan under this 
subsection, 
"(ii) CERTAIN AFFIUATES NOT AFFECTED.—This para-
graph may not be construed as— 
"(I) requiring any company not having control of 
an undercapitalized insured depository institution 
to guarantee, or otherwise be liable on, a capital 
restoration plan; 
"(II) requiring any person other than an insured 
depository institution to submit a capital restora-
V 
tion plan; or 
"(III) affecting compliance by brokers, dealers, 
government securities brokers, and government 
securities dealers with the financial responsibility 
requirements of the Securities Exchange Act of 
1934 and regulations and orders thereunder. 
"(3) ASSET GROWTH RESTRICTED.—An undercapitalized insured 
depository institution 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 appropriate Federal banking agency has 
accepted the institution's capital restoration plan; 
"(B) any increase in total assets is consistent with the 
plan; and 
"(C) the institution's ratio of tangible equity to assets 
increases during the calendar quarter at a rate sufficient to 
enable the institution to become adequately capitalized 
within a reasonable time. 
"(4) PRIOR APPROVAL REQUIRED FOR ACQUISITIONS, BRANCHING, 
AND NEW UNES OF BUSINESS.—An undercapitalized insured 
depository institution shall not, directly or indirectly, acquire 
any interest in any company or insured depository institution, 
105 STAT. 2258 
PUBLIC LAW 102-242—DEC. 19, 1991 
establish or acquire any additional branch office, or engage in 
any new line of business unless— 
"(A) the appropriate Federal banking agency 
has 
accepted the insured depository institution's capital res-
toration plan, the institution is implementing the plan, and 
the agency determines that the proposed action is consist-
ent with and will further the achieveiiient of the plan; or 
"(B) the Board of Directors determines that the proposed 
action will further the purpose of this section. 
"(5) DISCRETIONARY SAFEGUARDS.—The appropriate Federal 
banking agency may, with respect to any undercapitalized in-
sured depository institution, take actions described in any 
subparagraph of subsection (f)(2) if the agency determines that 
those actions are necessary to carry out the purpose of this 
section. 
"(f) PROVISIONS APPLICABLE TO SIGNIFICANTLY UNDERCAPITAUZED 
INSTITUTIONS AND UNDERCAPITALIZED INSTITUTIONS THAT FAIL TO 
SUBMIT AND IMPLEMENT CAPITAL RESTORATION PLANS.— 
"(1) IN GENERAL.—This subsection shall apply with respect to 
any insured depository institution that— 
"(A) is significantly undercapitalized; or 
"(B) is undercapitalized and— 
"(i) fails to submit an acceptable capital restoration 
plan within the time allowed by the appropriate Fed-
eral banking agency under subsection (e)(2)(D); or 
"(ii) fails in any material respect to implement a plan 
accepted by the agency. 
"(2) SPECIFIC ACTIONS AUTHORIZED.—The appropriate Federal 
banking agency shall carry out this section by taking 1 or more 
of the following actions: 
"(A) REQUIRING RECAPITALIZATION.—Doing 1 or more of 
the following: 
"(i) Requiring the institution to sell enough shares or 
obligations of the institution so that the institution will 
be adequately capitalized after the sale. 
"(ii) Further requiring that instruments sold under 
clause (i) be voting shares. 
"(iii) Requiring the institution to be acquired by a 
depository institution holding company, or to combine 
with another insured depository institution, if 1 or 
more grounds exist for appointing a conservator or 
receiver for the institution. 
"(B) RESTRICTING TRANSACTIONS WITH AFFILIATES.— 
"(i) Requiring the institution to comply with section 
23A of the Federal Reserve Act as if subsection (d)(1) of 
that section (exempting transactions with certain affili-
ated institutions) did not apply. 
"(ii) Further restricting the institution's transactions 
with affiliates. 
"(C) RESTRICTING INTEREST RATES PAID.— 
"(i) IN GENERAL.—Restricting the interest rates that 
the institution pays on deposits to the prevailing rates 
of interest on deposits of comparable amounts and 
maturities in the region where the institution is lo-
cated, as determined by the agency. 
"(ii) 
RETROACTIVE 
RESTRICTIONS PROHIBITED.—This 
subparagraph does not authorize the agency to restrict 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2259 
interest rates paid on time deposits made before (and 
not renewed or renegotiated after) the agency acted 
under this subparsigraph. 
"(D) RESTRICTING ASSET GROMTTH.—Restricting the institu-
tion's asset growth more stringently than subsection (eX3), 
or requiring the institution to reduce its total assets. 
"(E) RESTRICTING ACTIVITIES.—Requiring the institution 
or any of its subsidiaries to alter, reduce, or terminate any 
activity that the agency determines poses excessive risk to 
the institution. 
"(F) IMPROVING MANAGEMENT.—Doing 1 or more of the 
following: 
"(i) NEW ELECTION OF DIRECTORS.—Ordering a 
new 
election for the institution's board of directors. 
"(ii) DISMISSING DIRECTORS OR SENIOR EXECUTIVE OFFI-
CERS.—Requiring the institution to dismiss from office 
any director or senior executive officer who had held 
office for more than 180 days immediately before the 
institution became undercapitalized. Dismissal under 
this clause shall not be construed to be a removal under 
section 8. 
"(iii) EMPLOYING QUAUFIED SENIOR EXECUTIVE OFFI-
CERS.—Requiring the institution to employ qualified 
senior executive officers (who, if the agency so specifies, 
shall be subject to approval by the agency). 
"(G) PROHIBITING DEPOSITS FROM CORRESPONDENT BANKS.— 
Prohibiting the acceptance by the institution of deposits 
from 
correspondent 
depository 
institutions, 
including 
renewals and rollovers of prior deposits. 
"(H) REQUIRING PRIOR APPROVAL FOR CAPITAL DISTRIBU-
TIONS B
Y BANK HOLDING COMPANY.—Prohibiting any bank 
holding company having control of the insured depository 
institution from making any capital distribution without 
the prior approval of the Board of Governors of the Federal 
Reserve System. 
"(I) REQUIRING DIVESTITURE.—Doing one or more of the 
following: 
"(i) DIVESTITURE BY THE INSTITUTION.—Requiring the 
institution to divest itself of or liquidate any subsidiary 
if the agency determines that the subsidiary is in 
danger of becoming insolvent and poses a significant 
risk to the institution, or is likely to cause a significant 
dissipation of the institution's assets or earnings. 
"(ii) 
DIVESTITURE 
BY 
PARENT 
COMPANY 
OF 
NONDEPOSITORY AFFIUATE.—Requiring any 
company 
having control of the institution to divest itself of or 
liquidate any affiliate other than an insured depository 
institution if the appropriate Federal banking agency 
for that company determines that the affiliate is in 
danger of becoming insolvent and poses a significant 
risk to the institution, or is likely to cause a significant 
dissipation of the institution's assets or earnings. 
"(iii) DIVESTITURE OF INSTITUTION.—Requiring any 
company having control of the institution to divest 
itself of the institution if the appropriate Federal bank-
ing agency for that company determines that divesti-
105 STAT. 2260 
PUBLIC LAW 102-242—DEC. 19, 1991 
ture would improve the institution's financial condition 
and future prospects. 
"(J) REQUIRING OTHER ACTION.—Requiring the institution 
to take any other action that the agency determines will 
better carry out the purpose of this section than any of the 
actions described in this paragraph. 
"(3) PRESUMPTION IN FAVOR OF CERTAIN ACTIONS.—In comply-
ing with paragraph (2), the agency shall take the following 
actions, unless the agency determines that the actions would 
not further the purpose of this section: 
"(A) The action described in clause (i) or (iii) of paragraph 
(2)(A) (relating to requiring the sale of shares or obligations, 
or requiring the institution to be acquired by or combine 
with another institution). 
"(B) The action described in paragraph (2)(B)(i) (relating 
to restricting transactions with affiliates). 
"(C) The action described in paragraph (2)(C) (relating to 
restricting interest rates). 
"(4) SENIOR EXECUTIVE OFFICERS' COMPENSATION RESTRICTED.— 
"(A) IN GENERAL.—The insured depository institution 
shall not do any of the following without the prior written 
approval of the appropriate Federal banking agency: 
"(i) Pay any bonus to any senior executive officer. 
"(ii) Provide compensation to any senior executive 
officer at a rate exceeding that officer's average rate of 
compensation (excluding bonuses, stock options, and 
profit-sharing) during the 12 calendar months preced-
ing the calendar month in which the institution 
became undercapitalized. 
"(B) FAILING TO SUBMIT PLAN.—The appropriate Federal 
banking agency shall not grant any approval under 
subparagraph (A) with respect to an institution that has 
failed to submit an acceptable capital restoration plan. 
"(5) 
DISCRETION TO IMPOSE CERTAIN ADDITIONAL RESTRIC-
TIONS.—The agency may impose 1 or more of the restrictions 
prescribed by regulation under subsection (i) if the agency 
determines that those restrictions are necessary to carry out the 
purpose of this section. 
"(6) CONSULTATION WITH FUNCTIONAL REGULATORS.—Before 
the agency or Corporation makes a determination under para-
graph (2X1) with respect to an affiliate that is a broker, dealer, 
government securities broker, government securities dealer, 
investment company, or investment adviser, the agency or Cor-
poration shall consult with the Securities and Exchange 
Commisssion and, in the case of any other affiliate which is 
subject to any financial responsibility or capital requirement, 
any other functional regulator (as defined in section 2(s) of the 
Bank Holding Company Act of 1956) of such affiliate with 
respect to the proposed determination of the agency or the 
Corporation and actions pursuant to such determination. 
"(g) MORE STRINGENT TREATMENT BASED ON OTHER SUPERVISORY 
CRITERIA.— 
J 
"(1) IN GENERAL.—If the appropriate Federal banking agency 
determines (after notice and an opportunity for hearing) that an 
insured depository institution is in an unsafe or unsound condi-
tion or, pursuant to section 8(b)(8), deems the institution to be 
engaging in an unsafe or unsound practice, the agency may— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2261 
"(A) if the institution is well capitalized, reclassify the 
institution as adequately capitalized; 
"(B) if the institution is adequately capitalized, require 
the institution to comply with 1 or more provisions of 
subsections 
(d) and 
(e), as if the 
institution 
were 
undercapitalized; or 
"(C) if the institution is undercapitalized, take any 1 or 
more actions authorized under subsection (f)(2) as if the 
institution were significantly undercapitalized. 
"(2) CONTENTS OF PLAN.—Any plan required under paragraph 
(1) shall specify the steps that the insured depository institution 
will take to correct the unsafe or unsound condition or practice. 
Capital restoration plans shall not be required under paragraph 
(1)(B). 
"(h) 
PROVISIONS APPLICABLE TO CRITICALLY UNDERCAPITALIZED 
INSTITUTIONS.— 
"(1) ACTIVITIES RESTRICTED.—Any critically undercapitalized 
insured depository institution shall comply with restrictions 
prescribed by the Corporation under subsection (i). 
"(2) PAYMENTS ON SUBORDINATED DEBT PROHIBITED.— 
"(A) IN GENERAL.—A critically undercapitalized insured 
depository institution shall not, beginning 60 days after 
becoming critically undercapitalized, make any payment of 
principal or interest on the institution's subordinated debt. 
"(B) EXCEPTIONS.—The Corporation may make exceptions 
to subparagraph (A) if— 
"(i) the appropriate Federal banking agency has 
taken action with respect to the insured depository 
institution under paragraph (3)(A)(ii); and 
"(ii) the Corporation determines that the exception 
would further the purpose of this section. 
"(C) 
LIMITED 
EXEMPTION 
FOR CERTAIN 
SUBORDINATED 
DEBT.—Until July 15, 1996, subparagraph (A) shall not 
apply with respect to any subordinated debt outstanding on 
t 
July 15, 1991, and not extended or otherwise renegotiated 
after July 15,1991. 
"(D) ACCRUAL OF INTEREST.—Subparagraph (A) does not 
prevent unpaid interest from accruing on subordinated debt 
under the terms of that debt, to the extent otherwise 
permitted by law. 
"(3) CONSERVATORSHIP, RECEIVERSHIP, OR OTHER ACTION RE-
QUIRED.— 
"(A) IN GENERAL.—The appropriate Federal banking 
agency shall, not later than 90 days after an insured deposi-
tory institution becomes critically undercapitalized— 
"(i) appoint a receiver (or, with the concurrence of 
the Corporation, a conservator) for the institution; or 
"(ii) take such other action as the agency determines, 
with the concurrence of the Corporation, would better 
achieve the purpose of this section, after documenting 
why the action would better achieve that purpose. 
"(B) PERIODIC REDETERMINATIONS REQUIRED.—Any deter- Termination 
mination by an appropriate Federal banking agency under <
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-
subparagraph (A)(ii) to take any action with respect to an 
insured depository institution in lieu of appointing a con-
servator or receiver shall cease to be effective not later than 
the end of the 90-day period beginning on the date that the 
105 STAT. 2262 
PUBLIC LAW 102-242—DEC. 19, 1991 
. determination is made and a conservator or receiver shall 
be appointed for that institution under subparagraph (A)(i) 
unless the agency makes a new determination under 
'' • subparagraph (A)(ii) at the end of the effective period of the 
prior determination. 
"(C) APPOINTMENT OF RECEIVER REQUIRED IF OTHER ACTION 
FAILS TO RESTORE CAPITAL.— 
"(i) IN GENERAL.—Notwithstanding subparagraphs 
(A) and (B), the appropriate Federal banking agency 
shall appoint a receiver for the insured depository 
institution 
if 
the 
institution 
is 
critically 
undercapitalized on average during the calendar quar-
• 
ter beginning 270 days after the date on which the 
institution became critically undercapitalized. 
"(ii) EXCEPTION.—Notwithstanding clause (i), the 
appropriate Federal banking agency may continue to 
take such other action as the agency determines to be 
appropriate in lieu of such appointment i
f
— 
"(I) the agency determines, with the concurrence 
of the Corporation, that (aa) the insured depository 
institution has positive net worth, (bb) the insured 
depository institution has been in substantial 
' 
compliance with an approved capital restoration 
plan which requires consistent improvement in the 
institution's capital since the date of the approval 
of the plan, (cc) the insured depository institution 
is profitable or has an upward trend in earnings 
the agency projects as sustainable, and (dd) the 
insured depository institution is reducing the ratio 
of nonperforming loans to total loans; and 
"(II) the head of the appropriate Federal banking 
agency and the Chairperson of the Board of Direc-
tors both certify that the institution is viable and 
not expected to fail. 
Regulations. 
"(i) RESTRICTING ACTIVITIES OF CRITICALLY UNDERCAPITALIZED 
INSTITUTIONS.—To carry out the purpose of this section, the Corpora-
tion shall, by regulation or order— 
"(1) restrict the activities of any critically undercapitalized 
insured depository institution; and 
"(2) at a minimum, prohibit any such institution from doing 
any of the following without the Corporation's prior written 
approval: 
"(A) Entering into any material transaction other than in 
the usual course of business, including any investment, 
expansion, acquisition, sale of assets, or other similar action 
with respect to which the depository institution is required 
to provide notice to the appropriate Federal banking 
agency. 
"(B) Extending credit for any highly leveraged trans-
action. 
"(C) Amending the institution's charter or bylaws, except 
to the extent necessary to carry out any other requirement 
of any law, regulation, or order. 
"(D) Making any material change in accounting methods. 
"(E) Engaging in any covered transaction (as defined in 
section 23A(b) of the Federal Reserve Act). 
"(F) Paying excessive compensation or bonuses. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2263 
"(G) Paying interest on new or renewed liabilities at a 
rate that would increase the institution's weighted average 
cost of funds to a level significantly exceeding the prevail-
ing rates of interest on insured deposits in the institution's 
normal market areas. 
"0*) CERTAIN GOVERNMENT-CONTROLLED INSTITUTIONS EXEMPTED.— 
Subsections (e) through (i) (other than paragraph (3) of subsection 
(e)) shall not apply— 
"(1) to an insured depository institution for which the Cor-
poration or the Resolution Trust Corporation is conservator; or 
"(2) to a bridge bank, none of the voting securities of which 
are owned by a person or agency other than the Corporation or 
the Resolution Trust Corporation. 
"(k) REVIEW REQUIRED WHEN DEPOSIT INSURANCE FUND INCURS 
MATERIAL LOSS.— 
"(1) IN GENERAL.—If a deposit insurance fund incurs a mate-
rial loss with respect to an insured depository institution on or 
after July 1, 1993, the inspector general of the appropriate 
Federal banking agency shall— 
"(A) make a written report to that agency reviewing the Reports, 
agency's supervision of the institution (including the agen-
cy's implementation of this section), which shall— 
"(i) ascertain why the institution's problems resulted 
in a material loss to the deposit insurance fund; and 
"(ii) m£ike recommendations for preventing any such 
loss in the future; and 
"(B) provide a copy of the report to— 
"(i) the Comptroller General of the United States; 
"(ii) the Corporation (if the sigency is not the Corpora-
tion); 
"(iii) in the case of a State depository institution, the 
appropriate State banking supervisor; and 
"(iv) upon request by any Member of Congress, to 
that Member. 
"(2) MATERIAL LOSS INCURRED.—For purposes of this subsec-
tion: 
"(A) Loss INCURRED.—A deposit insurance fund incurs a 
loss with respect to an insured depository institution— 
"(i) if the Corporation provides any assistance under 
section 13(c) with respect to that institution; and— 
"(I) it is not substantially certain that the assist-
ance will be fully repaid not later than 24 months 
after the date on which the Corporation initiated 
the assistance; or 
"(II) the institution ceases to repay the assist-
ance in accordance with its terms; or 
"(ii) if the Corporation is appointed receiver of the 
institution, and it is or becomes apparent that the 
present value of the deposit insurance fund's outlays 
with respect to that institution will exceed the present 
value of receivership dividends or other payments on 
the claims held by the Corporation. 
"(B) MATERIAL LOSS.—A loss is material if it exceeds the 
greater o
f
— 
"(i) $25,000,000; or 
105 STAT. 2264 
PUBLIC LAW 102-242—DEC. 19, 1991 
Effective date. 
Termination 
date. 
"(ii) 2 percent of the institution's total assets at the 
time the Corporation initiated assistance under section 
13(c) or was appointed receiver. 
"(3) DEADUNE FOR REPORT.—The inspector general of the 
appropriate Federal banking agency shall comply with para-
graph (1) expeditiously, and in any event (except with respect to 
paragraph (lXB)(iv)) as follows: 
"(A) If the institution is described in paragraph (2)(A)(i), 
during the 6-month period beginning on the earlier o
f
— 
"(i) the date on which the institution ceases to repay 
assistance under section 13(c) in accordance with its 
terms, or 
"(ii) the date on which it becomes apparent that the 
assistance will not be fully repaid during the 24-month 
period described in paragraph (2)(A)(i). 
"(B) If the institution is described in paragraph (2)(A)(ii), 
during the 6-month period beginning on the date on which 
it becomes apparent that the present value of the deposit 
insurance fund's outlays with respect to that institution 
will exceed the present value of receivership dividends or 
other payments on the claims held by the Corporation. 
"(4) PUBLIC DISCLOSURE REQUIRED.— 
"(A) IN GENERAL.—The appropriate Federal banking 
agency shall disclose the report upon request under section 
552 of title 5, United States Code, without excising— 
"(i) any portion under section 552(b)(5) of that title; or 
"(ii) any information about the insured depository 
institution under paragraph (4) (other than trade se-
crets) or paragraph (8) of section 552(b) of that title. 
"(B) EXCEPTION.—Subparagraph (A) does not require the 
agency to disclose the name of any customer of the insured 
depository institution (other than an institution-affiliated 
party), or information from which such a person's identity 
could reasonably be ascertained. 
"(5) GAO REVIEW.—The General Accounting Office shall an-
nually— 
"(A) review reports made under paragraph (1) and rec-
ommend improvements in the supervision of insured 
depository institutions (including the implementation of 
this section); and 
"(B) verify the accuracy of 1 or more of those reports. 
"(6) TRANSITION RULE.—During the period beginning on July 
1, 1993, and ending on June 30, 1997, a loss incurred by the 
Corporation with respect to an insured depository institution— 
"(A) with respect to which the Corporation initiates 
assistance under section 13(c) during the period in question, 
or 
"(B) for which the Corporation was appointed receiver 
during the period in question, 
is material for purposes of this subsection only if that loss 
exceeds the greater of $25,000,000 or the applicable percentage 
of the institution's total assets at that time, set forth in the 
following table: 
The applicable 
"For the following period: 
percentage is: 
July 1, 1993-June 30, 1994 
7 percent 
July 1, 1994-June 30, 1995 
5 percent 
July 1, 1995-June 30, 1996 
4 percent 
July 1, 1996-June 30, 1997 
3 percent. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2265 
"(1) IMPLEMENTATION.— 
"(1) REGULATIONS AND OTHER ACTIONS.—Each appropriate 
Federal banking agency shall prescribe such regulations (in 
consultation with the other Federal banking agencies), issue 
such orders, and take such other actions as are necessary to 
carry out this section. 
"(2) WRITTEN DETERMINATION AND CONCURRENCE REQUIRED.— 
Any determination or concurrence by an appropriate Federal 
banking agency or the Corporation required under this section 
shall be written, 
"(m) OTHER AUTHORITY NOT AFFECTED.—This section does not 
limit any authority of an appropriate Federal banking agency, the 
Corporation, or a State to take action in addition to (but not in 
derogation of) that required under this section. 
"(n) ADMINISTRATIVE REVIEW OF DISMISSAL ORDERS.— 
"(1) TIMELY PETITION REQUIRED.—A director or senior execu-
tive officer dismissed pursuant to an order under subsection 
(f)(2)(F)(ii) may obtain review of that order by filing a written 
petition for reinstatement with the appropriate Federal bank-
ing agency not later than 10 days after receiving notice of the 
dismissal. 
"(2) PROCEDURE.— 
"(A) HEARING REQUIRED.—The agency shall give the peti-
tioner an opportunity to— 
"(i) submit written materials in support of the peti-
tion; and 
"(ii) appear, personally or through counsel, before 1 
or more members of the agency or designated employ-
r 
ees of the agency. 
"(B) DEADUNE FOR HEARING.—The agency shall— 
"(i) schedule the hearing referred to in subparagraph 
(A)(ii) promptly after the petition is filed; and 
"(ii) hold the hearing not later than 30 days after the 
petition is filed, unless the petitioner requests that the 
hearing be held at a later time. 
"(C) DEADUNE FOR DECISION.—Not later than 60 days 
after the date of the hearing, the agency shall— 
"(i) by order, grant or deny the petition; 
"(ii) if the order is adverse to the petitioner, set forth 
the basis for the order; and 
"(iii) notify the petitioner of the order. 
"(3) STANDARD FOR REVIEW OF DISMISSAL ORDERS.—The peti-
tioner shall bear the burden of proving that the petitioner's 
continued employment would materially strengthen the insured 
depository institution's ability— 
"(A) to become adequately capitalized, to the extent that 
the order is based on the institution's capital level or failure 
to submit or implement a capital restoration plan; and 
"(B) to correct the unsafe or unsound condition or unsafe 
or unsound practice, to the extent that the order is bgised on 
subsection (gXD. 
"(o) TRANSITION RULES FOR SAVINGS ASSOCIATIONS.— 
"(1) RTC's ROLE DOES NOT DIMINISH CARE REQUIRED OF OTS.— 
"(A) IN GENERAL.—In implementing this section, the 
appropriate Federal banking agency (and, to the extent 
note. 
105 STAT. 2266 
PUBLIC LAW 102-242—DEC. 19, 1991 
applicable, the Corporation) shall exercise the same care as 
i 
if the Savings Association Insurance Fund (rather than the 
Resolution Trust Corporation) bore the cost of resolving the 
problems of insured savings associations described in 
clauses (i) and (ii)(II) of section 21A(b)(3XA) of the Federal 
Home Loan Bank Act. 
"(B) REPORTS.—Subparagraph (A) does not require reports 
under subsection (k). 
"(2) ADDITIONAL FLEXIBILITY FOR CERTAIN SAVINGS ASSOCIA-
TIONS.—Subsections (e)(2), (f), and (h) shall not apply before July 
1,1994, to any insured savings association if^ 
"(A) before the date of enactment of the Federal Deposit 
Insurance Corporation Improvement Act of 1991— 
"(i) the savings association had submitted a plan 
meeting the requirements of section 5(t)(6)(A)(ii) of the 
Home Owners' Loan Act; and 
"(ii) the Director of the Office of Thrift Supervision 
had accepted the plan; 
"(B) the plan remains in effect; and 
"(C) the savings association remains in compliance with 
the plan or is operating under a written agreement with the 
appropriate Federal banking agency.". 
Effective 
(b) DEADLINE FOR REGULATIONS.—Each appropriate Federal bank-
<
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- 
ing agency (as defined in section 3 of the Federal Deposit Insurance 
12USC 18310 
Act (12 U.S.C. 1813)) (and the Corporation, acting in the Corpora-
tion's capacity as insurer of depository institutions under that Act) 
shall, after notice and opportunity for comment, promulgate final 
regulations under section 38 of the Federal Deposit Insurance Act 
(as added by subsection (a)) not later than 9 months after the date of 
enactment of this Act, and those regulations shall become effective 
not later than 1 year after that date of enactment. 
(c) OTHER AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE 
ACT.— 
(1) ENFORCEMENT ACTION BASED ON UNSATISFACTORY ASSET 
QUAUTY, MANAGEMENT, EARNINGS, OR LIQUIDITY.^Section 8(b) o f 
the Federal Deposit Insurance Act (12 U.S.C. 1818(b)) is amend-
ed by redesignating paragraph (8) as paragraph (9) and inserting 
after paragraph (7) the following: 
"(8) UNSATISFACTORY ASSET QUALITY, MANAGEMENT, EARNINGS, 
O
R LIQUIDITY AS UNSAFE O
R UNSOUND PRACTICE.—If an insured 
depository institution receives, in its most recent report of 
examination, a less-than-satisfactory rating for asset quality, 
management, earnings, or liquidity, the appropriate Federal 
banking agency may (if the deficiency is not corrected) deem the 
institution to be engaging in an unsafe or unsound practice for 
purposes of this subsection.". 
(2) CONFORMING AMENDMENTS RELATING TO FEDERAL BANKING 
AGENCIES' ENFORCEMENT AUTHORITY.—Section 8(i) of the Federal 
Deposit Insurance Act (12 U.S.C. 1818(i)) is amended— 
(A) in the first sentence of paragraph (1), by inserting "or 
under section 38" after "section"; and 
(B) in paragraph (2)(A)(ii), by inserting ", or final order 
under section 38" after "section". 
(3) DEFINITION.—Section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813) is amended by adding at the end the 
following: 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2267 
"(y) The term 'deposit insurance fund' means the Bank Insurance 
Fund or the Savings Association Insurance Fund, as appropriate.". 
(d) CONFORMING AMENDMENT TO SECTION 5(t)(7) OF THE HOME 
OWNERS' LOAN Acrr.—Section 5(tX7) of the Home Owners' Loan Act 
(12 U.S.C. 1464(t)(7)) is amended— 
(1) in subsection (A), by inserting "under this Act" before the 
period; and 
(2) in subsection (B), by inserting "under this Act" after 
"imposed by the Director". 
(e) TRANSITION RULE REGARDING CURRENT DIRECTORS AND SENIOR 
EXECUTIVE OFFICERS.— 
(1) DISMISSAL FROM OFFICE.—Section 38(fK2)(F)(ii) of the Fed-
eral Deposit Insurance Act (as added by subsection (a)) shall not 
apply with respect to— 
(A) any director whose current term as a director com-
menced on or before the date of enactment of this Act and 
has not been extended— 
(i) after that date of enactment, or 
(ii) to evade section 38(fK2XF)(ii); or 
(B) any senior executive officer who accepted emplojonent 
in his or her current position on or before the date of 
enactment of this Act and whose contract of employment 
has not been renewed or renegotiated— 
(i) after that date of enactment, or 
(ii) to evade section 38(fX2XF)(ii). 
(2) RESTRICTING COMPENSATION.—Section 38(f)(4) of the Fed-
eral Deposit Insurance Act (as added by subsection (a)) shall not 
apply with respect to any senior executive officer who accepted 
employment in his or her current position on or before the date 
of enactment of this Act and whose contract of employment has 
not been renewed or renegotiated— 
(A) after that date of enactment, or 
(B) to evade section 38(f)(4). 
(f) EFFECTIVE DATE.—The amendments made by this section shall 
become effective 1 year after the date of enactment of this Act. 
SEC. 132. STANDARDS FOR SAFETY AND SOUNDNESS. 
(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 
1811 et seq.) is amended by adding after section 38 (as added by 
section 131 of this Act) the following new section: 
"SEC. 39. STANDARDS FOR SAFETY AND SOUNDNESS. 
"(a) OPERATIONAL AND MANAGERIAL STANDARDS.—Each appro-
priate Federal banking agency shall, for all insured depository 
institutions and depository institution holding companies, pre-
scribe— 
"(1) standards relating to— 
"(A) internal controls, information systems, and internal 
audit systems, in accordance with section 36; 
"(B) loan documentation; 
"(C) credit underwriting; 
"(D) interest rate exposure; 
"(E) asset growth; and 
"(F) compensation, fees, and benefits, in accordance with 
subsection (c); and 
"(2) such other operational and managerial standards as the 
agency determines to be appropriate. 
12 u s e 1831o 
note. 
12 u s e 1464 
note. 
12 u s e 1831s. 
105 STAT. 2268 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(b) ASSET QUALITY, EARNINGS, AND STOCK VALUATION STAND-
ARDS.—Each appropriate Federal banking agency shall, for all in-
sured depository institutions and depository institution holding 
companies, prescribe— 
"(1) standards specifying— 
"(A) a maximum ratio of classified assets to capital; 
"(B) minimum earnings sufficient to absorb losses with-
out impairing capital; and 
"(C) to the extent feasible, a minimum ratio of market 
value to book value for publicly traded shares of the institu-
tion or company; and 
"(2) such other standards relating to asset quality, earnings, 
and valuation as the agency determines to be appropriate. 
"(c) COMPENSATION STANDARDS.—Each appropriate Federal bank-
ing agency shall, for all insured depository institutions, prescribe— 
"(1) standards prohibiting as an unsafe and unsound practice 
any employment contract, compensation or benefit agreement, 
fee arrangement, perquisite, stock option plan, postemployment 
benefit, or other compensatory arrangement that— 
"(A) would provide any executive officer, employee, direc-
tor, or principal shareholder of the institution with exces-
sive compensation, fees or benefits; or 
"(B) could lead to material financial loss to the institu-
tion; 
"(2) standards specifying when compensation, fees, or benefits 
. 
referred to in paragraph (1) are excessive, which shall require 
the agency to determine whether the amounts are unreasonable 
or disproportionate to the services actually performed by the 
individual by considering— 
"(A) the combined value of all cash and noncash benefits 
provided to the individual; 
"(B) the compensation history of the individual and other 
individuals with comparable expertise at the institution; 
"(C) the financial condition of the institution; 
"(D) comparable compensation practices at comparable 
institutions, based upon such factors as asset size, geo-
graphic location, and the complexity of the loan portfolio or 
other assets; 
"(E) for postemployment benefits, the projected total cost 
and benefit to the institution; 
"(F) any connection between the individual and any 
fraudulent act or omission, breach of trust or fiduciary 
duty, or insider abuse with regard to the institution; and 
"(G) other factors that the agency determines to be rel-
evant; and 
"(3) such other standards relating to compensation, fees, and 
benefits as the agency determines to be appropriate. 
"(d) STANDARDS TO BE PRESCRIBED BY REGULATION.—Standards 
under subsections (a), (b), and (c) shall be prescribed by regulation. 
"(e) FAILURE TO MEET STANDARDS.— 
"(1) PLAN REQUIRED.— 
"(A) IN GENERAL.—If the appropriate Federal banking 
agency determines that an insured depository institution or 
depository institution holding company fails to meet any 
standard prescribed under subsection (a), (b), or (c) the 
agency shall require the institution or company to submit 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2269 
an acceptable plan to the agency within the time allowed by 
the agency under subparagraph (C). 
"(B) CONTENTS OF PLAN.—Any plan required under 
subparagraph (A) shall specify the steps that the institution 
or company will take to correct the deficiency. If the 
institution is undercapitalized, the plan may be part of a 
capital restoration plan. 
"(C) DEADLINES FOR SUBMISSION AND REVIEW OF PLANS.— Regulations. 
The appropriate Federal banking agency shall by regula-
tion establish deadlines that— 
"(i) provide institutions and companies with reason-
able time to submit plans required under subparagraph 
(A), and generally require the institution or company to 
submit a plan not later than 80 days after the agency 
determines that the institution or company fails to 
meet any standard prescribed under subsection (a), (b), 
or (c); and 
"(ii) require the agency to act on plans expeditiously, 
and generally not later than 30 days after the plan is 
submitted. 
"(2) ORDER REQUIRED IF INSTITUTION OR COMPANY FAILS TO 
SUBMIT O
R IMPLEMENT PLAN.—If an insured depository institu-
tion or depository institution holding company fails to submit 
an acceptable plan within the time allowed under paragraph 
(1)(C), or fails in any material respect to implement a plan 
accepted by the appropriate Federal banking agency, the 
agency, by order— 
"(A) shall require the institution or company to correct 
the deficiency; and 
"(B) may do 1 or more of the following until the defi-
ciency has been corrected: 
"(i) Prohibit the institution or company from per-
mitting its average total assets during any calendar 
quarter to exceed its average total assets during the 
preceding calendar quarter, or restrict the rate at 
which the average total assets of the institution or 
company may increase from one calendar quarter to 
another. 
"(ii) Require the institution or company to increase 
its ratio of tangible equity to assets. 
"(iii) Take the action described in section 38(f)(2)(C). 
"(iv) Require the institution or company to take any 
other action that the agency determines will better 
carry out the purpose of section 38 than any of the 
actions described in this subparagraph. 
"(3) RESTRICTIONS MANDATORY FOR CERTAIN INSTITUTIONS.—In 
complying with paragraph (2), the appropriate Federal banking 
agency shall take 1 or more of the actions described in clauses (i) 
through (iii) of paragraph (2)(B) i
f
— 
"(A) the agency determines that the insured depository 
institution fails to meet any standard prescribed under 
subsection (a)(1) or (b)(1); 
"(B) the institution has not corrected the deficiency; and 
"(C) either— 
"(i) during the 24-month period before the date on 
which the institution first failed to meet the standard— 
"(I) the institution commenced operations; or 
note. 
105 STAT. 2270 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(11) 1 or more persons acquired control of the 
institution; or 
"(ii) during the 18-month period before the date on 
which the institution first failed to meet the standard, 
the institution underwent extraordinary growth, as de-
fined by the agency. 
"(f) DEFINITIONS.—For purposes of this section, the terms 'average' 
and 'capital restoration plan' have the same meanings as in section 
38. 
"(g) OTHER AUTHORITY NOT AFFECTED.—The authority granted by 
this section is in addition to any other authority of the Federal 
banking agencies.". 
12 use 1831s 
(b) REGULATIONS REQUIRED.—Each appropriate Federal banking 
Eigency (as defined in section 3 of the Federal Deposit Insurance Act) 
shall promulgate final regulations under section 39 of the Federal 
Deposit Insurance Act (as added by subsection (a)) not later than 
August 1,1993. 
12 use 1831s 
(c) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
°°*®- 
become effective on the earlier of— 
(1) the date on which final regulations promulgated in accord-
ance with subsection (b) become effective; or 
(2) December 1,1993. 
SEC. 133. CONSERVATORSHIP AND RECEIVERSHIP AMENDMENTS TO 
FACILITATE PROMPT REGULATORY ACTION. 
(a) ADDITIONAL GROUNDS FOR APPOINTING CONSERVATOR OR RE-
CEIVER; CONSISTENT STANDARDS FOR NATIONAL, STATE MEMBER, AND 
STATE NONMEMBER BANKS.—Section 11(c)(5) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(c)(5)) is amended to read as follows: 
"(5) GROUNDS FOR APPOINTING CONSERVATOR OR RECEIVER.— 
The grounds for appointing a conservator or receiver (which 
may be the Corporation) for any insured depository institution 
are as follows: 
"(A) ASSETS INSUFFICIENT FOR OBLIGATIONS.—The institu-
tion's assets are less than the institution's obligations to its 
creditors and others, including members of the institution. 
"(B) SUBSTANTIAL DISSIPATION.—Substantial dissipation of 
assets or earnings due to— 
"(i) any violation of any statute or regulation; or 
"(ii) any unsafe or unsound practice. 
"(C) UNSAFE OR UNSOUND CONDITION.—An unsafe or un-
sound condition to transact business. 
"(D) CEASE AND DESIST ORDERS.—Any willful violation of a 
cease-and-desist order which has become final. 
"(E) CONCEALMENT.—Any concealment of the institu-
tion's books, papers, records, or assets, or any refusal to 
submit the institution's books, papers, records, or affairs for 
inspection to any examiner or to any lawful agent of the 
appropriate Federal banking agency or State bank or sav-
ings association supervisor. 
"(F) INABILITY TO MEET OBLIGATIONS.—The institution is 
likely to be unable to pay its obligations or meet its deposi-
tors' demands in the normal course of business. 
"(G) LOSSES.—The institution has incurred or is likely to 
incur losses that will deplete all or substantially all of its 
capital, and there is no reasonable prospect for the institu-
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2271 
» 
tion to become adequately capitalized (as defined in section 
38(b)) without Federal assistance. 
"(H) VIOLATIONS OF LAW.—Any violation of any law or 
regulation, or any unsafe or unsound practice or condition 
that is likely to— 
"(i) cause insolvency or substantial dissipation of 
assets or earnings; 
"(ii) weaken the institution's condition; or 
"(iii) otherwise seriously prejudice the interests of 
the institution's depositors or the deposit insurance 
fund. 
"(I) CONSENT.—The institution, by resolution of its board 
of directors or its shareholders or members, consents to the 
appointment. 
"(J) 
CESSATION OF INSURED STATUS.—The institution 
ceases to be an insured institution. 
"(K) 
UNDERCAPITALIZATION.—The 
institution 
-is 
undercapitalized (as defined in section 38(b)), and— 
"(i) has no reasonable prospect of becoming ade-
quately capitalized (as defined in that section); 
"(ii) fails to become adequately capitalized when re-
quired to do so under section 38(f)(2)(A); 
"(iii) fails to submit a capital restoration plan accept-
able to that agency within the time prescribed under 
section 38(e)(2)(D); or 
"(iv) materially fails to implement a capital restora-
tion plan submitted and accepted under section 38(e)(2). 
"(L) The institution— 
"(i) is critically undercapitalized, as defined in sec-
tion 38(b); or 
"(ii) otherwise has substantially insufficient capital.". 
(b) CONFORMING AMENDMENT TO AUTHORITY TO APPOINT RECEIVER 
FOR NATIONAL BANK.—Section 1 of the Act of June 30, 1876 (12 
U.S.C. 191) is amended to read as follows: 
"SECTION 1. The Comptroller of the Currency may, without prior 
notice or hearings, appoint the Federal Deposit Insurance Corpora-
tion as receiver for any national banking association if the 
Comptroller determines, in the Comptroller's discretion, that— 
"(1) 1 or more of the grounds specified in section 11(c)(5) of the 
Federal Deposit Insurance Act exist; or 
"(2) the association's board of directors consists of fewer than 
5 members.". 
(c) CONFORMING AMENDMENT TO THE BANK CONSERVATION ACT.— 
Section 203(a) of the Bank Conservation Act (12 U.S.C. 203(a)) is 
amended to read as follows: 
"(a) APPOINTMENT.—The Comptroller of the Currency may, with-
out prior notice or hearings, appoint a conservator (which may be 
the Federal Deposit Insurance Corporation) to the possession and 
control of a bank whenever the Comptroller of the Currency deter-
mines that 1 or more of the grounds specified in section 11(c)(5) of 
the Federal Deposit Insurance Act exist.". 
(d) CONFORMING AMENDMENTS TO THE HOME OWNERS' LOAN 
ACT.—Section 5(d)(2) of the Home Owners' Loan Act (12 U.S.C. 
1464(d)(2)) is amended— 
(1) by striking subparagraphs (A) through (D) and inserting 
the following: 
105 STAT. 2272 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(A) GROUNDS FOR APPOINTING CONSERVATOR OR RECEIVER 
FOR INSURED SAVINGS ASSOCIATION.—The Director of the 
Office of Thrift Supervision may appoint a conservator or 
receiver for any insured savings association if the Director 
determines, in the Director's discretion, that 1 or more of 
the grounds specified in section ll(cX5) of the Federal De-
posit Insurance Act exists"; and 
(2) by redesignating subparagraphs (E) through (I) as subpara-
graphs (B) through (F), respectively. 
(e) ADDITIONAL PROVISIONS RELATING TO APPOINTMENT OF CON-
SERVATOR OR RECEIVER.—Section ll(cX9) of the Federal Deposit 
Insureince Act (12 U.S.C. 1821(cX9)) is amended to read as follows: 
"(9) APPROPRIATE FEDERAL BANKING AGENCY MAY APPOINT COR-
PORATION AS CONSERVATOR OR RECEIVER FOR INSURED STATE 
DEPOSITORY INSTITUTION TO CARRY OUT SECTION 38.— 
"(A) I N GENERAL.—The appropriate Federal 
banking 
agency may appoint the Corporation as sole receiver (or, 
subject to paragraph (11), sole conservator) of any insured 
State depository institution, after consultation with the 
appropriate State supervisor, if the appropriate Federal 
banking agency determines that— 
"(i) 1 or more of the grounds specified in subpara-
graphs (K) and (L) of paragraph (5) exist with respect to 
that institution; and 
"(ii) the appointment is necessary to carry out the 
purpose of section 38. 
"(B) NONDELEGATION.—The appropriate Federal banking 
agency shall not delegate any action under 
subpara-
graph (A). 
"(10) CORPORATION MAY APPOINT ITSELF AS CONSERVATOR OR 
RECEIVER FOR INSURED DEPOSITORY INSTITUTION TO PREVENT LOSS 
TO DEPOSIT INSURANCE FUND.—The Board of Directors may ap-
point the Corporation as sole conservator or receiver of an 
insured depository institution, after consultation with the 
appropriate Federal banking agency and the appropriate State 
supervisor (if any), if the Board of Directors determines that— 
"(A) 1 or more of the grounds specified in any subpara-
graph of paragraph (5) exist with respect to the institution; 
and 
"(B) the appointment is necessary to reduce— 
"(i) the risk that the deposit insurance fund would 
incur a loss with respect to the insured depository 
institution, or 
"(ii) any loss that the deposit insurance fund is ex-
pected to incur with respect to that institution. 
"(11) APPROPRIATE FEDERAL BANKING AGENCY SHALL NOT AP-
POINT CONSERVATOR UNDER CERTAIN PROVISIONS WITHOUT GIVING 
CORPORATION OPPORTUNITY TO APPOINT RECEIVER.—The appro-
priate Federal banking agency shall not appoint a conservator 
for an insured depository institution under subparagraph (K) or 
(L) of paragraph (5) without the Corporation's consent unless 
the agency has given the Corporation 48 hours notice of the 
agency's intention to appoint the conservator and the grounds 
for the appointment. 
"(12) DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT 
OF CONSERVATOR OR RECEIVER.—The members of the board of 
directors of an insured depository institution shall not be liable 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2273 
to the institution's shareholders or creditors for acquiescing in 
or consenting in good faith to— 
"(A) the appointment of the Corporation or the Resolu-
tion Trust Corporation as conservator or receiver for that 
institution; or 
"(B) an 
acquisition 
or combination 
under 
section 
38(f)(2)(A)(iii). 
"(13) ADDITIONAL POWERS.—In any case in which the Corpora-
tion is appointed conservator or receiver under paragraph (4), 
(6), (9), or (10) for any insured State depository institution— 
"(A) subject to subparagraph (B), this section shall apply 
to the Corporation as conservator or receiver in the same 
manner and to the same extent as if that institution were a 
Federal depository institution for which the Corporation 
had been appointed conservator or receiver; 
"(B) the Corporation shall apply the law of the State in 
which the institution is chartered insofar as that law gives 
the claims of depositors priority over those of other credi-
tors or claimants; and 
"(C) the Corporation as receiver of the institution may— 
"(i) liquidate the institution in an orderly manner; 
and 
"(ii) make any other disposition of any matter 
concerning the institution, as the Corporation deter-
mines is in the best interests of the institution, the 
depositors of the institution, and the Corporation.". 
(f) CONFORMING AMENDMENT TO THE FEDERAL RESERVE ACT.— 
Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by 
adding at the end the following new subsection: 
"(p) 
AUTHORITY TO APPOINT CONSERVATOR OR RECEIVER.—The 
Board may appoint the Federal Deposit Insurance Corporation as 
conservator or receiver for a State member bank under section 
11(c)(9) of the Federal Deposit Insurance Act.". 
i 
(g) EFFECTIVE DATE.—The amendments made by this section shall ]
;
2
J
L
T
S
C 191 
become effective 1 year after the date of enactment of this Act. 
Subtitle E—Least-Cost Resolution 
SEC. 141. LEAST-COST RESOLUTION. 
(a) LEAST-COST RESOLUTIONS REQUIRED.— 
(1) IN GENERAL.—Section 13(c) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1823(c)) is amended— 
(A) by redesignating paragraphs (5), (6), (7), (8), and (9), as 
paragraphs (6), (7), (8), (9), and (10), respectively; 
(B) by redesignating subparagraph (B) of paragraph (4) as 
paragraph (5); and 
(C) by amending paragraph (4) (as amended by subpara-
graph (B) of this paragraph) to read as follows: 
"(4) LEAST-COST RESOLUTION REQUIRED.— 
"(A) IN GENERAL.—Notwithstanding any other provision 
of this Act, the Corporation may not exercise any authority 
under this subsection or subsection (d), (f), (h), (i), or (k) with 
respect to any insured depository institution unless— 
"(i) the Corporation determines that the exercise of 
such authority is necessary to meet the obligation of 
note. 
105 STAT. 2274 
PUBLIC LAW 102-242—DEC. 19, 1991 
the Corporation to provide insurance coverage for the 
insured deposits in such institution; and 
"(ii) the total amount of the expenditures by the 
Corporation and obUgations incurred by the Corpora-
tion (including any immediate and long-term obligation 
of the Corporation and any direct or contingent liabil-
ity for future payment by the Corporation) in connec-
tion with the exercise of any such authority with 
respect to such institution is the least costly to the 
deposit insurance fund of all possible methods for meet-
ing the Corporation's obligation under this section. 
"(B) DETERMINING LEAST COSTLY APPROACH.—In determin-
ing how to satisfy the Corporation's obligations to an 
institution's insured depositors at the least possible cost to 
the deposit insurance fund, the Corporation shall comply 
with the following provisions: 
"(i) 
PRESENT-VALUE 
ANALYSIS; 
DOCUMENTATION 
REQUIRED.—The Corporation shall— 
"(I) evaluate alternatives on a present-value 
basis, using a realistic discount rate; 
"(II) document that evaluation and the assump-
tions on which the evaluation is based, including 
any assumptions with regard to interest rates, 
asset recovery rates, asset holding costs, and pay-
ment of contingent liabilities; and 
"(III) retain the documentation for not less than 
5 years, 
"(ii) FOREGONE TAX REVENUES.—Federal tax revenues 
that the Government would forego as the result of a 
proposed transaction, to the extent reasonably as-
certainable, shall be treated as if they were revenues 
foregone by the deposit insurance fund. 
"(C) TIME OF DETERMINATION.— 
"(i) GENERAL RULE.—For purposes of this subsection, 
the determination of the costs of providing any assist-
ance under paragraph (1) or (2) or any other provision 
of this section with respect to any depository institution 
shall be made as of the date on which the Corporation 
makes the determination to provide such assistance to 
the institution under this section. 
"(ii) RULE FOR LIQUIDATIONS.—For purposes of this 
subsection, the determination of the costs of liquidation 
of any depository institution shall be made as of the 
earliest o
f
— 
"(I) the date on which a conservator is appointed 
for such institution; 
"(II) the date on which a receiver is appointed for 
such institution; or 
"(III) the date on which the Corporation makes 
any determination to provide any assistance under 
this section with respect to such institution. 
"(D) LIQUIDATION COSTS.—In determining the cost of liq-
uidating any depository institution for the purpose of 
comparing the costs under subparagraph (A) (with respect 
to such institution), the amount of such cost may not exceed 
the amount which is equal to the sum of the insured 
deposits of such institution as of the earliest of the dates 
date. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2275 
described in subparagraph (C), minus the present value of 
the total net amount the Corporation reasonably expects to 
receive from the disposition of the assets of such institution 
in connection with such liquidation. 
"(E) DEPOSIT INSURANCE FUNDS AVAILABLE FOR INTENDED 
PURPOSE ONLY.— 
"(i) IN GENERAL.—After December 31, 1994, or at 
such earlier time as the Corporation determines to be 
appropriate, the Corporation may not take any action, 
directly or indirectly, with respect to any insured 
depository institution that would have the effect of 
increasing losses to any insurance fund by protecting— 
"(I) depositors for more than the insured portion 
of deposits (determined without regard to whether 
such institution is liquidated); or 
"(II) creditors other than depositors. 
"(ii) DEADLINE FOR REGULATIONS.—The Corporation 
Effective 
shall prescribe regulations to implement clause (i) not 
later than January 1, 1994, and the regulations shall 
take effect not later than January 1,1995. 
"(iii) PURCHASE AND ASSUMPTION TRANSACTIONS.—No 
provision of this subparagraph shall be construed as 
prohibiting the Corporation from allowing any person 
who acquires any assets or assumes any liabilities of 
any insured depository institution for which the Cor-
poration has been appointed conservator or receiver to 
acquire uninsured deposit liabilities of such institution 
so long as the insurance fund does not incur any loss 
with respect to such deposit liabilities in an amount 
greater than the loss which would have been incurred 
with respect to such liabilities if the institution had 
been liquidated. 
"(F) DISCRETIONARY DETERMINATIONS.—Any determina-
tion 
which the 
Corporation 
may 
make 
under 
this 
paragraph shall be made in the sole discretion of the Cor-
poration. 
"(G) SYSTEMIC RISK.— 
"(i) EMERGENCY DETERMINATION BY SECRETARY OF THE 
TREASURY.—Notwithstanding subparagraphs (A) and 
(E), if, upon the written recommendation of the Board 
of Directors (upon a vote of not less than two-thirds of 
the members of the Board of Directors) and the Board 
of Governors of the Federal Reserve System (upon a 
vote of not less than two-thirds of the members of such 
Board), the Secretary of the Treasury (in consultation 
with the President) determines that— 
"(I) the Corporation's compliance with subpara-
graphs (A) and (E) with respect to an insured 
depository institution would have serious adverse 
effects on economic conditions or financial stabil-
ity; and 
"(II) any action or assistance under this subpara-
graph would avoid or mitigate such adverse effects, 
« 
the Corporation may take other action or provide 
assistance under this section as necessary to avoid or 
mitigate such effects. 
105 STAT. 2276 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(ii) REPAYMENT OF LOSS.—The Corporation shall re-
cover the loss to the appropriate insurance fund arising 
from any action taken or assistance provided with 
respect to an insured depository institution under 
clause (i) expeditiously from 1 or more emergency spe-
cial assessments on the members of the insurance fund 
(of which such institution is a member) equal to the 
product of— 
"(I) an assessment rate established by the Cor-
poration; and 
"(11) the amount of each member's average total 
assets during the semiannual period, minus the 
sum of the amount of the member's average total 
tangible equity and the amount of the member's 
average total subordinated debt, 
"(iii) DOCUMENTATION REQUIRED.—The Secretary of 
the Treasury shall— 
"(I) document any determination under clause 
(i); and 
"(II) retain the documentation for review under 
clause (iv). 
Reports. 
"(iv) GAO REVIEW.—The Comptroller General of the 
United States shall review and report to the Congress 
on any determination under clause (i), including— 
"(I) the basis for the determination; 
"(II) the purpose for which any action was taken 
pursuant to such clause; and 
"(III) the likely effect of the determination and 
such action on the incentives and conduct of in-
sured depository institutions and uninsured deposi-
tors. 
"(v) NOTICE.— 
"(I) IN GENERAL.—The Secretary of the Treasury 
shall provide written notice of any determination 
under clause (i) to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the 
Committee on Banking, Finance and Urban Affairs 
of the House of Representatives. 
"(II) DESCRIPTION OF BASIS OF DETERMINATION.— 
The notice under subclause (I) shall include a 
description of the basis for any determination 
under clause (i). 
"(H) 
RULE OF CONSTRUCTION.—No provision of 
law 
shall be construed as permitting the Corporation to 
take any action prohibited by paragraph (4) unless such 
provision expressly provides, by direct reference to this 
paragraph, that this paragraph shall not apply with 
respect to such action.". 
12 use 1823 
(2) ANNUAL GAO COMPLIANCE AUDIT.—The Comptroller Gen-
^°*®- 
eral of the United States shall annually audit the Federal 
Deposit Insurance Corporation and the Resolution Trust Cor-
poration to determine the extent to which such corporations are 
complying with section 13(c)(4) of the Federal Deposit Insurance 
Act. 
(3) CLARIFICATION OF MANNER OF APPLICATION TO THE RTC.— 
Section 21 
A(b)(4) of the Federal Home Loan Bank Act (12 U.S.C. 
1441a(b)(4)) is amended— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2277 
(A) by striking 
"POWERS.—Except as" and inserting 
"POWERS.— 
"(A) I N GENERAL.—Except as"; and 
* 
(B) by adding at the end the following new subparagraph: 
"(B) 
M A N N E R OF APPLICATION OF LEAST-COST RESOLU-
TION.—For purposes of applying section 13(c)(4) of the Fed-
eral Deposit Insurance Act to the Corporation 
under 
subparagraph (A), the Corporation shall be treated as the 
affected deposit insurance fund.". 
(b) SECURED CLAIMS IN EXCESS OF VALUE OF COLLATERAL.—Section 
11(d)(5)(D) of the Federal 
Deposit 
Insurance Act (12 U.S.C. 
1821(d)(5)(D)) is amended to read as follows: 
"(D) AUTHORITY TO DISALLOW CLAIMS.— 
"(i) I N GENERAL.—The receiver may disallow any 
portion of any claim by a creditor or claim of security, 
preference, or priority which is not proved to the satis-
faction of the receiver. 
"(ii) PAYMENTS TO LESS THAN FULLY SECURED CREDI-
TORS.—In the case of a claim of a creditor against an 
insured depository institution which is secured by any 
property or other asset of such institution, any receiver 
appointed for any insured depository institution— 
"(I) may treat the portion of such claim which 
exceeds an amount equal to the fair market value 
of such property or other asset as an unsecured 
claim against the institution; and 
"(II) may not make any payment with respect to 
such unsecured portion of the claim other than in 
connection with the disposition of all claims of 
unsecured creditors of the institution. 
"(iii) EXCEPTIONS.—No provision of this paragraph 
shall apply with respect to— 
"(I) any extension of credit from any Federal 
home loan bank or Federal Reserve bank to any 
institution described in paragraph (3)(A); or 
"(II) any security interest in the assets of the 
institution securing any such extension of credit.". 
(c) DATA COLLECTIONS.—Section 7(a)(8) of the Federal 
Deposit 
Insurance Act (12 U.S.C. 1817(a)(8)) is amended to read as follows: 
"(8) DATA COLLECTIONS.—In addition to or in connection with 
any other report required under this subsection, the Corpora-
tion shall take such action as may be necessary to ensure that— 
"(A) each insured depository institution maintains; and 
"(B) the Corporation receives on a regular basis from 
such institution, 
information on the total amount of all insured deposits, pre-
ferred deposits, and uninsured deposits at the institution.". 
(d) INDUSTRY IMPACT ANALYSIS REQUIRED.— 
(1) I N GENERAL.—Section 11(h) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821(h)) is amended by adding at the end the 
following new paragraph: 
"(4) FINANCIAL SERVICES INDUSTRY IMPACT ANALYSIS.—After 
the appointment of the Corporation as conservator or receiver 
for any insured depository institution and before taking any 
action under this section or section 13 in connection with the 
resolution of such institution, the Corporation shall— 
105 STAT. 2278 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(A) evaluate the likely impact of the means of resolu-
tion, and any action which the Corporation may take in 
connection with such resolution, on the viability of other 
insured depository institutions in the same community; and 
"(B) take such evaluation into account in determining the 
means for resolving the institution and establishing the 
terms and conditions for any such action.". 
(2) CLERICAL AMENDMENT.—The heading for section 11(h) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(h)) is 
amended by striking "LIQUIDATION" and inserting "RESOLU-
TION". 
(e) ASSISTANCE BEFORE APPOINTMENT OF CONSERVATOR OR RE-
CEIVER.—Section 13(c) of the Federal Deposit Insurance Act (12 
U.S.C. 1823(c)) is amended by redesignating paragraphs (8), (9), and 
(10) (as so redesignated by subsection (a)(1)(A) of this section), as 
paragraphs (9), (10), and (11), respectively, and by inserting after 
paragraph (7) the following new paragraph: 
"(8) ASSISTANCE BEFORE APPOINTMENT OF CONSERVATOR OR RE-
CEIVER.— 
"(A) IN GENERAL.—Subject to the least-cost provisions of 
paragraph (4), the Corporation shall consider providing 
direct financial assistance under this section for depository 
institutions before the appointment of a conservator or 
receiver for such institution only under the following cir-
cumstances: 
"(i) TROUBLED CONDITION CRITERIA.—The Corporation 
determines— 
"(I) grounds for the appointment of a conservator 
or receiver exist or likely will exist in the future 
unless the depository institution's capital levels 
are increased; and 
"(II) it is unlikely that the institution can meet 
all currently applicable capital standards without 
assistance, 
"(ii) OTHER CRITERIA.—The depository institution 
meets the following criteria: 
"(I) The appropriate Federal banking agency and 
the Corporation have determined that, during such 
period of time preceding the date of such deter-
mination as the agency or the Corporation consid-
ers to be relevant, the institution's management 
has been competent and has complied with ap-
plicable laws, rules, and supervisory directives and 
orders. 
"(II) The institution's management did not 
engage in any insider dealing, speculative practice, 
or other abusive activity. 
Federal 
"(B) PuBLic DISCLOSURE.—Any determination under this 
Register, 
paragraph to provide assistance under this section shall be 
publication. 
made in writing and published in the Federal Register.". 
(f) DEFINITIONS.—Section 3(m) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(m)) is amended by adding at the end the follow-
ing new paragraphs: 
"(3) UNINSURED DEPOSITS.—The term 'uninsured deposit' 
means the amount of any deposit of any depositor at any 
insured depository institution in excess of the amount of the 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2279 
insured deposits of such depositor (if any) at such depository 
institution. 
"(4) PREFERRED DEPOSITS.—The term 'preferred deposits' 
means deposits of any public unit (as defined in paragraph (1)) 
at any insured depository institution which are secured or 
collateralized as required under State law.". 
SEC. 142. FEDERAL RESERVE DISCOUNT WINDOW ADVANCES. 
(a) REDESIGNATING SECTIONS 10(a) AND 10(b) OF THE FEDERAL RE-
SERVE ACT.—The Federal Reserve Act (12 U.S.C. 221 et seq.) is 
amended— 
(1) by redesignating section 10(a) (12 U.S.C. 347a) as section 
lOA; and 
(2) by redesignating section 10(b) (12 U.S.C. 347b) as section 
lOB. 
(b) LIMITATIONS ON LIQUIDITY LENDING FOR DEPOSIT INSURANCE 
PURPOSES.—Section lOB of the Federal Reserve Act (as redesignated 
by subsection (a)) is amended— 
(1) by striking "Any Federal Reserve bank" and inserting "(a) 
IN GENERAL.—Any Federal Reserve bank"; and 
(2) by adding at the end the following: 
"(b) LIMITATIONS ON ADVANCES.— 
"(1) LIMITATION ON EXTENDED PERIODS.—Except as provided in 
paragraph (2), no advances to any undercapitalized depository 
institution by any Federal Reserve bank under this section may 
be outstanding for more than 60 days in any 120-day period. 
"(2) VIABILITY EXCEPTION.— 
"(A) IN GENERAL.—If— 
"(i) the head of the appropriate Federal banking 
agency certifies in advance in writing to the Federal 
Reserve bank that any depository institution is viable; 
or 
"(ii) the Board conducts an examination of any 
depository institution and the Chairman of the Board 
certifies in writing to the Federal Reserve bank that 
the institution is viable, 
the limitation contained in paragraph (1) shall not apply 
during the 60-day period beginning on the date such certifi-
cation is received. 
"(B) EXTENSIONS OF PERIOD.—The 60-day period may be 
extended for additional 60-day periods upon receipt by the 
Federal Reserve bank of additional written certifications 
under subparagraph (A) with respect to each such addi-
tional period. 
"(C) AUTHORITY TO ISSUE A CERTIFICATE OF VIABILITY MAY 
NOT BE DELEGATED.—The authority of the head of any 
agency to issue a written certification of viability under this 
paragraph may not be delegated to any other person. 
"(D) EXTENDED ADVANCES SUBJECT TO PARAGRAPH (3).— 
Notwithstanding paragraph (1), an undercapitalized deposi-
tory institution which does not have a certificate of viability 
in effect 
under this paragraph may have advances 
outstanding for more than 60 days in any 120-day period if 
the Board elects to treat— 
"(i) such institution as critically undercapitalized 
under paragraph (3); and 
105 STAT. 2280 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(ii) any such advance as an advance described in 
subparagraph (A)(i) of paragraph (3). 
"(3) ADVANCES TO CRITICALLY UNDERCAPITALIZED DEPOSITORY 
INSTITUTIONS.— 
"(A) LiABiUTY F
O
R INCREASED LOSS.—Notwithstanding 
any other provision of this section, if— 
"(i) in the case of any critically undercapitalized 
depository institution— 
"(I) any advance under this section to such 
institution is outstanding without payment having 
been demanded as of the end of the 5-day period 
beginning on the date the institution becomes a 
critically undercapitalized depository institution; 
or 
"(11) any new advance is made to such institution 
under this section after the end of such period; and 
"(ii) after the end of that 5-day period, any deposit 
insurance fund in the Federal Deposit Insurance Cor-
poration incurs a loss exceeding the loss that the Cor-
poration would have incurred if it had liquidated that 
institution as of the end of that period, 
the Board shall, subject to the limitations in subparagraph 
(B), be liable to the Federal Deposit Insurance Corporation 
for the excess loss, without regard to the terms of the 
advance or any collateral pledged to secure the advance. 
"(B) LIMITATION ON EXCESS LOSS.—The liability of the 
Board under subparagraph (A) shall not exceed the lesser of 
the following: 
"(i) The amount of the loss the Board or any Federal 
Reserve bank would have incurred on the increases in 
the amount of advances made after the 5-day period 
referred to in subparagraph (A) if those increased ad-
vances had been unsecured. 
"(ii) The interest received on the increases in the 
amount of advances made after the 5-day period re-
ferred to in subparagraph (A). 
"(C) FEDERAL RESERVE TO PAY OBUGATION.—The Board 
shall pay the Federal Deposit Insurance Corporation the 
amount of any liability of the Board under subparagraph 
(A). 
"(D) REPORT.—The Board shall report to the Congress on 
any excess loss liability it incurs under subparagraph (A), 
as limited by subparagraph (B)(i), and the reasons therefore, 
not later than 6 months after incurring the liability. 
"(4) No OBLIGATION TO MAKE ADVANCES.—A Federal Reserve 
bank shall have no obligation to make, increase, renew, or 
extend any advance or discount under this Act to any depository 
institution. 
"(5) DEFINITIONS.— 
"(A) APPROPRIATE FEDERAL BANKING AGENCY.—The term 
'appropriate Federal banking agency' has the same mean-
ing as in section 3 of the Federal Deposit Insurance Act. 
"(B) CRITICALLY UNDERCAPITALIZED.—The term 'critically 
undercapitalized' has the same meaning as in section 38 of 
the Federal Deposit Insurance Act. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2281 
"(C) 
DEPOSITORY 
INSTITUTION.—The 
term 
'depository 
institution' has the same meaning as in section 3 of the 
Federal Deposit Insurance Act. 
"(D) 
UNDERCAPITALIZED DEPOSITORY 
INSTITUTION.—The 
term 'undercapitalized depository institution' means any 
depository institution which— 
"(i) is undercapitalized, as defined in section 38 of the 
Federal Deposit Insurance Act; or 
"(ii) has a composite CAMEL rating of 5 under the 
Uniform Financial Institutions Rating System (or an 
equivalent rating by any such agency under a com-
parable rating system) as of the most recent examina-
tion of such institution. 
"(E) VIABLE.—A depository institution is 'viable' if the 
Board or the appropriate Federal banking agency deter-
mines, giving due regard to the economic conditions and 
circumstances in the market in which the institution oper-
ates, that the institution— 
"(i) is not critically undercapitalized; 
"(ii) 
is 
not 
expected 
to 
become 
critically 
undercapitalized; and 
"(iii) is not expected to be placed in conservatorship 
or receivership.". 
(c) BOARD'S AUTHORITY T O EXAMINE DEPOSITORY INSTITUTIONS AND 
AFFILIATES.—Section 11 of the Federal Reserve Act is amended by 12USC248. 
adding at the end the following: 
"(n) To examine, at the Board's discretion, any depository institu-
tion, and any affiliate of such depository institution, in connection 
with any advance to, any discount of any instrument for, or any 
request for any such advance or discount by, such depository institu-
tion under this Act.". 
(d) EFFECTIVE DATE.—The amendment made by subsection (b) 12 USC 347b 
shall take effect at the end of the 2-year period beginning on the ^°*®-
date of enactment of this Act. 
(e) CONFORMING AMENDMENTS REDESIGNATING SECTIONS 13a, 25(a), 
AND 25(b) OF THE FEDERAL RESERVE AcT.—The Federal Reserve Act 
(12 U.S.C. 221 et seq.) is amended— 
(1) by redesignating section 13a as section 13A; 
12 USC 348-352. 
(2) by redesignating section 25(a) as section 25A; and 
12 USC 611 
(3) by redesignating section 25(b) as section 25B. 
t o*f?o 
12 USC 632. 
SEC. 143. EARLY RESOLUTION. 
12 USC 1823 
(a) I N GENERAL.—It is the sense of the Congress that the Federal 
banking agencies should facilitate early resolution of troubled in-
sured depository institutions whenever feasible if early resolution 
would have the least possible long-term cost to the deposit insurance 
fund, consistent with the least-cost and prompt corrective action 
provisions of the Federal Deposit Insurance Act. 
(b) GENERAL PRINCIPLES.—In encouraging the Federal banking 
agencies to pursue early resolution strategies, the Congress con-
templates that any resolution transaction under section 13(c) of that 
Act would observe the following general principles: 
(1) COMPETITIVE NEGOTIATION.—The transaction should 
be 
negotiated competitively, taking into account the value of 
expediting the process. 
(2) RESULTING INSTITUTION ADEQUATELY CAPITALIZED.—Any in-
sured depository institution created or assisted in the trans-
note. 
105 STAT. 2282 
PUBLIC LAW 102-242—DEC. 19, 1991 
action (hereafter the "resulting institution") and any institution 
acquiring the troubled institution should meet all applicable 
minimum capital standards. 
(3) 
SUBSTANTIAL 
PRIVATE 
INVESTMENT.—The 
transaction 
should involve substantial private investment. 
(4) CONCESSIONS.—Preexisting owners and debtholders of any 
troubled institution or its holding company should make 
substantial concessions. 
(5) QUALIFIED MANAGEMENT.—Directors and senior manage-
ment of the resulting institution should be qualified to perform 
their duties, and should not include individuals substantially 
responsible for the troubled institution's problems. 
(6) FDIC's PARTICIPATION.—The transaction should give the 
Federal Deposit Insurance Corporation an opportunity to 
participate in the success of the resulting institution. 
(7) STRUCTURE OF TRANSACTION.—The transaction should, 
insofar as practical, be structured so that— 
(A) the Federal Deposit Insurance Corporation— 
(i) does not acquire a significant proportion of the 
troubled institution's problem assets; 
(ii) succeeds to the interests of the troubled institu-
tion's preexisting owners and debtholders in proportion 
to the assistance the Corporation provides; and 
(iii) limits the Corporation's assistance in term and 
amount; and 
(B) new investors share risk with the Corporation. 
(c) REPORT.—Two years after the date of enactment of this Act, the 
Federal Deposit Insurance Corporation shall submit a report to 
Congress analyzing the effect of early resolution on the deposit 
insurance funds. 
Subtitle F—Federal Insurance for State 
Chartered Depository Institutions 
SEC. 151. DEPOSITORY INSTITUTIONS LACKING FEDERAL DEPOSIT INSUR-
ANCE. 
(a) ANNUAL INDEPENDENT AUDIT OF PRIVATE DEPOSIT INSURER; 
DISCLOSURE BY INSTITUTIONS LACKING FEDERAL DEPOSIT INSUR-
ANCE.— 
(1) IN GENERAL.—The Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.), as amended by the preceding provisions of 
this Act, is further amended by adding at the end the following 
new section: 
12 use 1831t. 
"SEC. 40. DEPOSITORY INSTITUTIONS LACKING FEDERAL DEPOSIT INSUR-
ANCE. 
"(a) ANNUAL INDEPENDENT AUDIT OF PRIVATE DEPOSIT INSURERS.— 
"(1) AUDIT REQUIRED.—Any private deposit insurer shall 
obtain an annual audit from an independent auditor using 
generally accepted auditing standards. The audit shall include a 
determination of whether the private deposit insurer follows 
generally accepted accounting principles and has set aside suffi-
cient reserves for losses. 
"(2) PROVIDING COPIES OF AUDIT REPORT.— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2283 
"(A) PRIVATE 
DEPOSIT INSURER.—The private deposit 
insurer shall provide a copy of the audit report— 
"(i) to each depository institution the deposits of 
which are insured by the private deposit insurer, not 
later than 14 days after the audit is completed; and 
"(ii) to the appropriate supervisory agency of each 
State in which such an institution receives deposits, not 
later than 7 days after the audit is completed. 
"(B) DEPOSITORY INSTITUTION.—Any depository institution 
the deposits of which are insured by the private deposit 
insurer shall provide a copy of the audit report, upon 
request, to any current or prospective customer of the 
institution. 
"(b) DISCLOSURE REQUIRED.—Any depository institution lacking 
Federal deposit insurance shall, within the United States, do the 
following: 
"(1) 
PERIODIC 
STATEMENTS; 
ACCOUNT 
RECORDS.—Include 
conspicuously in all periodic statements of account, on each 
signature card, and on each passbook, certificate of deposit, or 
similar instrument evidencing a deposit a notice that the 
institution is not federally insured, and that if the institution 
fails, the Federal Government does not guar;antee that deposi-
tors will get back their money. 
"(2) ADVERTISING; PREMISES.—Include conspicuously in all 
advertising and at each place where deposits are normally 
received a notice that the institution is not federally insured. 
"(3) ACKNOWLEDGMENT OF RISK.—Receive deposits only for the 
account of persons who have signed a written acknowledgment 
that the institution is not federally insured, and that if the 
institution fails, the Federal Government does not guarantee 
that they will get back their money. 
"(c) MANNER AND CONTENT OF DISCLOSURE.—To ensure that cur-
rent and prospective customers understand the risks involved in 
foregoing Federal deposit insurance, the Federal Trade Commission, 
by regulation or order, shall prescribe the manner and content of 
disclosure required under this section. 
"(d) EXCEPTIONS FOR INSTITUTIONS NOT RECEIVING RETAIL DE-
POSITS.—The Federal Trade Commission may, by regulation or 
order, make exceptions to subsection (b) for any depository institu-
tion that, within the United States, does not receive initial deposits 
of less than $100,000 from individuals who are citizens or residents 
of the United States, other than money received in connection with 
any draft or similar instrument issued to transmit money. 
"(e) ELIGIBILITY FOR FEDERAL DEPOSIT INSURANCE.— 
"(1) IN GENERAL.—Except as permitted by the Federal Trade 
Commission, in consultation with the Federal Deposit Insurance 
Corporation, no depository institution (other than a bank, 
including an unincorporated bank) lacking Federal deposit 
insurance may use the mails or any instrumentality of inter-
state commerce to receive or facilitate receiving deposits, unless 
the appropriate supervisor of the State in which the institution 
is chartered has determined that the institution meets all eligi-
bility requirements for Federal deposit insurance, including— 
"(A) in the case of an institution described in section 
19(b)(l)(A)(iv) of the Federal Reserve Act, all eligibility 
requirements set forth in the Federal Credit Union Act and 
105 STAT. 2284 
PUBLIC LAW 102-242—DEC. 19, 1991 
regulations of the National Credit Union Administration; 
and 
"(B) in the case of any other institution, all eligibility 
requirements set forth in this Act and regulations of the 
Corporation. 
"(2) AUTHORITY OF FDIC AND NCUA NOT AFFECTED.—No deter-
mination under paragraph (1) shall bind, or otherwise affect the 
authority of, the National Credit Union Administration or the 
Corporation. 
"(f) DEFINITIONS.—For purposes of this section: 
"(1) APPROPRIATE SUPERVISOR.—The 'appropriate supervisor' 
of a depository institution means the agency primarily respon-
sible for supervising the institution. 
"(2) DEPOSITORY INSTITUTION.—The term 'depository institu-
tion' includes— 
"(A) any entity described in section 19(b)(l)(A)(iv) of the 
Federal Reserve Act; and 
"(B) any entity that, as determined by the Federal Trade 
Commission— 
"(i) is engaged in the business of receiving deposits; 
and 
"(ii) could reasonably be mistaken for a depository 
institution by the entity's current or prospective cus-
tomers. 
"(3) LACKING FEDERAL DEPOSIT INSURANCE.—A depository 
institution lacks Federal deposit insurance if the institution is 
not either— 
"(A) an insured depository institution; or 
"(B) an insured credit union, as defined in section 101 of 
the Federal Credit Union Act. 
"(4) PRIVATE DEPOSIT INSURER.—The term 'private deposit 
insurer' means any entity insuring the deposits of any deposi-
tory institution lacking Federal deposit insurance. 
"(g) ENFORCEMENT.—Compliance with the requirements of this 
section, and any regulation prescribed or order issued under this 
section, shall be enforced under the Federal Trade Commission Act 
by the Federal Trade Commission.". 
12 use I83lt 
(2) EFFECTIVE DATES.—Section 40 of the Federal Deposit Insur-
"°*®- 
ance Act (as added by paragraph (1)) shall become effective on 
the date of enactment of this Act, except that— 
(A) paragraphs (1) and (2) of subsection (b) shall become 
effective 1 year after the date of enactment of this Act; 
(B) during the period beginning 1 year after that date of 
enactment of this Act and ending 30 months after that date 
of enactment, subsection (b)(1) shall apply with ", and that 
if the institution fails, the Federal Government does not 
guarantee that depositors will get back their money" 
omitted; 
(C) subsection (e) shall become effective 2 years after that 
date of enactment; and 
(D) subsection (b)(3) shall become effective 30 months 
after that date of enactment. 
12 u s e 1831e 
(3) CONFORMING AMENDMENT TO FEDERAL DEPOSIT INSURANCE 
"°*®- 
ACT.—Effective 1 year after the date of enactment of this Act, 
section 28 of the Federal Deposit Insurance Act (12 U.S.C. 1831e) 
is amended— 
(A) by striking subsection (h); and 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2285 
(B) by redesignating subsection (i) as subsection (h). 
(b) VIABILITY OF PRIVATE DEPOSIT INSURERS.— 
12 use I83lt 
(1) DEADLINE FOR INITIAL INDEPENDENT AUDIT.—The initial "°*®-
annual audit under section 40(a)(1) of the Federal Deposit Insur-
ance Act (as added by subsection (a)) shall be completed not 
later than 120 days after the date of enactment of this Act. 
(2) BUSINESS PLAN REQUIRED.—Not later than 240 days after 
the date of enactment of this Act, any private deposit insurer 
shall provide a business plan to each appropriate supervisor of 
each State in which deposits are received by any depository 
institution lacking Federal deposit insurance the deposits of 
which are insured by a private deposit insurer. The business 
plan shall explain in detail why the private deposit insurer is 
viable, and shall, at a minimum— 
(A) describe the insurer's— 
(i) underwriting standards; 
(ii) resources, including trends in and forecasts of 
assets, income, and expenses; 
(iii) risk-management program, including examina-
tion and supervision, problem case resolution, and rem-
edies; and 
(B) include, for the preceding 5 years, copies of annual 
audits, annual reports, and annual meeting agendas and 
minutes. 
(3) DEFINITIONS.—For purposes of this subsection, the terms 
"appropriate supervisor", "deposit", "depository institution", 
and "lacking Federal deposit insurance" have the same mean-
ing as in section 40(f) of the Federal Deposit Insurance Act (as 
added by subsection (a)). 
Subtitle G—Technical Corrections 
SEC. 161. TECHNICAL CORRECTIONS AND CLARIFICATIONS. 
(a) SECTION 11 OF THE FEDERAL DEPOSIT INSURANCE ACT.—Section 
11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is 
amended— 
(1) in subsection (d)(3)(A), by striking "(4)(A)" and inserting 
"(4)"; 
(2) in subsection (dXll)(B), by striking "(14)(C)" and inserting 
"(15)(B)"; 
(3) in subsection (e)(3)(C)(ii), by striking "subsection (k)" and 
inserting "subsection (i)"; 
(4) in subsection (e)(4)(B)(iii), by striking "subsection (k)" and 
inserting "subsection (i)"; 
(5) in subparagraphs (A) and (E) of subsection (e)(8), by strik-
ing "subsections (d)(9) and (i)(4)(I)" and inserting "subsection 
(d)(9)"; 
(6) in subsection (nX9), by striking "(13)" and inserting "(12)"; 
and 
(7) in subsection (n)(ll)(D), by striking "(8)" and inserting 
"(9)". 
(b) CLARIFICATION OF F D I C POWERS IN F S L I C RESOLUTION FUND 
CONSERVATORSHIPS AND RECEIVERSHIPS.—Section llA(a) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1821a(a)) is amended by adding 
at the end the following new paragraphs: 
' 
105 STAT. 2286 
PUBLIC LAW 102-242—DEC. 19, 1991 
Effective date. 
"(4) RIGHTS, POWERS, AND DUTIES.—Effective August 10, 1989, 
the Corporation shall have all rights, powers, and duties to 
carry out the Corporation's duties with respect to the assets and 
liabilities of the FSLIC Resolution Fund that the Corporation 
otherwise has under this Act. 
"(5) CORPORATION AS CONSERVATOR OR RECEIVER.— 
"(A) IN GENERAL.—Effective August 10, 1989, the Cor-
poration shall succeed the Federal Savings and Loan Insur-
ance Corporation as conservator or receiver with respect to 
any depository institution— 
"(i) the accounts of which were insured before August 
10, 1989 by the Federal Savings and Loan Insurance 
Corporation; and 
"(ii) for which a conservator or receiver was ap-
pointed before January 1,1989. 
"(B) RIGHTS, POWERS, AND DUTIES.—When acting as con-
servator or receiver with respect to any depository institu-
tion described in subparagraph (A), the Corporation shall 
have all rights, powers, and duties that the Corporation 
otherwise has as conservator or receiver under this Act.". 
(c) CLERICAL AMENDMENT TO SUBSECTION HEADING.—The heading 
for section 3(w) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(w)) is amended by striking "HOLDING COMPANIES" and insert-
ing "AFFILIATES OF DEPOSITORY INSTITUTIONS". 
(d) FDIC REMOVAL PERIOD MADE CONSISTENT WITH R T C PERIOD.— 
Section 9(b)(2)(B) of the Federal Deposit Insurance Act (12 U.S.C. 
181903)(2)(B)) is amended by inserting "before the end of the 90-day 
period beginning on the date the action, suit, or proceeding is filed 
against the Corporation or the Corporation is substituted as a party" 
before the period. 
(e) CLARIFICATION OF FDIC AUTHORITY TO PAY DE MINIMUS 
CLAIMS.—The second sentence of section ll(i)(3)(A) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(i)(3)(A)) is amended by strik-
ing "The" and inserting "Notwithstanding any other provision of 
Federal or State law, or the constitution of any State, the". 
(f) CLERICAL AMENDMENT TO SECTION HEADING.— 
(1) The heading for section 219 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 is amended by 
s t r i k i n g "FROM TAXATION". 
(2) The table of contents for the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 is amended by 
striking "from taxation" in the item relating to section 219. 
TITLE II—REGULATORY IMPROVEMENT 
Foreign Bank 
Supervision 
Enhancement 
Act of 1991. 
12 u s e 3101 
note. 
Subtitle A—Regulation of Foreign Banks 
SEC. 201. SHORT TITLE. 
This subtitle may be cited as the 
Enhancement Act of 1991". 
'Foreign Bank Supervision 
SEC. 
202. 
REGULATION 
OF 
FOREIGN 
BANK 
OPERATIONS. 
(a) ESTABLISHMENT AND TERMINATION OF FOREIGN BANK OFFICES 
IN THE UNITED STATES.—Section 7 of the International Banking Act 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2287 
of 1978 (12 U.S.C. 3105) is amended by striking subsection (d) and 
inserting the following new subsections: 
"(d) ESTABLISHMENT OF FOREIGN BANK OFFICES IN THE UNITED 
STATES.— 
"(1) PRIOR APPROVAL REQUIRED.—No foreign bank may estab-
lish a branch or an agency, or acquire ownership or control of a 
commercial lending company, without the prior approval of the 
Board. 
"(2) REQUIRED STANDARDS FOR APPROVAL.—The Board may not 
approve an application under paragraph (1) unless it determines 
that— 
"(A) the foreign bank engages directly in the business of 
banking outside of the United States and is subject to 
comprehensive supervision or regulation on a consolidated 
basis by the appropriate authorities in its home country; 
and 
"(B) the foreign bank has furnished to the Board the 
information it needs to adequately assess the application. 
"(3) STANDARDS FOR APPROVAL.—In acting on any application 
under paragraph (1), the Board may take into account— 
"(A) whether the appropriate authorities in the home 
country of the foreign bank have consented to the proposed 
establishment of a branch, agency or commercial lending 
company in the United States by the foreign bank; 
"(B) the financial and managerial resources of the foreign 
bank, including the bank's experience and capacity to 
engage in international banking; 
"(C) whether the foreign bank has provided the Board 
with adequate assurances that the bank will make avail-
able to the Board such information on the operations or 
activities of the foreign bank and any affiliate of the bank 
that the Board deems necessary to determine and enforce 
compliance with this Act, the Bank Holding Company Act 
of 1956, and other applicable Federal law; and 
"(D) whether the foreign bank and the United States 
affiliates of the bank are in compliance with applicable 
United States law. 
"(4) FACTOR.—In acting on an application under paragraph 
(1), the Board shall not make the size of the foreign bank the 
sole determinant factor, and may take into account the needs of 
the community as well as the length of operation of the foreign 
bank and its relative size in its home country. Nothing in this 
paragraph shall affect the ability of the Board to order a State 
branch, agency, or commercial lending company subsidiary to 
terminate its activities in the United States pursuant to any 
standard set forth in this Act. 
"(5) ESTABLISHMENT OF CONDITIONS.—Consistent with the 
standards for approval in paragraph (2), the Board may impose 
such conditions on its approval under this subsection as it 
deems necessary. 
"(e) TERMINATION OF FOREIGN BANK OFFICES IN THE UNITED 
STATES.— 
"(1) STANDARDS FOR TERMINATION.—The Board, after notice 
and opportunity for hearing and notice to any appropriate State 
bank supervisor, may order a foreign bank that operates a State 
branch or agency or commercial lending company subsidiary in 
105 STAT. 2288 
PUBLIC LAW 102-242—DEC. 19, 1991 
the United States to terminate the activities of such branch, 
agency, or subsidiary if the Board finds that— 
"(A) the foreign bank is not subject to comprehensive 
supervision or regulation on a consolidated basis by the 
appropriate authorities in its home country; or 
"(B)(i) there is reasonable cause to believe that such 
foreign bank, or any affiliate of such foreign bank, has 
committed a violation of law or engaged in an unsafe or 
unsound banking practice in the United States; and 
"(ii) as a result of such violation or practice, the contin-
ued operation of the foreign bank's branch, agency or 
commercial lending company subsidiary in the United 
States would not be consistent with the public interest or 
with the purposes of this Act, the Bank Holding Company 
Act of 1956, or the Federal Deposit Insurance Act. 
However, in making findings under this paragraph, the Board 
shall not make size the sole determinant factor, and may take 
into account the needs of the community as well as the length of 
operation of the foreign bank and its relative size in its home 
country. Nothing in this paragraph shall affect the ability of the 
Board to order a State branch, agency, or commercial lending 
company subsidiary to terminate its activities in the United 
States pursuant to any standard set forth in this Act. 
"(2) DISCRETION TO DENY HEARING.—The Board may issue an 
order under paragraph (1) without providing for an opportunity 
for a hearing if the Board determines that expeditious action is 
necessary in order to protect the public interest. 
"(3) EFFECTIVE DATE OF TERMINATION ORDER.—An order issued 
under paragraph (1) shall take effect before the end of the 120-
day period beginning on the date such order is issued unless the 
Board extends such period. 
"(4) COMPLIANCE WITH STATE AND FEDERAL LAW.—Any foreign 
bank required to terminate activities conducted at offices or 
subsidiaries in the United States pursuant to this subsection 
shall comply with the requirements of applicable Federal and 
State law with respect to procedures for the closure or dissolu-
tion of such offices or subsidiaries. 
"(5) RECOMMENDATION TO AGENCY FOR TERMINATION OF A FED-
ERAL BRANCH O
R AGENCY.—The Board may transmit to the 
Comptroller of the Currency a recommendation that the license 
of any Federal branch or Federal agency of a foreign bank be 
terminated in accordance with section 4(i) if the Board has 
reasonable cause to believe that such foreign bank or any 
affiliate of such foreign bank has engaged in conduct for which 
the activities of any State branch or agency may be terminated 
under paragraph (1). 
"(6) ENFORCEMENT OF ORDERS.— 
"(A) IN GENERAL.—In the case of contumacy of any office 
or subsidiary of the foreign bank against which the Board 
or, in the case of an order issued under section 4(i), the 
Comptroller of the Currency has issued an order under 
paragraph (1) or a refusal by such office or subsidiary to 
comply with such order, the Board or the Comptroller of the 
Currency may invoke the aid of the district court of the 
United States within the jurisdiction of which the office or 
subsidiary is located. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2289 
"(B) COURT ORDER.—Any court referred to in subpara-
graph (A) may issue an order requiring compliance with an 
order issued under paragraph (1). 
"(7) CRITERIA RELATING TO FOREIGN SUPERVISION.—Not later 
than 1 year after the date of enactment of this subsection, the 
Board, in consultation with the Secretary of the Treasury, shall 
develop and publish criteria to be used in evaluating the oper-
ation of any foreign bank in the United States that the Board 
has determined is not subject to comprehensive supervision or 
regulation on a consolidated basis. In developing such criteria, 
the Board shall allow reasonable opportunity for pubic review 
and comment. 
"(f) JUDICIAL REVIEW.— 
"(1) JURISDICTION OF UNITED STATES COURTS OF APPEALS.—Any 
foreign bank— 
"(A) whose application under subsection (d) or section 
10(a) has been disapproved by the Board; 
"(B) against which the Board has issued an order under 
subsection (e) or section 10(b); or 
"(C) against which the Comptroller of the Currency has 
issued an order under section 4(i) of this Act, 
may obtain a review of such order in the United States court of 
appeals for any circuit in which such foreign bank operates a 
branch, agency, or commercial lending company that h£is been 
required by such order to terminate its activities, or in the 
United States Court of Appeals for the District of Columbia 
Circuit, by filing a petition for review in the court before the 
end of the 30-day period beginning on the date the order was 
issued. 
"(2) SCOPE OF JUDICIAL REVIEW.—Section 706 of title 5, United 
States Code (other than paragraph (2)(F) of such section) shall 
apply with respect to any review under parsigraph (1). 
"(g) CONSULTATION WITH STATE BANK SUPERVISOR.—The Board 
shall request and consider any views of the appropriate State bank 
supervisor with respect to any application or action under subsec-
tion (d) or (e). 
"(h) 
LIMITATIONS ON POWERS OF STATE BRANCHES AND AGEN-
CIES.— 
"(1) IN GENERAL.—After the end of the 1-year period begin-
ning on the date of enactment of the Federal Deposit Insurance 
Corporation Improvement Act of 1991, a State branch or State 
agency may not engage in any type of activity that is not 
permissible for a Federal branch unless— 
"(A) the Board has determined that such activity is 
consistent with sound banking practice; and 
"(B) in the case of an insured branch, the Federal Deposit 
Insurance Corporation has determined that the activity 
would pose no significant risk to the deposit insurance fund. 
"(2) SINGLE BORROWER LENDING LIMIT.—A State branch or 
State agency shall be subject to the same limitations with 
respect to loans made to a single borrower as are applicable to a 
Federal branch or Federal agency under section 4(b). 
"(3) OTHER AUTHORITY NOT AFFECTED.—This section does not 
limit the authority of the Board or any State supervisory 
authority to impose more stringent restrictions.". 
105 STAT. 2290 
PUBLIC LAW 102-242—DEC. 19, 1991 
(b) STANDARDS FOR APPROVAL OF FEDERAL BRANCHES AND AGEN-
CIES.—Section 4(a) of the International Banking Act of 1978 (12 
U.S.C. 3102(a)) is amended— 
(1) by striking "(a) Except as provided in section 5," and 
inserting 
"(a) 
ESTABLISHMENT AND OPERATION OF FEDERAL 
BRANCHES AND AGENCIES.— 
"(1) INITIAL FEDERAL BRANCH OR AGENCY.—Except as provided 
in section 5,"; and 
(2) by adding at the end the following new paragraph: 
"(2) BOARD CONDITIONS REQUIRED TO BE INCLUDED.—In consid-
ering any application for approval under this subsection, the 
Comptroller of the Currency shall include any condition im-
posed by the Board under section 7(d)(5) as a' condition for the 
approval of such application by the agency.". 
(c) STANDARDS FOR APPROVAL OF ADDITIONAL FEDERAL BRANCHES 
AND AGENCIES.—Section 4(h) of the International Banking Act of 
1978 (12 U.S.C. 3102(h)) is amended— 
(1) by redesignating paragraphs (1) and (2) as subparagraphs 
(A) and (B), respectively; 
(2) by striking "(h) A foreign bank" and inserting "(h) ADDI-
TIONAL BRANCHES OR AGENCIES.— 
"(1) APPROVAL OF AGENCY REQUIRED.—A foreign bank"; and 
(3) by adding at the end the following new paragraph: 
"(2) NOTICE TO AND COMMENT BY BOARD.—The Comptroller of 
the Currency shall provide the Board with notice and an 
opportunity for comment on any application to establish an 
additional 
Federal branch or Federal 
agency under 
this 
subsection.". 
(d) DISAPPROVAL FOR FAILURE T O AGREE T O PROVIDE NECESSARY 
INFORMATION.—Section 3(c) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1842(c)) is amended— 
(1) by redesignating paragraphs (1) and (2) as subparagraphs 
(A) and (B), respectively; 
(2) by striking "(c) The Board shall" and inserting "(c) FAC-
TORS FOR CONSIDERATION BY BOARD.— 
"(1) COMPETITIVE FACTORS.—The Board shall"; 
(3) by striking "In every case" and inserting "(2) BANKING 
AND COMMUNITY FACTORS.—In every case"; 
(4) by striking "community to be served. Notwithstanding any 
other provision of law" and inserting "community to be served. 
"(4) TREATMENT OF CERTAIN BANK STOCK LOANS.—Notwith-
standing any other provision of law"; and 
(5) by inserting after paragraph (2) (as so designated by 
paragraph (3) of this subsection) the following new paragraph: 
"(3) SUPERVISORY FACTORS.—The Board shall disapprove any 
application under this section by any company if— 
"(A) the company fails to provide the Board with ade-
quate assurances that the company will make available to 
the Board such information on the operations or activities 
of the company, and any affiliate of the company, as the 
Board determines to be appropriate to determine and en-
force compliance with this Act; or 
"(B) in the case of an application involving a foreign 
bank, the foreign bank is not subject to comprehensive 
supervision or regulation on a consolidated basis by the 
appropriate authorities in the bank's home country.". 
(e) CONFORMING AMENDMENTS.— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2291 
(1) AFFILIATE DEFINED.—Section l(bX13) of the International 
Banking Act of 1978 (12 U.S.C. 3101(13)) is amended by inserting 
" 'affiliate,' " after "the terms" the 1st place such term appears. 
(2) DEFINITIONS.—Section 1(b) of the International Banking 
Act of 1978 (12 U.S.C. 3101(b)) is amended— 
(A) by striking "and" at the end of paragraph (13); 
(B) by striking the period at the end of paragraph (14) and 
inserting a semicolon; and 
(C) by adding at the end the following new paragraphs: 
"(15) the term 'representative office' means any office of a 
foreign bank which is located in any State and is not a Federal 
branch, Federal agency. State branch. State agency, or subsidi-
ary of a foreign bank; 
"(16) the term 'office' means any branch, agency, or rep-
resentative office; and 
"(17) the term 'State bank supervisor' has the meaning given 
to such term in section 3 of the Federal Deposit Insurance Act.". 
SEC. 203. CONDUCT AND COORDINATION OF EXAMINATIONS. 
(a) AUTHORITY OF BOARD TO CONDUCT AND COORDINATE EXAMINA-
TIONS.—Section 7(c) of the International Banking Act of 1978 (12 
U.S.C. 3105(b)) is amended— 
(1) by striking paragraph (1) and inserting the following new 
paragraph: 
"(1) EXAMINATION OF BRANCHES, AGENCIES, AND AFFILIATES.— 
"(A) IN GENERAL.—The Board may examine each branch 
or agency of a foreign bank, each commercial lending com-
pany or bank controlled by 1 or more foreign banks or 1 or 
more foreign companies that control a foreign bank, and 
other office or affiliate of a foreign bank conducting busi-
ness in any State. 
"(B) COORDINATION OF EXAMINATIONS.— 
"(i) IN GENERAL.—The Board 
shall 
coordinate 
examinations under this paragraph with the Comptrol-
ler of the Currency, the Federal Deposit Insurance 
Corporation, and appropriate State bank supervisors to 
the extent such coordination is possible. 
"(ii) SIMULTANEOUS EXAMINATIONS.—The Board may 
request simultaneous examinations of each office of a 
foreign bank and each affiliate of such bank operating 
in the United States. 
"(C) ANNUAL ON-SITE EXAMINATION.—Each branch or 
agency of a foreign bank shall be examined at least once 
during each 12-month period (beginning on the date the 
i 
most recent examination of such branch or agency ended) 
in an on-site examination. 
"(D) COST OF EXAMINATIONS.—The cost of any examina-
tion under subparagraph (A) shall be assessed against and 
collected from the foreign bank or the foreign company that 
controls the foreign bank, £is the case may be."; and 
(2) in paragraph (2), by inserting 
"REPORTING REQUIRE-
MENTS.—" before "Each branch". 
(b) COORDINATION OF EXAMINATIONS.—Section 4(b) of the Inter-
national Banking Act of 1978 (12 U.S.C. 3102(b)) is amended by 
adding at the end thereof the following new sentence: "The 
Comptroller of the Currency shall coordinate examinations of Fed-
eral branches and agencies of foreign banks with examinations 
105 STAT. 2292 
PUBLIC LAW 102-242—DEC. 19, 1991 
conducted by the Board under section 7(c)(1) and, to the extent 
possible, shall participate in any simultaneous examinations of the 
United States operations of a foreign bank requested by the Board 
under such section.". 
(c) PARTICIPATION IN COORDINATED EXAMINATIONS.— 
(1) IN GENERAL.—Section 10(b) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1820(b)) is amended by redesignating para-
graphs (5) and (6) as paragraphs (6) and (7), respectively, and by 
inserting after paragraph (4) the following new paragraph: 
"(5) EXAMINATION OF INSURED STATE BRANCHES.—The Board of 
Directors shall— 
"(A) coordinate examinations of insured State branches 
of foreign banks with examinations conducted by the Board 
of Governors of the Federal Reserve System under section 
7(c)(1) of the International Banking Act of 1978; and 
"(B) to the extent possible, participate in any simulta-
neous examination of the United States operations of a 
foreign bank requested by the Board under such section.". 
(2) TECHNICAL AND CONFORMING AMENDMENT.—Paragraph (6) 
of section lOQo) of the Federal Deposit Insurance Act (12 U.S.C. 
1820(b)) (as so redesignated under paragraph (1) of this subsec-
tion) by striking "or (4)" and inserting "(4), or (5)". 
SEC. 204. SUPERVISION OF THE REPRESENTATIVE OFFICES OF FOREIGN 
BANKS. 
Section 10 of the International Banking Act of 1978 (12 U.S.C. 
3107) is amended to read as follows: 
"SEC. 10. REPRESENTATIVE OFFICES. 
"(a) PRIOR APPROVAL TO ESTABLISH REPRESENTATIVE OFFICES.— 
"(1) IN GENERAL.—No foreign bank may establish a represent-
ative office without the prior approval of the Board. 
"(2) STANDARDS FOR APPROVAL.—In acting on any application 
under this paragraph to establish a representative office, the 
Board shall take into account the standards contained in section 
7(d)(2) and may impose any additional requirements that the 
Board determines to be necessary to carry out the purposes of 
this Act. 
"(b) TERMINATION OF REPRESENTATIVE OFFICES.—The Board may 
order the termination of the activities of a representative office of a 
foreign bank on the basis of the standards, procedures, and require-
ments applicable under paragraphs (1), (2), and (3) of section 7(d) 
with respect to branches and agencies. 
"(c) EXAMINATIONS.—The Board may make examinations of each 
representative office of a foreign bank, the cost of which shall be 
assessed against and paid by such foreign bank. 
"(d) COMPLIANCE WITH STATE LAW.—This Act does not authorize 
the establishment of a representative office in any State in con-
travention of State law.". 
SEC. 205. REPORTING OF STOCK LOANS. 
Section 7(j)(9) of the Federal Deposit Insurance Act (12 U.S.C. 
1817(j)(9)) is amended to read as follows: 
"(9) REPORTING OF STOCK LOANS.— 
"(A) REPORT REQUIRED.—Any financial institution and 
any affiliate of any financial institution that has credit 
outstanding to any person or group of persons which is 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2293 
secured, directly or indirectly, by shares of an insured 
depository institution shall file a consolidated report with 
the appropriate Federal banking agency for such insured 
depository institution if the extensions of credit by the 
financial institution and such institution's affiliates, in the 
aggregate, are secured, directly or indirectly, by 25 percent 
or more of any class of shares of the same insured deposi-
tory institution. 
' (B) DEFINITIONS.—For purposes of this paragraph— 
"(i) FINANCIAL INSTITUTION.—The term 
'financial 
institution' means any insured depository institution 
and any foreign bank that is subject to the provisions of 
the Bank Holding Company Act of 1956 by virtue of 
section 8(a) of the International Banking Act of 1978. 
"(ii) 
CREDIT 
OUTSTANDING.—The 
term 
'credit 
outstanding' includes— 
"(I) any loan or extension of credit, 
"(II) the issuance of a guarantee, acceptance, or 
letter of credit, including an endorsement or 
standby letter of credit, and 
"(III) any other type of transaction that extends 
credit or financing to the person or group of per-
sons, 
"(iii) GROUP OF PERSONS.—The term 'group of per-
sons' includes any number of persons that the financial 
institution reasonably believes— 
"(I) are acting together, in concert, or with one 
another to acquire or control shares of the same 
insured depository institution, including an ac-
quisition of shares of the same insured depository 
institution at approximately the same time under 
substantially the same terms; or 
"(II) have made, or propose to make, a joint filing 
under section 13 of the Securities Exchange Act of 
1934 regarding ownership of the shares of the same 
insured depository institution. 
"(C) INCLUSION OF SHARES HELD BY THE FINANCIAL INSTITU-
TION.—Any shares of the insured depository institution held 
by the financial institution or any of its affiliates as prin-
cipal shall be included in the calculation of the number of 
shares in which the financial institution or its affiliates has 
a security interest for purposes of subparagraph (A). 
"(D) REPORT REQUIREMENTS.— 
"(i) TIMING OF REPORT.—The report required under 
this paragraph shall be a consolidated report on behalf 
of the financial institution and all affiliates of the 
institution, and shall be filed in writing within 30 days 
of the date on which the financial institution or any 
such affiliate first believes that the security for any 
outstanding credit consists of 25 percent or more of any 
class of shares of an insured depository institution. 
"(ii) CONTENT OF REPORT.—The report under this 
paragraph shall indicate the number and percentage of 
shares securing each applicable extension of credit, the 
identity of the borrower, and the number of shares held 
as principal by the financial institution and any affili-
ate of such institution. 
105 STAT. 2294 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(iii) COPY TO OTHER AGENCIES.—A copy of any report 
under this paragraph shall be filed with the appro-
priate Federal banking agency for the financial institu-
tion (if other than the agency receiving the report 
under this paragraph). 
"(iv) OTHER INFORMATION,—Each appropriate Fed-
eral banking agency may require any additional 
information necessary to carry out the agency's super-
visory responsibilities. 
"(E) EXCEPTIONS.— 
"(i) EXCEPTION WHERE INFORMATION PROVIDED BY BOR-
ROWER.—Notwithstanding subparagraph (A), a finan-
cial institution and the affiliates of such institution 
shall not be required to report a transaction under this 
paragraph if the person or group of persons re-
ferred to in such subparagraph has disclosed the 
amount borrowed from such institution or affiliate and 
the security interest of the institution or affiliate to the 
appropriate Federal banking agency for the insured 
depository institution in connection with a notice filed 
under this subsection, an application filed under the 
Bank Holding Company Act of 1956, section 10 of the 
Home Owners' Loan Act, or any other application filed 
with the appropriate Federal banking agency for the 
insured depository institution as a substitute for a 
notice under this subsection, such as an application for 
deposit insurance, membership in the Federal Reserve 
System, or a national bank charter. 
"(ii) EXCEPTION FOR SHARES OWNED FOR MORE THAN i 
YEAR.—Notwithstanding subparagraph (A), a financial 
institution and any affiliate of such institution shall 
not be required to report a transaction involving— 
"(I) a person or group of persons that has been 
the owner or owners of record of the stock for a 
period of 1 year or more; or 
"(II) stock issued by a newly chartered bank 
before the bank's opening.". 
SEC. 206. COOPERATION WITH FOREIGN SUPERVISORS. 
The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is 
amended by adding at the end the following new section: 
12 use 3109. 
"SEC. 15. COOPERATION WITH FOREIGN SUPERVISORS. 
"(a) DISCLOSURE OF SUPERVISORY INFORMATION TO FOREIGN SUPER-
VISORS.—Notwithstanding any other provision of law, the Board, 
Comptroller of the Currency, Federal Deposit Insurance Corpora-
tion, and Director of the Office of Thrift Supervision may disclose 
information obtained in the course of exercising supervisory or 
examination authority to any foreign bank regulatory or super-
visory authority if the Board, Comptroller, Corporation, or Director 
determines that such disclosure is appropriate and will not preju-
dice the interests of the United States. 
"(b) 
REQUIREMENT OF CONFIDENTIALITY.—Before making 
any 
disclosure of any information to a foreign authority, the Board, 
Comptroller of the Currency, Federal Deposit Insurance Corpora-
tion, and Director of the Office of Thrift Supervision shall obtain, to 
the extent necessary, the agreement of such foreign authority to 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2295 
maintain the confidentiality of such information to the extent pos-
sible under applicable law.". 
SEC. 207. APPROVAL REQUIRED FOR ACQUISITION BY FOREIGN BANKS 
OF SHARES OF UNITED STATES BANKS. 
Section 8(a) of the International Banking Act of 1978 (12 U.S.C. 
3106(a)) is amended by striking "thereto" and all that follows 
through the period and inserting "to such provisions.". 
SEC. 208. PENALTIES. 
The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is 
amended by inserting after section 15 (as added by section 206 of this 
subtitle) the following new section: 
"SEC. 16. PENALTIES. 
12 USC 3110. 
"(a) CIVIL MONEY PENALTY.— 
"(1) IN GENERAL.—Any foreign bank, and any office or subsidi-
ary of a foreign bank, that violates, and any individual who 
participates in a violation of, any provision of this Act, or any 
regulation prescribed or order issued under this Act, shall 
forfeit and pay a civil penalty of not more than $25,000 for each 
day during which such violation continues. 
"(2) ASSESSMENT PROCEDURES.—Any penalty imposed under 
paragraph (1) may be assessed and collected by the Board or the 
Comptroller of the Currency in the manner provided in sub-
paragraphs (E), (F), (G), (H), and (I) of section 8(i)(2) of the 
Federal Deposit Insurance Act for penalties imposed (under 
such section), and any such assessments shall be subject to the 
provisions of such section. 
"(3) HEARING PROCEDURE.—Section 8(h) of the Federal Deposit 
Insurance Act shall apply to any proceeding under this section. 
"(4) DISBURSEMENT.—All penalties collected under authority 
of this section shall be deposited into the Treasury. 
"(5) VIOLATE DEFINED.—For purposes of this section, the term 
'violate' includes taking any action (alone or with others) for or 
toward causing, bringing about, participating in, counseling, or 
aiding or abetting a violation. 
"(6) REGULATIONS.—The Board and the Comptroller of the 
Currency shall each prescribe regulations establishing such 
procedures as may be necessary to carry out this section. 
"(b) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERV-
ICE.—The resignation, termination of employment or participation, 
or separation of an institution-affiliated party (within the meaning 
of section 3(u) of the Federal Deposit Insurance Act) with respect to 
a foreign bank, or any office or subsidiary of a foreign bank (includ-
ing a separation caused by the termination of a location in the 
United States), shall not affect the jurisdiction or authority of the 
Board or the (Comptroller of the Currency to issue any notice or to 
proceed under this section against any such party, if such notice is 
served before the end of the 6-year period beginning on the date 
such party ceased to be an institution-affiliated party with respect to 
such foreign bank or such office or subsidiary of a foreign bank 
(whether such date occurs on, before, or after the date of the 
enactment of the Foreign Bank Supervision Enhancement Act of 
1991). 
"(c) PENALTY FOR FAILURE TO MAKE REPORTS.— 
105 STAT. 2296 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(1) FIRST TIER.—Any foreign bank, or any office or subsidiary 
of a foreign bank, that— 
"(A) maintains procedures reasonably adapted to avoid 
any inadvertent error and, unintentionally and as a result 
of such error— 
"(i) fails to make, submit, or publish such reports or 
information as may be required under this Act or 
under regulations prescribed by the Board or the 
Comptroller of the Currency under this Act, within the 
period of time specified by the agency; or 
"(ii) submits or publishes any false or misleading 
report or information; or 
"(B) inadvertently transmits or publishes any report that 
is minimally late, 
shall be subject to a penalty of not more than $2,000 for each 
day during which such failure continues or such false or mis-
leading information is not corrected. The foreign bank, or the 
office or subsidiary of a foreign bank, shall have the burden of 
proving that an error was inadvertent and that a report was 
inadvertently transmitted or published late. 
"(2) SECOND TIER.—Any foreign bank, or any office or subsidi-
ary of a foreign bank, that— 
"(A) fails to make, submit, or publish such reports or 
: 
information as may be required under this Act or under 
regulations prescribed by the Board or the Comptroller of 
the Currency pursuant to this Act, within the time period 
specified by such agency; or 
"(B) submits or publishes any false or misleading report 
or information, 
in a manner not described in paragraph (1) shall be subject to a 
penalty of not more than $20,000 for each day during which 
such failure continues or such false or misleading information is 
not corrected. 
"(3) THIRD TIER.—Notwithstanding paragraph (2), if any com-
pany knowingly or with reckless disregard for the accuracy of 
any information or report described in paragraph (2) submits or 
publishes any false or misleading report or information, the 
Board or the Comptroller of the Currency may, in the Board's or 
Comptroller's discretion, assess a penalty of not more than 
$1,000,000 or 1 percent of total assets of such foreign bank, or 
such office or subsidiary of a foreign bank, whichever is less, per 
day for each day during which such failure continues or such 
false or misleading information is not corrected. 
"(4) ASSESSMENT OF PENALTIES.—Any penalty imposed under 
paragraph (1), (2), or (3) shall be assessed and collected by the 
Board or the Comptroller of the Currency in the manner pro-
vided in subsection (a)(2) (for penalties imposed under such 
subsection) and any such assessment (including the determina-
tion of the amount of the penalty) shall be subject to the 
provisions of such subsection. 
"(5) HEARING PROCEDURE.—Section 8(h) of the Federal Deposit 
Insurance Act shall apply to any proceeding under this 
subsection.". 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2297 
SEC. 209. POWERS OF AGENCIES RESPECTING APPLICATIONS, EXAMINA-
TIONS, AND OTHER PROCEEDINGS. 
Section 13(b) of the International Banking Act of 1978 (12 U.S.C. 
3108(b)) is amended— 
(1) by striking "(b) In addition to" and inserting "(b) ENFORCE-
MENT.— 
"(1) IN GENERAL.—In addition to"; 
(2) by adding at the end the following new paragraphs: 
"(2) AUTHORITY TO ADMINISTER OATHS; SUBPOENA POWER.—In 
the course of, or in connection with, an application, examina-
tion, investigation, or other proceeding under this Act, the 
Board, the Comptroller of the Currency, and the Federal De-
posit Insurance Corporation, as the case may be, any member of 
the Board or of the Board of Directors of the Corporation, and 
any designated representative of the Board, Comptroller, or 
Corporation (including any person designated to conduct any 
hearing under this Act) may— 
"(A) administer oaths and affirmations and take or cause 
to be taken depositions; and 
"(B) issue, revoke, quash, or modify any subpoena, includ-
ing any subpoena requiring the attendance and testimony 
of a witness or any subpoenas duces tecum. 
"(3) ADMINISTRATIVE ASPECTS OF SUBPOENAS.— 
"(A) ATTENDANCE AND PRODUCTION AT DESIGNATED SITE.— 
The attendance of any witness and the production of any 
* 
document pursuant to a subpoena under paragraph (2) may 
be required at the place designated in the subpoena from 
any place in any State (as defined in section 3(a)(3) of the 
Federal Deposit Insurance Act) or other place subject to the 
jurisdiction of the United States. 
"(B) SERVICE OF SUBPOENA.—Service of a subpoena issued 
under this subsection may be made by registered mail, or in 
such other manner reasonably calculated to give actual 
notice as the Board, Comptroller of the Currency, or Fed-
eral Deposit Insurance Corporation may by regulation or 
otherwise provide. 
"(C) FEES AND TRAVEL EXPENSES.—Witnesses subpoenaed 
under this subsection shall be paid the same fees and 
1 
mileage that are paid witnesses in the district courts of the 
United States. 
"(4) CONTUMACY OR REFUSAL.— 
"(A) IN GENERAL.—In the case of contumacy of any person 
issued a subpoena under this subsection or a refusal by such 
person to comply with such subpoena, the Board, Comptrol-
ler of the Currency, or Federal Deposit Insurance Corpora-
tion, or any other party to proceedings in connection with 
which subpoena was issued may invoke the aid o
f
— 
"(i) the United States District Court for the District 
of Columbia, or 
"(ii) any district court of the United States within the 
jurisdiction of which the proceeding is being conducted 
or the witness resides or carries on business. 
"(B) COURT ORDER.—Any court referred to in subpara-
^ graph (A) may issue an order requiring compliance with a 
subpoena issued under this subsection. 
105 STAT. 2298 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(5) EXPENSES AND FEES.—Any court having jurisdiction of 
any proceeding instituted under this subsection may allow any 
party to such proceeding such reasonable expenses and attor-
neys' fees as the court deems just and proper. 
"(6) CRIMINAL PENALTY.—Any person who willfully fails or 
refuses to attend and testify or to answer any lawful inquiry or 
to produce books, papers, correspondence, memoranda, con-
tracts, agreements, or other records in accordance with any 
subpoena under this subsection shall be fined under title 18, 
United States Code, imprisoned not more than 1 year, or both. 
Each day during which any such failure or refusal continues 
shall be treated as a separate offense.". 
SEC. 210. CLARIFICATION OF MANAGERIAL STANDARDS IN BANK HOLD-
ING COMPANY ACT OF 1956. 
Section 3(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1842(c)) (as amended by section 202(d) of this subtitle) is amended by 
adding at the end the following new paragraph: 
"(5) MANAGERIAL RESOURCES.—Consideration of the manage-
rial resources of a company or bank under paragraph (2) shall 
include consideration of the competence, experience, and integ-
rity of the officers, directors, and principal shareholders of the 
company or bank.". 
SEC. 211. STANDARDS AND FACTORS IN THE HOME OWNERS' LOAN ACT. 
Section 10(e) of the Home Owners' Loan Act (12 U.S.C. 1467a(e)) is 
amended— 
(1) in paragraph (1), by inserting after subparagraph (B) the 
following: 
"Consideration of the managerial resources of a company or 
savings association under subparagraph (B) shall include consid-
eration of the competence, experience, and integrity of the 
officers, directors, and principal shareholders of the company or 
association."; 
(2) in paragraph (2)— 
(A) by inserting after the second sentence "Consideration 
of the managerial resources of a company or savings 
association shall include consideration of the competence, 
experience, and integrity of the officers, directors, and prin-
cipal shareholders of the company or association."; 
(B) by striking "or" at the end of subparagraph (A); 
(C) by striking the period at the end of subparagraph (B) 
and inserting a comma; and 
(D) by inserting after subparagraph (B) the following new 
subparagraphs: 
"(C) if the company fails to provide adequate assurances 
to the Director that the company will make available to the 
Director such information on the operations or activities of 
the company, and any affiliate of the company, as the 
Director determines to be appropriate to determine and 
enforce compliance with this Act, or 
"(D) in the case of an application involving a foreign 
bank, if the foreign bank is not subject to comprehensive 
supervision or regulation on a consolidated basis by the 
appropriate authorities in the bank's home country.". 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2299 
SEC. 212. AUTHORITY OF FEDERAL BANKING AGENCIES TO ENFORCE 
CONSUMER STATUTES. 
(a) AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT.— 
(1) MAINTENANCE OF RECORDS AND PUBUC DISCLOSURE.—Sec-
tion 304(h) of the Home Mortgage Disclosure Act of 1975 (12 
U.S.C. 2803(h)) is amended— 
(A) by striking paragraph (1) and inserting the following 
new paragraph: 
"(1) the Office of the Comptroller of the Currency for national 
banks and Federal branches and Federal agencies of foreign 
banks;"; and 
(B) by striking paragraph (3) and inserting the following 
new paragraph: 
"(3) the Federal Deposit Insurance Corporation for banks 
insured by the Federal Deposit Insurance Corporation (other 
than members of the Federal Reserve System), mutual savings 
banks, insured State branches of foreign banks, and any other 
depository institution described in section 303(2)(A) which is not 
otherwise referred to in this paragraph;". 
(2) ENFORCEMENT.—Section 305(b) of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2804(b)) is amended— 
(A) by striking paragraph (1) and inserting the following 
new paragraph: 
"(1) section 8 of the Federal Deposit Insurance Act, in the case 
of— 
"(A) national banks, and Federal branches and Federal 
agencies of foreign banks, by the Office of the Comptroller 
of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than national banks), branches and agencies of foreign 
banks (other than Federal branches, Federal agencies, and 
insured State branches of foreign banks), commercial lend-
ing companies owned or controlled by foreign banks, and 
organizations operating under section 25 or 25(a) of the 
Federal Reserve Act, by the Board; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System), mutual savings banks as defined in section 3(f) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(f)), in-
sured State branches of foreign banks, and any other 
depository institution not referred to in this paragraph or 
paragraph (2) or (3) of this subsection, by the Board of 
Directors of the Federal Deposit Insurance Corporation;"; 
and 
(B) by adding at the end the following: 
"The terms used in paragraph (1) that are not defined in this title or 
otherwise defined in section 3(s) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978 (12 U.S.C. 
3101).". 
(b) AMENDMENT TO THE TRUTH IN LENDING ACT.—Section 108(a) of 
the Truth in Lending Act (15 U.S.C. 1607(a)) is amended— 
(1) by striking paragraph (1) and inserting the following new 
paragraph: 
"(1) section 8 of the Federal Deposit Insurance Act, in the case 
of— 
105 STAT. 2300 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(A) national banks, and Federal branches and Federal 
agencies of foreign banks, by the Office of the Comptroller 
of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than national banks), branches and agencies of foreign 
banks (other than Federal branches. Federal agencies, and 
insured State branches of foreign banks), commercial lend-
ing companies owned or controlled by foreign banks, and 
organizations operating under section 25 or 25(a) of the 
Federal Reserve Act, by the Board; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System) and insured State branches of foreign banks, by the 
Board of Directors of the Federal Deposit Insurance Cor-
poration."; and 
(2) by adding at the end the following: 
"The terms used in paragraph (1) that are not defined in this title or 
otherwise defined in section 3(s) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978 (12 U.S.C. 
3101).". 
(c) AMENDMENT TO THE FAIR CREDIT REPORTING ACT.—Section 
621(b) of the Fair Credit Reporting Act (15 U.S.C. 1681s(b)) is 
amended— 
(1) by striking paragraph (1) and inserting the following new 
paragraph: 
"(1) section 8 of the Federal Deposit Insurance Act, in the case 
o
f
— 
"(A) national banks, and Federal branches and Federal 
agencies of foreign banks, by the Office of the Comptroller 
of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than national banks), branches and agencies of foreign 
banks (other than Federal branches. Federal agencies, and 
insured State branches of foreign banks), commercial lend-
ing companies owned or controlled by foreign banks, and 
organizations operating under section 25 or 25(a) of the 
, 
Federal Reserve Act, by the Board of Governors of the 
Federal Reserve System; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System) and insured State branches of foreign banks, by the 
Board of Directors of the Federal Deposit Insurance Cor-
poration."; and 
(2) by adding at the end the following: 
"The terms used in paragraph (1) that are not defined in this title or 
otherwise defined in section 3(s) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978 (12 U.S.C. 
3101).". 
(d) AMENDMENT TO THE EQUAL CREDIT OPPORTUNITY ACT.—Section 
704(a) of the Equal Credit Opportunity Act (15 U.S.C. 1691c(a)) is 
amended— 
(1) by striking paragraph (1) and inserting the following new 
paragraph: 
"(1) section 8 of the Federal Deposit Insurance Act, in the case 
o
f
— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2301 
"(A) national banks, and Federal branches and Federal 
agencies of foreign banks, by the Office of the Comptroller 
of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than national banks), branches and agencies of foreign 
banks (other than Federal branches, Federal agencies, and 
insured State branches of foreign banks), commercial lend-
ing companies owned or controlled by foreign banks, and 
organizations operating under section 25 or 25(a) of the 
Federal Reserve Act, by the Board; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System) and insured State branches of foreign banks, by the 
Board of Directors of the Federal Deposit Insurance Cor-
poration."; and 
(2) by adding at the end the following: 
"The terms used in paragraph (1) that are not defined in this title or 
otherwise defined in section 3(s) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978 (12 U.S.C. 
3101).". 
(e) AMENDMENT TO THE FAIR DEBT COLX.ECTION PRACTICES ACT.— 
Section 814(b) of the Fair Debt Collection Practices Act (15 U.S.C. 
16921(b)) is amended— 
(1) by striking paragraph (1) and inserting the following: 
"(1) section 8 of the Federal Deposit Insurance Act, in the case 
o
f
— 
"(A) national banks, and Federal branches and Federal 
agencies of foreign banks, by the Office of the Comptroller 
of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than national banks), branches and agencies of foreign 
banks (other than Federal branches, Federal agencies, and 
insured State branches of foreign banks), commercial lend-
ing companies owned or controlled by foreign banks, and 
organizations operating under section 25 or 25(a) of the 
Federal Reserve Act, by the Board of Governors of the 
Federal Reserve System; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System) and insured State branches of foreign banks, by the 
Board of Directors of the Federal Deposit Insurance Cor-
poration."; and 
(2) by adding at the end the following: 
"The terms used in paragraph (1) that are not defined in this title or 
otherwise defined in section 3(s) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978 (12 U.S.C. 
3101).". 
(f) AMENDMENT TO THE ELECTRONIC FUND TRANSFER ACT.—Section 
917(a) of the Electronic Fund Transfer Act (15 U.S.C. 1693o(a)) is 
amended— 
(1) by striking paragraph (1) and inserting the following: 
"(1) section 8 of the Federal Deposit Insurance Act, in the case 
of— 
105 STAT. 2302 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(A) national banks, and Federal branches and Federal 
agencies of foreign banks, by the Office of the Comptroller 
of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than nationgJ banks), branches and agencies of foreign 
banks (other than Federal branches, Federal agencies, and 
insured State branches of foreign banks), commercial lend-
ing companies owned or controlled by foreign banks, and 
organizations operating under section 25 or 25(a) of the 
Federal Reserve Act, by the Board; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System) and insured State branches of foreign banks, by the 
Board of Directors of the Federal Deposit Insurance Cor-
poration;"; and 
(2) by adding at the end the following: 
"The terms used in paragraph (1) that are not defined in this title or 
otherwise defined in section 3(s) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978 (12 U.S.C. 
3101).". 
(g) AMENDMENT TO THE FEDERAL TRADE COMMISSION ACT.— 
(1) DEFINITIONS.—Section 4 of the Federal Trade Commission 
Act (15 U.S.C. 44) is amended by adding at the end the following 
new paragraph: 
" 'Banks' means the t)T)es of banks and other financial 
institutions referred to in section 18(f)(2).". 
(2) ENFORCEMENT.—Section 18(f) of the Federal 
Trade 
Commission Act (15 U.S.C. 57a(f)) is amended— 
(A) by striking paragraph (2) and inserting the following: 
"(2) ENFORCEMENT.—Clompliance with regulations prescribed 
under this subsection shall be enforced under section 8 of the 
Federal Deposit Insurance Act, in the case of^ 
"(A) national banks, banks operating under the code of 
law for the District of Columbia, and Federal branches and 
Federal agencies of foreign banks, by the divisions of 
consumer affairs established by the Office of the Comptrol-
ler of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than national banks and banks operating under the code of 
law for the District of Columbia), branches and agencies of 
foreign banks (other than Federal branches, Federal agen-
cies, and insured State branches of foreign banks), commer-
cial lending companies owned or controlled by foreign 
banks, and organizations operating under section 25 or 25(a) 
of the Federal Reserve Act, by the division of consumer 
affairs established by the Board of Governors of the Federal 
Reserve System; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other banks referred to in subparagraph (A) or 
(B)) and insured State branches of foreign banks, by the 
division of consumer affairs established by the Board of 
Directors of the Federal Deposit Insurance Corporation."; 
and 
(B) by adding at the end the following: 
"The terms used in this paragraph that are not defined in the 
Federal Trade Commission Act or otherwise defined in section 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2303 
3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) 
shall have the meaning given to them in section 1(b) of the 
International Banking Act of 1978 (12 U.S.C. 3101).". 
(h) AMENDMENT TO THE EXPEDITED FUNDS AVAILABIUTY ACT.— 
Section 610(a) of the Expedited Funds Availability Act (12 U.S.C. 
4009(a)) is amended— 
(1) by striking paragraph (1) and inserting the following: 
"(1) section 8 of the Federal Deposit Insurance Act in the case 
of— 
"(A) national banks, and Federal branches and Federal 
agencies of foreign banks, by the Office of the Comptroller 
of the Currency; 
"(B) member banks of the Federal Reserve System (other 
than national banks), and offices, branches, and agencies of 
foreign banks located in the United States (other than 
Federal branches, Federal agencies, and insured State 
branches of foreign banks), by the Board of Governors of the 
Federal Reserve System; and 
"(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System) and insured State branches of foreign banks, by the 
Board of Directors of the Federal Deposit Insurance Cor-
poration;"; and 
(2) by adding at the end the following: 
"The terms used in paragraph (1) that are not defined in this title or 
otherwise defined in section 3(s) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978 (12 U.S.C. 
3101).". 
SEC. 213. CRIMINAL PENALTY FOR VIOLATING THE INTERNATIONAL 
BANKING ACT OF 1978. 
The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is 
amended by inserting after section 16 (as added by section 208 of this 
subtitle) the following new section: 
"SEC. 17. CRIMINAL PENALTY. 
12 USC 3111. 
"Whoever, with the intent to deceive, to gain financially, or to 
cause financial gain or loss to any person, knowingly violates any 
provision of this Act or any regulation or order issued by the 
appropriate Federal banking agency under this Act shall be impris-
oned not more than 5 years or fined not more than $1,000,000 for 
each day during which a violation continues, or both.". 
SEC. 214. MISCELLANEOUS 
AMENDMENTS 
TO 
THE 
INTERNATIONAL 
BANKING ACT OF 1978. 
(a) SECTION 6.—Section 6 of the International Banking Act of 1978 
(12 U.S.C. 3104) is amended— 
(1) by redesignating subsection (b) as subsection (bXD; 
(2) by designating the last undesignated paragraph as para-
graph (2); and 
(3) by adding at the end the following new subsection: 
"(c) RETAIL DEPOSIT-TAKING BY FOREIGN BANKS.— 
"(1) IN GENERAL.—After the date of enactment of this subsec-
tion, notwithstanding any other provision of this Act or any 
provision of the Federal Deposit Insurance Act, in order to 
105 STAT. 2304 
PUBLIC LAW 102-242—DEC. 19, 1991 
accept or maintain deposit accounts having balances of less 
than $100,000, a foreign bank shall— 
"(A) establish 1 or more banking subsidiaries in the United 
States for that purpose; and 
"(B) obtain Federal deposit insurance for any such 
subsidiary in accordance with the Federal Deposit Insur-
ance Act. 
"(2) EXCEPTION.—Deposit accounts with balances of less than 
$100,000 may be accepted or maintained in a branch of a foreign 
bank only if such branch was an insured branch on the date of 
the enactment of this subsection.". 
(b) SECTION 7.—Section 7 of the International Banking Act of 1978 
(12 U.S.C. 3105) is amended by adding at the end the following new 
subsection: 
Reports- 
"(j) STUDY ON EQUIVALENCE OF FOREIGN BANK CAPITAL.—Not later 
than 180 days after enactment of this subsection, the Board and the 
Secretary of the Treasury shall jointly submit to the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Commit-
tee on Banking, Finance and Urban Affairs of the House of Rep-
resentatives a report— 
"(1) analyzing the capital standards contained in the frame-
work for measurement of capital adequacy established by the 
Supervisory committee of the Bank for International Settle-
ments, foreign regulatory capital standards that apply to for-
eign banks conducting banking operations in the United States, 
and the relationship of the Basle and foreign standards to risk-
based capital and leverage requirements for United States 
banks; and 
"(2) establishing guidelines for the adjustments to be used by 
the Board in converting data on the capital of such foreign 
banks to the equivalent risk-bsised capital and leversige require-
ments for United States banks for purposes of determining 
whether a foreign bank's capital level is equivalent to that 
imposed on United States banks for purposes of determinations 
under section 7 of the International Banking Act of 1978 and 
sections 3 and 4 of the Bank Holding Company Act of 1956. 
An update shall be prepared annually explaining any changes in the 
analysis under paragraph (1) and resulting changes in the guidelines 
pursuant to paragraph (2). 
12 use 3102 
SEC. 215. STUDY AND REPORT ON SUBSIDIARY REQUIREMENTS FOR FOR-
note. 
EIGN BANKS. 
(a) IN GENERAL.—The Secretary of the Treasury (hereafter re-
ferred to as the "Secretary"), jointly with the Board of Governors of 
the Federal Reserve System and in consultation with the Comptrol-
ler of the Currency, the Federal Deposit Insurance Corporation, and 
the Attorney General, shall conduct a study of whether foreign 
banks should be required to conduct banking operations in the 
United States through subsidiaries rather than branches. In 
conducting the study, the Secretary shall take into account— 
(1) differences in accounting and regulatory practices abroad 
and the difficulty of assuring that the foreign bank meets 
United States capital and management standards and is ade-
quately supervised; 
(2) implications for the deposit insurance system; 
(3) competitive equity considerations; 
. 
(4) national treatment of foreign financial institutions; 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2305 
(5) the need to prohibit money laundering and illegal pay-
ments; 
(6) safety and soundness considerations; 
(7) implications for international negotiations for liberalized 
trade in financial services; 
(8) the tax liability of foreign banks; 
(9) whether the establishment of subsidiaries by foreign banks 
to operate in the United States should be required only if 
United States Banks are authorized to engage in securities 
activities and interstate banking and branching; and 
(10) differences in treatment of United States creditors under 
the bankruptcy and receivership laws. 
(b) REPORT REQUIRED.—Not later than 1 year after the date of 
enactment of this Act, the Secretary shall transmit to the Commit-
tee on Banking, Housing, and Urban Affairs of the Senate and the 
Committee on Banking, Finance and Urban Affairs of the House of 
Representatives a report on the results of the study under subsec-
tion (a). Any additional or dissenting views of participating agencies 
shall be included in the report. 
Subtitle B—Customer and Consumer 
Provisions 
SEC. 221. STUDY ON REGULATORY BURDEN. 
12 USC 3305 
(a) IN GENERAL.—Not later than 1 year after the date of enact-
ment of this Act, the Federal Financial Institutions Examination 
Council, in consultation with individuals representing insured 
depository institutions, consumers, community groups, and other 
interested parties, shall— 
(1) review the policies and procedures, and recordkeeping and 
documentation requirements used to monitor and enforce 
compliance with— 
(A) all laws under the jurisdiction of the Federal banking 
agencies; and 
(B) all laws affecting insured depository institutions 
under the jurisdiction of the Secretary of the Treasury; 
(2) determine whether such policies, procedures, and require-
ments impose unnecessary burdens on insured depository 
institutions; and 
(3) identify any revisions of such policies, procedures, and 
requirements that could reduce unnecessary burdens on insured 
depository institutions without in any respect— 
(A) diminishing either compliance with or enforcement of 
consumer laws in any respect; or 
(B) endangering the safety and soundness of insured 
depository institutions. 
(h) REPORT.—Not later than 1 year after the date of enactment of 
this Act, the Federal Financial Institutions Examination Council 
shall submit to the Congress a report describing the revisions identi-
fied under subsection (aX3). 
(c) DEFINITIONS.—For purposes of this section, the terms "insured 
depository institution" and "Federal banking agency" have the 
same meanings as in section 3 of the Federal Deposit Insurance Act. 
105 STAT. 2306 
PUBLIC LAW 102-242—DEC. 19, 1991 
SEC. 222. DISCUSSION OF LENDING DATA. 
(a) PuBuc SECTIONS OF COMMUNITY REINVESTMENT ACT RE-
PORTS.—Section 8O70k))(l)(B) of the Community Reinvestment Act of 
1977 (12 U.S.C. 2906(b)(1)(B)) is amended by inserting "and data" 
after "facts". 
(b) OTHER COMMUNITY REINVESTMENT ACT AMENDMENTS.—Section 
807 of the Community Reinvestment Act of 1977 (12 U.S.C. 2906) is 
amended— 
(1) in subsection (a)(1), by striking "depository institutions 
regulatory 
agency" and inserting 
"financial 
supervisory 
agency"; 
(2) in subsection (b)(1)(A)— 
(A) by striking "depository institutions regulatory agen-
cy's" and inserting "financial supervisory agency's"; and 
(B) by striking ' depository institutions regulatory agen-
cies" and inserting "financial supervisory agencies"; and 
(3) in subsection (c), by striking "depository institutions regu-
latory agency" each place such term appears and inserting 
"financial supervisory agency". 
SEC. 223. ENFORCEMENT OF EQUAL CREDIT OPPORTUNITY ACT. 
(a) PATTERN OR PRACTICE.—Section 706(g) of the Equal Credit 
Opportunity Act (15 U.S.C. 1691e(g)) is amended by adding at the 
end the following new sentence: "Each agency referred to in para-
graphs (1), (2), and (3) of section 704(a) shall refer the matter to the 
Attorney General whenever the agency has reason to believe that 1 
or more creditors has engaged in a pattern or practice of discourag-
ing or denying applications for credit in violation of section 701(a). 
Each such agency may refer the matter to the Attorney General 
whenever the agency has reason to believe that 1 or more creditors 
has violated section 701(a).". 
(b) DAMAGES.—Section 706(h) of the Equal Credit Opportunity Act 
(15 U.S.C. 1691e(h)) is amended by inserting "actual and punitive 
damages and" after "including". 
(c) NOTICE TO HUD.—Section 706 of the Equal Credit Opportunity 
Act (15 U.S.C. 1691e) is amended by adding at the end the following 
new subsection: 
"(k) NOTICE TO HUD OF VIOLATIONS.—Whenever an agency re-
ferred to in paragraph (1), (2), or (3) of section 704(a)— 
"(1) has reason to believe, as a result of receiving a consumer 
complaint, conducting a consumer compliance examination, or 
otherwise, that a violation of this title has occurred; 
"(2) has reason to believe that the alleged violation would be a 
violation of the Fair Housing Act; and 
"(3) does not refer the matter to the Attorney General pursu-
ant to subsection (g), 
the agency shall notify the Secretary of Housing and Urban Devel-
opment of the violation, and shall notify the applicant that the 
Secretary of Housing and Urban Development has been notified of 
the alleged violation and that remedies for the violation may be 
available under the Fair Housing Act.". 
(d) APPRAISALS.—Section 701 of the Equal Credit Opportunity Act 
(15 U.S.C. 1691) is amended by adding at the end the following: 
"(e) Each creditor shall promptly ftirnish an applicant, upon 
written request by the applicant made within a reasonable period of 
time of the application, a copy of the appraisal report used in 
connection with the applicant's application for a loan that is or 
note. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2307 
would have been secured by a lien on residential real property. The 
creditor may require the applicant to reimburse the creditor for the 
cost of the appraisal.". 
SEC. 224. HOME MORTGAGE DISCLOSURE ACT. 
(a) IN GENERAL.—Section 309 of the Home Mortgage Disclosure 
Act (12 U.S.C. 2808) is amended— 
(1) by striking "depository" before "institution"; 
(2) by inserting "specified in section 303(2)(A)" after "institu-
tion"; and 
(3) by adding at the end the following: "The Board, in con-
sultation with the Secretary, may exempt institutions described 
in section 303(2)(B) that are comparable within their respective 
industries to institutions that are exempt under the preceding 
sentence.". 
Qo) EFFECTIVE DATE.—This section shall become effective on Janu- 12 USC 2808 
ary 1, 1992. 
SEC. 225. NOTICE OF SAFEGUARD EXCEPTION. 
Section 604 of the Expedited Funds Availability Act (12 U.S.C. 
4003) is amended— 
(1) in subsection (b), by inserting "(a)(2)," after "subsection"; 
(2) in subsection (c)(1), by striking "(F)" after "subsections 
(a)(2)"; 
(3) in subsection (d), by inserting "(a)(2)," after "subsections"; 
(4) in subsection (f)(l)(A)(i), by striking "day" and inserting 
"time period within which"; and 
(5) in subsection (f), by adding at the end of paragraph (2) the 
following: 
"(D) In the case of a deposit to which subsection (b)(1) or 
(b)(2) 
applies, 
the 
depository 
institution 
may, 
for 
nonconsumer accounts and other classes of accounts, as 
defined by the Board, that generally have a large number of 
such deposits, provide notice at or before the time it first 
determines that the subsection applies. 
"(E) In the case of a deposit to which subsection (b)(3) 
applies, the depository institution may, subject to regula-
tions of the Board, provide notice at the beginning of each 
time period it determines that the subsection applies. In 
addition to the requirements contained in paragraph (1)(A), 
the notice shall specify the time period for which the 
exception will apply.". 
SEC. 226. DELEGATED PROCESSING. 
Section 328(a) of the Cranston-Gonzalez National Affordable Hous-
ing Act (12 U.S.C. 1713 note) is amended in the first sentence by 
inserting before the period "or other individuals and entities ex-
presslv approved by the Department of Housing and Urban Develop-
ment . 
SEC. 227. DEPOSITS AT NONPROPRIETARY AUTOMATED TELLER MA-
CHINES. 
(a) IN GENERAL.—Section 603(e) of the Expedited Funds Availabil-
ity Act (12 U.S.C. 4002(e)) is amended by striking paragraphs (1)(C) 
and (2). 
(b) CONFORMING AMENDMENTS.—The Expedited Funds Availabil-
ity Act (12 U.S.C. 4001 et seq.) is amended— 
105 STAT. 2308 
PUBLIC LAW 102-242—DEC. 19, 1991 
(1) in section 603(e) (12 U.S.C. 4002(e))— 
(A) by striking the heading for paragraph (1) and insert-
ing the following: 
"(1) NONPROPRIETARY ATM.—"; and 
(B) by redesignating paragraphs (3) and (4) as paragraphs 
(2) and (3), respectively; and 
(2) in section 604(a)(2) (12 U.S.C. 4003(a)(2)) by striking "and 
(2)". 
SEC. 228. NOTICE OF BRANCH CLOSURE. 
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by adding after section 38 (as added by section 131 of this 
Act) the following new section: 
12 u s e 1831p. 
"SEC. 39. NOTICE OF BRANCH CLOSURE. 
"(a) NOTICE TO APPROPRIATE FEDERAL BANKING AGENCY.— 
"(1) IN GENERAL.—An insured depository institution which 
proposes to close any branch shall submit a notice of the 
proposed closing to the appropriate Federal banking agency not 
later than the first day of the 90-day period ending on the date 
proposed for the closing. 
"(2) CONTENTS OF NOTICE.—A notice under paragraph (1) shall 
include— 
"(A) a detailed statement of the reasons for the decision 
to close the branch; and 
"(B) statistical or other information in support of such 
reasons. 
"(b) NOTICE TO CUSTOMERS.— 
"(1) IN GENERAL.—An insured depository institution which 
proposes to close a branch shall provide notice of the proposed 
closing to its customers. 
"(2) CONTENTS OF NOTICE.—Notice under paragraph (1) shall 
consist o
f
— 
"(A) posting of a notice in a conspicuous manner on the 
premises of the branch proposed to be closed during not less 
than the 30-day period ending on the date proposed for that 
closing; and 
"(B) inclusion of a notice in— 
"(i) at least one of any regular account statements 
mailed to customers of the branch proposed to be 
closed, or 
"(ii) in a separate mailing, 
by not later than the beginning of the 90-day period ending 
on the date proposed for that closing. 
"(c) ADOPTION OF POLICIES.—Each insured depository institution 
shall adopt policies for closings of branches of the institution.". 
IToPmi^"^ 
Subtitle C—Bank Enterprise Act 
12 u s e 1811 
SEC. 231. SHORT TITLE. 
This subtitle may be cited as the "Bank Enterprise Act of 1991". 
12 u s e 1834. 
SEC. 232. REDUCED ASSESSMENT RATE FOR DEPOSITS ATTRIBUTABLE TO 
LIFELINE ACCOUNTS. 
(a) QUALIFICATION OF LIFELINE ACCOUNTS BY FEDERAL RESERVE 
BOARD.— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2309 
i 
(1) IN GENERAL.—The Board of Governors of the Federal 
Reserve System, and the Federal Deposit Insurance Corporation 
shall establish minimum requirements for accounts providing 
basic transaction services for consumers at insured depository 
institutions in order for such accounts to qualify as lifeline 
accounts for purposes of this section and section 7(b)(10) of the 
Federal Deposit Insurance Act. 
(2) FACTORS TO BE CONSIDERED.—In determining the minimum 
requirements under paragraph (1) for lifeline accounts at in-
sured depository institutions, the Board and the Corporation 
shall consider the following factors: 
(A) Whether the account is available to provide basic 
transaction services for individuals who maintain a balance 
of less than $1,000 or such other amount which the Board 
may determine to be appropriate. 
(B) Whether any service charges or fees to which the 
account is subject, if any, for routine transactions do not 
exceed a minimal amount. 
(C) Whether any minimum balance or minimum opening 
requirement to which the account is subject, if any, is not 
more than a minimal amount. 
(D) Whether checks, negotiable orders of withdrawal, or 
similar instruments for making payments or other trans-
fers to third parties may be drawn on the account. 
(E) Whether the depositor is permitted to make more 
than a minimal number of withdrawals from the account 
each month by any means described in subparagraph (D) or 
any other means. 
(F) Whether a monthly statement itemizing all trans-
actions for the monthly reporting period is made available 
to the depositor with respect to such account or a passbook 
is provided in which all transactions with respect to such 
account are recorded. 
(G) Whether depositors are permitted access to tellers at 
the institution for conducting transactions with respect to 
such account. 
(H) Whether other account relationships with the institu-
tion are required in order to open any such account. 
(I) Whether individuals are required to meet any pre-
requisite which discriminates against low-income individ-
uals in order to open such account. 
(J) Such other factors as the Board may determine to be 
appropriate. 
(3) DEFINITIONS.—For purposes of this subsection— 
(A) BOARD.—The term "Board" means the Board of Gov-
ernors of the Federal Reserve System. 
(B) INSURED DEPOSITORY INSTITUTION.—The term "insured 
depository institution" has the meaning given to such term 
in section 3(c)(2) of the Federal Deposit Insurance Act. 
(C) LiFEUNE ACCOUNT.—The term "lifeline account" 
means any transaction account (as defined in section 
19(b)(1)(C) of the Federal Reserve Act) which meets the 
minimum requirements established by the Board under this 
subsection. 
(b) 
REDUCED ASSESSMENT RATES FOR LIFEUNE ACCOUNT DE-
POSITS.— 
105 STAT. 2310 
PUBLIC LAW 102-242—DEC. 19, 1991 
(1) REPORTING UFEUNE ACCOUNT DEPOSITS.—Section 7(a) of the 
Federal Deposit Insurance Act (12 U.S.C. 1817(a)) (as amended 
by sections 122, 123, and 141 of this Act) is amended by re-
designating paragraphs (6), (7), (8), (9), and (10) as paragraphs 
(7), (8), (9), (10), and (11), respectively, and by inserting after 
paragraph (5) the following new paragraph: 
"(6) LiFEUNE ACCOUNT DEPOSITS.—In the reports of condition 
required to be reported under this subsection, the deposits in 
lifeline accounts (as defined in section 232(a)(3)(C) of the Bank 
Enterprise Act of 1991) shall be reported separately.". 
(2) ASSESSMENT RATES APPLICABLE TO LIFELINE DEPOSITS.—Sec-
tion 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)) 
is amended by redesignating paragraph (10) (as so redesignated 
by section 103(b) of this Act) as paragraph (11) and by inserting 
after paragraph (9) the following new paragraph: 
"(10) ASSESSMENT RATE FOR LIFEUNE ACCOUNT DEPOSITS.—Not-
withstanding any other provision of this subsection, that por-
tion of the average assessment base of any insured depository 
institution which is attributable to deposits in lifeline accounts 
(as reported in the institution's reports of condition pursuant to 
subsection (a)(6)) shall be subject to assessment at the assess-
ment rate of % the maximum rate.". 
(3) ASSESSMENT PROCEDURE,—Section 7(b)(2)(A) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)) is amended— 
(A) by striking subclause (II) of clause (i) and inserting the 
following new subclause: 
"(II) such Bank Insurance Fund member's aver-
age assessment base for the immediately preceding 
semiannual period (minus any amount taken into 
account under clause (iii) with respect to lifeline 
account deposits); and"; and 
(B) by striking subclause (II) of clause (ii) and inserting 
the following new subclause: 
"(II) such Savings Association Insurance Fund 
member's average assessment base for the imme-
diately preceding semiannual period (minus any 
amount taken into account under clause (iii) with 
respect to lifeline account deposits); and"; and 
(C) by adding at the end the following new clause: 
"(iii) the semiannual assessment due from any Bank 
Insurance Fund member or Savings Association Insur-
ance Fund member with respect to lifeline account 
deposits for any semiannual assessment period shall be 
the product o
f
— 
"(I) VT. the assessment rate applicable with re-
spect to such deposits pursuant to paragraph (10) 
during that semiannual assessment period; and 
"(II) the portion of such member's average 
assessment base for the immediately preceding 
semiannual period which is attributable to deposits 
in lifeline accounts (as reported in the institution's 
reports of condition pursuant to subsection (a)(6)).". 
(c) AVAILABILITY OF FUNDS.—The provisions of this section shall 
not take effect until appropriations are specifically provided in 
Appropriation 
advance. There are hereby authorized to be appropriated such sums 
authorization. 
^ jj^^y j|jg necessary to carry out the provisions of this section. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2311 
SEC. 233. ASSESSMENT CREDITS FOR QUALIFYING ACTIVITIES RELATING 12 USC 1834a. 
TO DISTRESSED COMMUNITIES. 
(a) DETERMINATION OF CREDITS FOR INCREASES IN COMMUNITY 
ENTERPRISE ACTIVITIES.— 
(1) IN GENERAL.—The Community Enterprise Assessment 
Credit Board established under subsection (d) shall issue guide-
lines for insured depository institutions eligible under this 
subsection for any community enterprise assessment credit with 
respect to any semiannual period. Such guidelines shall— 
(A) designate the eligibility requirements for any institu-
tion meeting applicable capital standards to receive an 
assessment credit under section 7(d)(4) of the Federal De-
posit Insurance Act; and 
(B) determine the community enterprise assessment 
credit available to any eligible institution under paragraph 
(3). 
(2) QUALIFYING ACTIVITIES.—An insured depository institution 
shall be eligible for any community enterprise assessment 
credit for any semiannual period for— 
(A) any increase during such period in the amount of new 
originations of qualified loans and other financial assist-
ance provided for low- and moderate-income persons in 
distressed communities, or enterprises integrally involved 
with such neighborhoods, which the Board determines are 
qualified to be taken into account for purposes of this 
subsection; and 
(B) any increase during such period in the amount of 
deposits accepted from persons domiciled in the distressed 
community, at any office of the institution (including any 
branch) located in any qualified distressed community, and 
any increase during such period in the amount of new 
originations of loans and other financial assistance made 
within that community, except that in no case shall the 
credit for increased deposits at any institution or branch 
exceed the credit for increased loan and other financial 
assistance by the bank or branch in the distressed 
community. 
(3) AMOUNT OF ASSESSMENT CREDIT.—The amount of 
any 
community enterprise assessment credit available under section 
7(d)(4) for any insured depository institution, or a qualified 
portion thereof, for any semiannual period shall be the amount 
which is equal to 5 percent, in the case of an institution which 
does not meet the community development 
organization 
requirements under section 235, and 15 percent, in the case of 
an institution, or a qualified portion thereof, which meets such 
requirements (or any percentage designated under paragraph 
(5)) of the sum of^ 
(A) the amounts of assets described in paragraph (2)(A); 
and 
(B) the amounts of deposits, loans, and other extensions of 
credit described in paragraph (2)(B). 
(4) DETERMINATION OF QUALIFIED LOANS AND OTHER FINANCIAL 
ASSISTANCE.—Except as provided in paragraph (6), the types of 
loans and other financial assistance which the Board may 
determine to be qualified to be taken into account under para-
105 STAT. 2312 
PUBLIC LAW 102-242—DEC. 19, 1991 
graph (2)(A) for purposes of the community enterprise assess-
ment credit, may include the following: 
(A) Loans insured or guaranteed by the Secretary of 
Housing and Urban Development, the Secretary of the 
Department of Veterans Affairs, the Administrator of the 
Small Business Administration, and the Secretary of Agri-
culture. 
(B) Loans or financing provided in connection with activi-
ties assisted by the Administrator of the Small Business 
Administration or any small business investment company 
and investments in small business investment companies. 
(C) Loans or financing provided in connection with any 
neighborhood housing service program assisted under the 
Neighborhood Reinvestment Corporation Act. 
(D) Loans or financing provided in connection with any 
activities assisted under the community development block 
grant program under title I of the Housing and Community 
Development Act of 1974. 
(E) Loans or financing provided in connection with activi-
ties assisted under title II of the Cranston-Gonzalez Na-
tional Affordable Housing Act. 
(F) Loans or financing provided in connection with a 
homeownership program assisted under title III of the 
United States Housing Act of 1937 or subtitle B or C of title 
IV of the Cranston-Gonzalez National Affordable Housing 
Act. 
(G) Financial assistance provided through community 
development corporations. 
(H) Federal and State programs providing interest rate 
assistance for homeowners, 
(I) Extensions of credit to nonprofit developers or pur-
chasers of low-income housing and small business develop-
ments. 
(J) In the case of members of any Federal home loan 
bank, participation in the community investment fund pro-
gram established by the Federal home loan banks. 
(K) Conventional mortgages targeted to low- or moderate-
income persons. 
(5) ADJUSTMENT OF PERCENTAGE.—The Board may increase or 
decrease the percentage referred to in paragraph (3) for deter-
mining the amount of any community enterprise Eissessment 
credit pursuant to such paragraph, except that the percentage 
established for insured depository institutions which meet the 
community development organization requirements under sec-
tion 235 shall not be less than 3 times the amount of the 
percentage applicable for insured depository institutions which 
do not meet such requirements. 
(6) CERTAIN INVESTMENTS NOT ELIGIBLE TO BE TAKEN INTO 
ACCOUNT.—Investments by any insured depository institution in 
loans and securities that are not the result of originations by 
the institution shall not be taken into account for purposes of 
determining the amount of any credit pursuant to this 
subsection. 
(b) QUALIFIED DISTRESSED COMMUNITY DEFINED.— 
(1) IN GENERAL.—For purposes of this section, the term 
"qualified distressed community" means any neighborhood or 
community which— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2313 
(A) meets the minimum area requirements under para-
graph (3) and the eligibility requirements of paragraph (4); 
and 
(B) is designated as a distressed community by any in-
sured depository institution in accordance with paragraph 
(2) and such designation is not disapproved under such 
paragraph. 
(2) DESIGNATION REQUIREMENTS.— 
(A) NOTICE OF DESIGNATION.— 
(i) NOTICE TO AGENCY.—Upon designating an area as 
a qualified distressed community, an insured deposi-
tory institution shall notify the appropriate Federal 
banking agency of the designation. 
(ii) PUBLIC NOTICE.—Upon the effective date of any 
designation of an area as a qualified distressed commu-
nity, an insured depository institution shall publish a 
notice of such designation in major newspapers and 
other community publications which serve such area. 
(B) AGENCY DUTIES RELATING t o DESIGNATIONS.— 
(i) PROVIDING INFORMATION.—At the request of any 
insured depository institution, the appropriate Federal 
/ 
banking agency shall provide to the institution appro-
priate information to assist the institution to identify 
and designate a qualified distressed community. 
(ii) PERIOD FOR DISAPPROVAL.—Any notice received by Effective date, 
the appropriate Federal banking agency from any in-
sured depository institution under subparagraph (A)(i) 
shall take effect at the end of the 90-day period begin-
ning on the date such notice is received unless written 
notice of the approval or disapproval of the application 
by the agency is provided to the institution before the 
end of such period. 
(3) MINIMUM AREA REQUIREMENTS.—For purposes of this 
subsection, an area meets the requirements of this paragraph 
if— 
(A) the area is within the jurisdiction of 1 unit of general 
local government; 
(B) the boundary of the area is contiguous; and 
(C) the area— 
(i) has a population, as determined by the most 
recent census data available, of not less than— 
(I) 4,000, if any portion of such area is located 
within a metropolitan statistical area (as des-
ignated by the Director of the Office of Manage-
ment and Budget) with a population of 50,000 or 
more; or 
(II) 1,000, in any other case; or 
(ii) is entirely within an Indian reservation (as deter-
mined by the Secretary of the Interior). 
(4) ELIGIBILITY REQUIREMENTS.—For purposes of this subsec-
tion, an area meets the requirements of this paragraph if at 
least 2 of the following criteria are met: 
(A) INCOME.—At least 70 percent of the families and 
unrelated individuals residing in the area have incomes of 
less than 80 percent of the median income of the area. 
(B) POVERTY.—At least 20 percent of the residents resid-
ing in the area have incomes which are less than the 
105 STAT. 2314 
PUBLIC LAW 102-242—DEC. 19, 1991 
national poverty level (as determined pursuant to criteria 
established by the Director of the Office of Management 
and Budget). 
(C) UNEMPLOYMENT.—The unemployment rate for the 
area is one and one-half times greater than the national 
average (as determined by the Bureau of Labor Statistic's 
most recent figures). 
(c) ASSESSMENT CREDIT PROVIDED.— 
(1) IN GENERAL.—Section 7(d) of the Federal Deposit Insurance 
Act (12 U.S.C. 1817(d)) is amended— 
(A) by redesignating paragraphs (4) and (5) as paragraphs 
(6) and (7), respectively; and 
(B) by inserting after paragraph (3) the following new 
paragraphs: 
"(4) COMMUNITY ENTERPRISE ASSESSMENT CREDITS.—Notwith-
standing paragraphs (2)(A) and (3)(A) and in addition to any 
assessment credit authorized under paragraph (2)(B) or (3)(B), 
the Corporation shall allow an assessment credit for any semi-
annual assessment period to any Bank Insurance Fund member 
or Savings Association Insurance Fund member satisfying the 
requirements of the Community Enterprise Assessment Credit 
Board under section 233(a)(1) of the Bank Enterprise Act of 1991 
in the amount determined by such Board through regulation for 
such period pursuant to such section. 
"(5) MAXIMUM AMOUNT OF CREDIT.—The total amount of 
assessment credits allowed under this subsection (including 
community enterprise assessment credits pursuant to para-
graph (4)) for any insured depository institution for any semi-
annual period shall not exceed the amount which is equal to 20 
percent, in the case of an institution which does not meet the 
community development organization requirements under sec-
tion 235 of the Bank Enterprise Act of 1991, and 50 percent, in 
the case of an institution which meets such requirements, of the 
assessment imposed on such institution for the semiannual 
period.". 
(2) TECHNICAL AND CONFORMING AMENDMENTS.— 
(A) Subparagraph (A) of section 7(dXl) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(d)(1)) is amended by 
inserting "(other than credits allowed pursuant to para-
graph (4))" after "amount to be credited". 
(B) Subparagraph (B) of section 7(d)(1) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(d)(1)) is amended by 
inserting "(taking into account any assessment credit al-
lowed pursuant to paragraph (4))" after 
"should be 
reduced". 
(d) COMMUNITY ENTERPRISE ASSESSMENT CREDIT BOARD.— 
(1) 
ESTABLISHMENT.—There 
is 
hereby 
established 
the 
"Community Enterprise Assessment Credit Board". 
(2) NUMBER AND APPOINTMENT.—The Board shall be composed 
of 5 members as follows: 
(A) The Secretary of the Treasury or a designee of the 
Secretary. 
(B) The Secretary of Housing and Urban Development or 
a designee of the Secretary. 
(C) The Chairperson of the Federal Deposit Insurance 
Corporation or a designee of the Chairperson. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2315 
... 
(D) 2 individuals appointed by the President from among President, 
individuals who represent community organizations. 
(3) TERMS.— 
(A) APPOINTED MEMBERS.—Each appointed member shall 
be appointed for a term of 5 years. 
(B) INTERIM APPOINTMENT.—Any member appointed to fill 
a vacancy occurring before the expiration of the term to 
which such member's predecessor was appointed shall be 
appointed only for the remainder of such term. 
(C) CONTINUATION OF SERVICE.—Each appointed member 
may continue to serve after the expiration of the period to 
which such member was appointed until a successor has 
been appointed. 
(4) CHAIRPERSON.—The Secretary of the Treasury shall serve 
as the Chairperson of the Board. 
(5) No PAY.—No members of the Commission may receive any 
pay for service on the Board. 
(6) TRAVEL EXPENSES.—Each member shall receive travel ex-
penses, including per diem in lieu of subsistence, in accordance 
with sections 5702 and 5703 of title 5, United States Code. 
(7) MEETINGS.—The Board shall meet at the call of the Chair-
person or a majority of the Board's members. 
(e) DUTIES OF THE BOARD.— 
(1) PROCEDURE FOR DETERMINING COMMUNITY ENTERPRISE 
ASSESSMENT CREDITS.—The Board shall establish procedures for 
accepting and considering applications by insured depository 
institutions under subsection (a)(1) for community enterprise 
assessment credits and making determinations with respect to 
such applications. 
(2) NOTICE TO FDIC.—The Board shall notify the applicant and 
the Federal Deposit Insurance Corporation of any determina-
tion of the Board with respect to any application referred to in 
paragraph (1) in sufficient time for the Corporation to include 
the amount of such credit in the computation made for purposes 
of the notification required under section 7(d)(1)(B). 
(f) AVAILABILITY OF FUNDS.—The provisions of this section shall 
not take effect until appropriations are specifically provided in 
advance. There are hereby authorized to be appropriated such sums 
as may be necessary to carry out the provisions of this section. 
(g) DEFINITIONS.—For purposes of this section— 
(1) 
APPROPRIATE 
FEDERAL 
BANKING 
AGENCY.—The 
term 
"appropriate Federal banking agency" has the meaning given 
to such term in section 3(q) of the Federal Deposit Insurance 
Act. 
(2) BOARD.—The term "Board" means the Community Enter-
prise Assessment Credit Board established under the amend-
ment made by subsection (d). 
(3) INSURED DEPOSITORY INSTITUTION.—The term "insured 
depository institution" has the meaning given to such term in 
section 3(c)(2) of the Federal Deposit Insurance Act. 
SEC. 234. COMMUNITY DEVELOPMENT ORGANIZATIONS. 
12 USC 1834b. 
(a) COMMUNITY DEVELOPMENT ORGANIZATIONS DESCRIBED.—For 
purposes of this subtitle, any insured depository institution, or a 
qualified portion thereof, shall be treated as meeting the community 
development organization requirements of this section i
f
— 
(1) the institution— 
Appropriation 
authorization. 
105 STAT. 2316 
PUBLIC LAW 102-242—DEC. 19, 1991 
(A) is a community development bank, or controls any 
community development bank, which meets the require-
ments of subsection Ob); 
(B) controls any community development corporation, or 
maintains any community development unit within the 
institution, which meets the requirements of subsection (c); 
(C) invests in accounts in any community development 
credit union designated as a low-income credit union, sub-
ject to restrictions established for such credit unions by the 
National Credit Union Administration Board; or 
(D) invests in a community development organization 
jointly controlled by two or more institutions; 
(2) except in the case of an institution which is a community 
development bank, the amount of the capital invested, in the 
form of debt or equity, by the institution in the community 
development organization referred to in paragraph (1) (or, in the 
case of any community development unit, the amount which the 
institution irrevocably makes available to such unit for the 
purposes described in paragraph (3)) is not less than the greater 
of— 
(A) Vz of 1 percent of the capital, as defined by generally 
accepted accounting principles, of the institution; or 
(B) the sum of the amounts invested in such community 
development organization; and 
(3) the community development organization provides loans 
for residential mortgages, home improvement, and community 
development and other financial services, other than financing 
for the purchase of automobiles or extension of credit under any 
open-end credit plan (as defined in section 103(i) of the Truth in 
Lending Act), to low- and moderate-income persons, nonprofit 
organizations, and small businesses located in qualified dis-
tressed communities in a manner consistent with the intent of 
this subtitle. 
(b) COMMUNITY DEVELOPMENT BANK REQUIREMENTS.—A commu-
nity development bank meets the requirements of this subsection 
if— 
(1) the community development bank has a 15-member ad-
visory board designated as the "Community Investment Board" 
and consisting entirely of community leaders who— 
(A) shall be appointed initially by the board of directors of 
the community development bank and thereafter by the 
Community Investment Board from nominations received 
from the community; and 
(B) are appointed for a single term of 2 years, except that, 
of the initial members appointed to the Community Invest-
ment Board, V
b shall be appointed for a term of 8 months, 
V
a shall be appointed for a term of 16 months, and V
s shall 
be appointed for a term of 24 months, as designated by the 
board of directors of the community development bank at 
the time of the appointment; 
(2) V
s of the members of the community development bank's 
board of directors are appointed from among individuals nomi-
nated by the Community Investment Board; and 
(3) the bylaws of the community development bank require 
that the board of directors of the bank meet with the Commu-
nity Investment Board at least once every 3 months. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2317 
(c) COMMUNITY DEVELOPMENT CORPORATION REQUIREMENTS.—Any 
community development corporation, or community development 
unit within any insured depository institution meets the require-
ments of this subsection if the corporation or unit provides the same 
or greater, as determined by the appropriate Federal banking 
agency, community participation in the activities of such corpora-
tion or unit as would be provided by a Community Investment Board 
under subsection (b) if such corporation or unit were a community 
development bank. 
(d) ADEQUATE DISPERSAL REQUIREMENT.—The appropriate Federal 
banking agency may approve the establishment of a community 
development organization under this subtitle only upon finding that 
the distressed community is not adequately served by an existing 
community development organization. 
(e) DEFINITIONS.—For purposes of this section— 
(1) COMMUNITY DEVELOPMENT BANK.—The term "community 
development bank" means any depository institution (as de-
fined in section 3(c)(1) of the Federal Deposit Insurance Act). 
(2) 
COMMUNITY 
DEVELOPMENT 
ORGANIZATION.—The 
term 
"community development organization" means any community 
development 
bank, 
community 
development 
corporation, 
community development unit within any insured depository 
institution, or community development credit union. 
(3) Low- AND MODERATE-INCOME PERSONS.—The term "low-
and moderate-income persons" has the meaning given such 
term in section 102(a)(20) of the Housing and Community Devel-
opment Act of 1974. 
(4) NONPROFIT ORGANIZATION; SMALL BUSINESS.—The terms 
"nonprofit organization" and "small business" have the mean-
ings given to such terms by regulations which the appropriate 
Federal banking agency shall prescribe for purposes of this 
section. 
(5) QUALIFIED DISTRESSED COMMUNITY.—The term "qualified 
distressed community" has the meaning given to such term in 
section 233(b). 
Subtitle D—FDIC Property Disposition 
SEC. 241. FDIC AFFORDABLE HOUSING PROGRAM. 
(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 
1811 et seq.) is amended by adding after section 39 (as added by 
section 228 of this title) the following new section: 
"SEC. 40. FDIC AFFORDABLE HOUSING PROGRAM. 
Disadvantaged. 
"(a) PURPOSE.—The purpose of this section is to provide 
I83lq. 
homeownership and rental housing opportunities for very low-
income, low-income, and moderate-income families. 
"(b) FUNDING AND LIMITATIONS OF PROGRAM.— 
"(1) DURATION OF PROGRAM.—The provisions of this section 
shall be effective, subject to the provisions of paragraph (2), only 
during the 3-year period beginning upon the commencement of 
the first fiscal year for which amounts are provided pursuant to 
paragraph (2)(A). 
"(2) ANNUAL FISCAL LIMITATIONS.— 
105 STAT. 2318 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(A) IN GENERAL.—In each fiscal year during the 3-year 
period referred to in paragraph (1), the provisions of this 
section shall apply only— 
"(i) to such extent or in such amounts as are provided 
in appropriations Acts for any losses resulting during 
the fiscal year from the sale of properties under this 
section, except that such amounts for losses may not 
exceed $30,000,000 in any fiscal year; and 
"(ii) to the extent that amounts are provided in 
appropriations Acts pursuant to subparagraph (C) for 
any other costs relating to the program under this 
section. 
"(B) DEFINITION OF LOSSES.—For purposes of this para-
graph, the amount of losses resulting from the sale of 
properties under this section during any fiscal year shall be 
the amount equal to the sum of any affordable housing 
discounts reasonably anticipated to accrue during the fiscal 
year. 
"(C) AUTHORIZATION OF APPROPRIATIONS.—There are 
au-
thorized to be appropriated, for each fiscal year during the 
3-year period referred to in paragraph (1), such sums as 
may be necessary for any costs of the program under this 
section other than losses resulting from the sale of prop-
erties under this section. 
"(D) OTHER DEFINITIONS.—For purposes of this paragraph: 
"(i) 
AFFORDABLE 
HOUSING 
DISCOUNT.—The 
term 
'affordable housing discount' means, with respect to 
any eligible residential or eligible condominium prop-
erty transferred under this section by the Corporation, 
the difference (if any) between the realizable disposi-
tion value of the property and the actual sale price of 
the property under this section. 
"(ii) 
REALIZABLE 
DISPOSITION 
VALUE.—The 
term 
'realizable disposition value' means the estimated sale 
price that the Corporation reasonably would be able to 
obtain upon the sale of a property by the Corporation 
under the provisions of this Act, not including this 
Federal 
section, and any other applicable laws. Not later than 
^hi^*^t' 
^^® expiration of the 120-day period beginning upon the 
publication. 
Commencement of the first fiscal year for which 
amounts are provided pursuant to paragraph (2)(A), the 
Corporation shall establish, and publish in the Federal 
Register, procedures for determining the realizable dis-
position value of a property transferred under this 
section, which shall take into consideration such fac-
tors as the Corporation considers appropriate, includ-
ing the actual sale prices of properties disposed of by 
the Resolution Trust Corporation under section 21A(c) 
of the Federal Home Loan Bank Act, the prices of other 
properties sold under similar programs, and the ap-
praised value of the property transferred under this 
section. Until such procedures are established, the Cor-
poration may consider the realizable disposition value 
of any eligible residential or condominium property to 
be equal to the appraised value of the property. 
"(3) EXISTING CONTRACTS.—The provisions of this section shall 
not apply to any eligible residential property or any eligible 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2319 
condominium property that is subject to an agreement entered 
into by the Corporation before the commencement of the first 
fiscal year for which amounts are provided pursuant to para-
graph (2)(A) that provides for any other disposition of the 
property. 
"(c) RULES GOVERNING DISPOSITION OF ELIGIBLE SINGLE FAMILY 
PROPERTIES.— 
"(1) NOTICE TO CLEARINGHOUSES.—Within a reasonable period 
of time after acquiring title to an eligible single family property, 
the Corporation shall provide written notice to clearinghouses. 
Such notice shall contain basic information about the property, 
including but not limited to location, condition, and information 
relating to the estimated fair market value of the property. 
Each clearinghouse shall make such information available, 
upon request, to other public agencies, other nonprofit organiza-
tions, and qualifying households. The Corporation shall allow 
public agencies, nonprofit organizations, and qualifying house-
holds reasonable access to eligible single family property for 
purposes of inspection. 
"(2) 
OFFERS TO SELL TO NONPROFIT ORGANIZATIONS, PUBUC 
AGENCIES, AND QUAUFYING HOUSEHOLDS.—During the 180-day 
period beginning on the date on which the Corporation makes 
an eligible single family property available for sale, the Cor-
poration shall offer to sell the property to— 
"(A) qualifying households (including qualifying house-
holds with members who are veterans); or 
"(B) public agencies or nonprofit organizations that agree 
to (i) make the property available for occupancy by and 
maintain it as affordable for low-income families (including 
low-income families with members who are veterans) for 
the remaining useful life of such property, or (ii) make the 
property available for purchase by any such family who, 
except as provided in paragraph (4), agrees to occupy the 
property as a principal residence for at least 12 months and 
certifies in writing that the family intends to occupy the 
property for at least 12 months. 
The restrictions described in clause (i) of subparagraph (B) shall 
be contained in the deed or other recorded instrument. If, upon 
the expiration of such 180-day period, no qualifying household, 
public agency, or nonprofit organization has made a bona fide 
offer to purchase the property, the Corporation may offer to sell 
the property to any purchaser. The Corporation shall actively 
market eligible single family properties for sale to low-income 
families and to low-income families with members who are 
veterans. 
"(3) RECAPTURE OF PROFITS FROM RESALE.—Except as provided 
in paragraph (4), if any eligible single family property sold (A) to 
a qualifying household, or (B) to a low-income family pursuant 
to paragraph (2)(B)(ii), subsection (jX3XA), or subsection (k)(2), is 
resold by the qualifying household or low-income family during 
the 1-year period beginning upon initial acquisition by the 
household or low-income family, the Corporation shall recap-
ture 75 percent of the amount of any proceeds from the resale 
that exceed the sum of (i) the original sale price for the acquisi-
tion of the property by the qualifying household or low-income 
family, (ii) the costs of any improvements to the property made 
105 STAT. 2320 
PUBLIC LAW 102-242—DEC. 19, 1991 
after the date of the acquisition, and (iii) any closing costs in 
connection with the acquisition. 
"(4) EXCEPTIONS TO RECAPTURE REQUIREMENT.— 
"(A) RELOCATION.—The Corporation may in its discretion 
waive the applicability (i) to any qualifying household of the 
requirement under paragraph (3) and the requirements 
relating to residency of a qualifying household under 
subsections (p)(12) (B) and (C), and (ii) to any low-income 
family of the requirement under paragraph (3) and the 
residency requirements under paragraph (2)(B)(ii). The Cor-
poration may grant any such waiver only for good cause 
shown, including any necessary relocation of the qualifying 
household or low-income family. 
"(B) OTHER RECAPTURE PROVISIONS.—The requirement 
under paragraph (3) shall not apply to any eligible single 
family property for which, upon resale by the qualifying 
household or low-income family during the 1-year period 
beginning upon initial acquisition by the household or 
family, a portion of the sale proceeds or any subsidy pro-
vided in connection with the acquisition of the property by 
the household or family is required to be recaptured or 
repaid under any other Federal, State, or local law (includ-
ing section 143(m) of the Internal Revenue Code of 1986) or 
regulation or under any sale agreement. 
"(5) EXCEPTION TO AVOID DISPLACEMENT OF EXISTING RESI-
DENTS.—Notwithstanding the first sentence of paragraph (2), 
during the 180-day period following the date on which the 
Corporation makes an eligible single family property available 
for sale, the Corporation may sell the property to the household 
residing in the property, but only if (A) such household was 
residing in the property at the time notice regarding the prop-
erty was provided to clearinghouses under paragraph (1), (B) 
such sale is necessary to avoid the displacement of, and un-
necessary hardship to, the resident household, (C) the resident 
household intends to occupy the property as a principal resi-
dence for at least 12 months, and (D) the resident household 
certifies in writing that the household intends to occupy the 
property for at least 12 months. 
"(d) RULES GOVERNING DISPOSITION OF EUGIBLE MULTIFAMILY 
HOUSING PROPERTIES.— 
"(1) NOTICE TO CLEARINGHOUSES.—Within a reasonable period 
of time after acquiring title to an eligible multifamily housing 
property, the Corporation shall provide written notice to 
clearinghouses. Such notice shall contain basic information 
about the property, including but not limited to location, 
number of units (identified by number of bedrooms), and 
information relating to the estimated fair market value of the 
property. Each clearinghouse shall make such information 
available, upon request, to qualifying multifamily purchasers. 
The Corporation shall allow qualifying multifamily purchasers 
reasonable access to eligible multifamily housing properties for 
purposes of inspection. 
"(2) EXPRESSION OF SERIOUS INTEREST.—Qualifying multifamily 
purchasers may give written notice of serious interest in a 
property during a period ending 90 days after the time the 
Corporation provides notice under paragraph (1). The notice of 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2321 
serious interest shall be in such form and include such informa-
tion as the Corporation may prescribe. 
"(3) NOTICE OF READINESS FOR SALE.—Upon the expiration of 
the period referred to in paragraph (2) for a property, the 
Corporation shall provide written notice to any qualifying 
multifamily purchaser that has expressed serious interest in the 
property. Such notice shall specify the minimum terms and 
conditions for sale of the property. 
"(4) 
OFFERS BY QUAUFYING MULTIFAMILY PURCHASERS.—A 
qualifying multifamily purchaser receiving notice in accordance 
with paragraph (3) shall have 45 days (from the date notice is 
received) to make a bona fide offer to purchase the property. 
The Corporation shall accept an offer that complies with the 
terms and conditions established by the Corporation. If, before 
the expiration of such 45-day period, any offer to purchase a 
property initially accepted by the Corporation is subsequently 
rejected or fails (for any reason), the Corporation shall accept 
another offer to purchase the properly made during such period 
that complies with the terms and conditions established by the 
Corporation (if such another offer is made). The preceding 
sentence may not be construed to require a qualifying multifam-
ily purchaser whose offer is accepted during the 45-day period to 
purchase the property before the expiration of the period. 
"(5) EXTENSION OF RESTRICTED OFFER PERIODS.—The Corpora-
tion may provide notice to clearinghouses regarding, and offer 
for sale under the provisions of paragraphs (1) through (4), any 
eligible multifamily housing property— 
"(A) in which no qualifying multifamily purchaser has 
expressed serious interest during the period referred to in 
paragraph (2), or 
"(B) for which no qualifying multifamily purchaser has 
made a bona fide offer before the expiration of the period 
referred to in paragraph (4), 
except that the Corporation may, in the discretion of the Cor-
poration, alter the duration of the periods referred to in para-
graphs (2) and (4) in offering any property for sale under this 
paragraph. 
"(6) SALE OF MULTIFAMILY PROPERTIES TO OTHER PURCHASERS.— 
"(A) TIMING.—If, upon the expiration of the period re-
ferred to in paragraph (2), no qualifying multifamily pur-
chaser has expressed serious interest in a property, the 
Corporation may offer to sell the property, individually or 
in combination with other properties, to any purchaser. 
"(B) LIMITATION ON COMBINATION SALES.—The Corpora-
tion may not sell in combination with other properties any 
property for which a qualifying multifamily purchaser has 
expressed serious interest in purchasing individually. 
"(C) EXPIRATION OF OFFER PERIOD.—If, upon the expira-
tion of the period referred to in paragraph (4), no qualifying 
multifamily purchaser has made an offer to purchase a 
property, the Corporation may offer to sell the property, 
individually or in combination with other properties, to any 
purchaser. 
"(7) LOW-INCOME OCCUPANCY REQUIREMENTS.— 
"(A) SINGLE PROPERTY PURCHASES.—With respect to any 
purchase of a single eligible multifamily housing property 
105 STAT. 2322 
PUBLIC LAW 102-242—DEC. 19, 1991 
by a qualifying multifamily purchaser under paragraph (4) 
or (5)— 
"(i) not less than 35 percent of all dwelling units 
purchased shall be made available for occupancy by 
and maintained as affordable for low-income and very 
,' 
^ 
low-income families during the reraaining useful life of 
the property in which the units are located; provided 
that 
"(ii) not less than 20 percent of all dwelling units 
purchased shall be made available for occupancy by 
and maintained as affordable for very low-income fami-
lies during the remaining useful life of the property in 
which the units are located. 
"(B) 
AGGREGATION REQUIREMENTS FOR MULTIPROPERTY 
PURCHASES.—With respect to any purchase under para-
graph (4) or (5) by a qualifying multifamily purchaser 
involving more than one eligible multifamily housing prop-
erty as a part of the same negotiation, with respect to which 
the purchaser intends to aggregate the low-income occu-
pancy required under this paragraph over the total number 
of units so purchased— 
"(i) not less than 40 percent of the aggregate number 
of all dwelling units purchased shall be made available 
for occupancy by and maintained as affordable for low-
income and very low-income families during the 
remaining useful life of the building or structure in 
which the units are located; provided that 
"(ii) not less than 20 percent of the aggregate number 
of all dwelling units purchased shall be made available 
for occupancy by and maintained as affordable for very 
low-income families during the remaining useful life of 
the building or structure in which the units are located; 
and further provided that 
"(iii) not less than 10 percent of the dwelling units in 
each separate property purchased shall be made avail-
able for occupancy by and maintained as affordable for 
low-income families during the remaining useful life of 
the property in which the units are located. 
The requirements of this paragraph shall be contained in the 
deed or other recorded instrument. 
"(8) EXEMPTIONS.— 
"(A) CONTINUED OCCUPANCY OF CURRENT RESIDENTS.—No 
purchaser of an eligible multifamily property may termi-
nate the occupancy of any person residing in the property 
on the date of purchase for purposes of meeting low-income 
occupancy requirement applicable to the property under 
paragraph (7). The purchaser shall be considered to be in 
compliance with this subsection if each newly vacant dwell-
ing unit is reserved for low-income occupancy until the low-
income occupancy requirement is met. 
"(B) 
FINANCIAL INFEASIBILITY.—The Secretary or 
the 
State housing finance agency for the State in which an 
eligible multifamily housing property is located may tempo-
rarily reduce the low-income occupancy requirements 
under paragraph (7) applicable to the property, if the 
Secretary or such agency determines that an owner's 
compliance with such requirements is no longer financially 
PUBLIC LAW 102-242—DEC. 19,1991 
105 STAT. 2323 
feasible. The owner of the property shall make a good-faith 
effort to return low-income occupancy to the level required 
under paragraph (7), and the Secretary or the State housing 
finance agency, as appropriate, shall review the reduction 
annually to determine whether financial 
infeasibility 
continues to exist. 
"(e) RENT LIMITATIONS.— 
"(1) IN GENERAL.—With respect to properties under para-
graph (2), rents charged to tenants for units made available for 
occupancy by very low-income families shall not exceed 30 
percent of the adjusted income of a family whose income equals 
50 percent of the median income for the area, as determined by 
the Secretary, with adjustment for family size. Rents charged to 
tenants for units made avsiilable for occupancy by low-income 
families other than very low-income families shall not exceed 30 
percent of the adjusted income of a family whose income equals 
65 percent of the median income for the area, as determined by 
the Secretary, with adjustment for family size. 
"(2) APPUCABIUTY.—The rent limitations under this subsec-
tion shall apply to any eligible single family property sold 
pursuant to subsection (cX2XBXi) and to any eligible multifamily 
housing property sold pursuant to subsection (d). 
"(f) PREFERENCES FOR SALES.— 
"(1) IN GENERAL.—In selling any eligible multifamily housing 
property or combinations of eligible residential properties, the 
C!orporation shall give preference, among substantially similar 
offers, to the offer that would reserve the highest percentage of 
dwelling units for occupancy or purchase by very low-income 
and low-income families and would retain such affordability for 
the longest term. 
"(2) MuLTiPROPERTY PURCHASES.—The Corporation shall give 
preference, among substantially similar offers made under 
paragraph (4) or (5) of subsection (d) to purchase more than one 
eligible multifamily housing property as a part of the same 
negotiation, to offers made by purchasers who agree to maintain 
low-income occupancy in each separate property purchased in 
compliance with the levels required for properties under subsec-
tion (dX7XA). 
"(3) DEFINITION OF SUBSTANTIALLY SIMILAR OFFERS.—For pur-
poses of this subsection, a given offer to purchase eligible multi-
family housing property or combinations of such properties 
shall be considered to be substantially similar to another offer if 
the purchase price under such given offer is not less than 85 
percent of the purchase price under the other offer. 
"(g) FINANCING SALES.— 
"(1) ASSISTANCE BY CORPORATION.— 
"(A) SALE PRICE.—The Corporation shall establish a 
market value for each eligible multifamily housing prop-
erty. The Corporation shall sell eligible multifamily hous-
ing property at the net realizable market value, except that 
the Corporation may agree to sell eligible multifamily hous-
ing property at a price below the net realizable market 
value to the extent necessary to facilitate an expedited sale 
of such property and enable a public agency or nonprofit 
organization to comply with the low-income occupancy 
requirements applicable to such property under subsection 
(dX7). The Corporation may sell eligible single family prop-
105 STAT. 2324 
PUBLIC LAW 102-242—DEC. 19, 1991 
erty or eligible condominium property to qualifying house-
holds, nonprofit organizations, and public agencies without 
regard to any minimum sale price. 
"(B) PURCHASE LOAN.—The Corporation may provide a 
loan at market interest rates to any purchaser of eligible 
residential property for all or a portion of the purchase 
price, which loan shall be secured by a first or second 
mortgage on the property. The Corporation may provide 
the loan at below market interest rates to the extent nec-
essary to facilitate an expedited sale of eligible residential 
property and permit (i) a low-income family to purchase an 
eligible single family property under subsection (c), or (ii) a 
public agency or nonprofit organization to comply with the 
low-income occupancy requirements applicable to the pur-
chase of an eligible residential property under subsection (c) 
or (d). The Corporation shall provide loans under this 
subparagraph in a form permitting sale or transfer of the 
loan to a subsequent holder. In providing financing for 
combinations of eligible multifamily housing properties 
under this section, the Corporation may hold a participat-
ing share, including a subordinate participation. 
"(2) ASSISTANCE BY HUD.—The Secretary shall take such 
action as may be necessary to expedite the processing of applica-
tions for assistance under section 202 of the Housing Act of 
1959, the United States Housing Act of 1937, title IV of the 
Stewart B. McKinney Homeless Assistance Act, and the Na-
tional Housing Act, to enable any organization or individual to 
purchase eligible residential property. 
"(3) ASSISTANCE BY FMHA.—The Secretary of Agriculture shall 
take such action as may be necessary to expedite the processing 
of applications for assistance under title V of the Housing Act of 
1949 to enable any organization or individual to purchase eli-
gible residential property. 
"(4) EXCEPTION TO DISPOSITION RULES.—Notwithstanding the 
requirements under paragraphs (1), (2), (3), (4), (6), and (8) of 
subsection (d), the Corporation may provide for the disposition 
of eligible multifamily housing properties as necessary to facili-
tate purchase of such properties for use in connection with 
section 202 of the Housing Act of 1959. 
"(5) BULK ACQUISITIONS UNDER HOME INVESTMENT PARTNER-
SHIPS ACT.— 
"(A) PURCHASE PRICE.—In providing for bulk acquisition 
of eligible single family properties by participating jurisdic-
tions for inclusion in affordable housing activities under 
title II of the Cranston-Gonzalez National Affordable Hous-
ing Act, the Corporation shall agree to an amount to be 
paid for acquisition of such properties. The acquisition price 
shall include discounts for bulk purchase and for holding of 
the property such that the acquisition price for each prop-
erty shall not exceed the fair market value of the property, 
as valued individually. 
"(B) EXEMPTIONS.—To the extent necessary to facilitate 
sale of properties under this paragraph, the requirements 
of subsections (c) and (f) and of paragraph (1) of this subsec-
tion shall not apply to such transactions and properties 
involved in such transactions. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2325 
"(C) INVENTORIES.—To facilitate acquisitions by such 
participating jurisdictions, the Corporation shall provide 
the participating jurisdictions with inventories of eligible 
single family properties not less than 4 times each year. 
"(h) COORDINATION WITH OTHER PROGRAMS.— 
"(1) USE OF SECONDARY MARKET AGENCIES.—In the disposition 
of eligible residential properties, the Corporation (in consulta-
tion with the Secretary) shall explore opportunities to work 
with secondary market entities to provide housing for low- and 
moderate-income families. 
"(2) CREDIT ENHANCEMENT.— 
"(A) IN GENERAL.—With respect to such properties, the 
Secretary may, consistent with statutory authorities, work 
through the Federal Housing Administration, the Govern-
ment National Mortgage Association, the Federal National 
Mortgage Association, the Federal Home Loan Mortgage 
Corporation, and other secondary market entities to de-
velop risk-sharing structures, mortgage insurance, and 
other credit enhancements to assist in the provision of 
property ownership, rental, and cooperative 
housing 
opportunities for low- and moderate-income families. 
"(B) CERTAIN TAX-EXEMPT BONDS.—The Corporation may 
provide credit enhancements with respect to tax-exempt 
bonds issued on behalf of nonprofit organizations pursuant 
to section 103, and subpart A of part IV of subchapter A of 
chapter 1, of the Internal Revenue Code of 1986, with 
respect to the disposition of eligible residential properties 
for the purposes described in subparagraph (A). 
"(3) NATIONAL AFFORDABLE HOUSING ACT.—The Corporation 
shall coordinate the disposition of eligible residential property 
under this section with appropriate programs and provisions of, 
and amendments made by, the Cranston-Gonzalez National 
Affordable Housing Act, including titles II and IV of such Act. 
"(i) EXEMPTION FOR CERTAIN TRANSACTIONS WITH INSURED DEPOSI-
TORY INSTITUTIONS.—The provisions of this section shall not apply 
with respect to any eligible residential property after the date the 
Corporation enters into a contract to sell such property to an 
insured depository institution (as defined in section 3), including any 
sale in connection with a transfer of all or substantially all of the 
assets of a closed insured depository institution (including such 
property) to another insured depository institution. 
"(j) TRANSFER OF CERTAIN ELIGIBLE RESIDENTIAL PROPERTIES TO ^ 
STATE 
HOUSING 
AGENCIES FOR DISPOSITION.—Notwithstanding 
subsections (c), (d), (f), and (g), the Corporation may transfer eligible 
residential properties to the State housing finance agency or any 
other State housing agency for the State in which the property is 
located, or to any local housing agency in whose jurisdiction the 
property is located. Transfers of eligible residential properties under 
this subsection may be conducted by direct sale, consignment sale, 
or any other method the Corporation considers appropriate and 
shall be subject to the following requirements: 
"(1) INDIVIDUAL OR BULK TRANSFER.—The Corporation may 
transfer such properties individually or in bulk, as agreed to by 
the Corporation and the State housing finance agency or State 
or local housing agency. 
"(2) ACQUISITION PRICE.—The acquisition price paid by the 
State housing finance agency or State or local housing agency to 
105 STAT. 2326 
PUBLIC LAW 102-242—DEC. 19, 1991 
the Corporation for properties transferred under this subsection 
f T shall be an amount agreed to by the Corporation and the 
transferee agency. 
"(3) LOW-INCOME USE.—Any State housing finance agency or 
State or local housing agency acquiring properties under this 
subsection shall offer to sell or transfer the properties only as 
follows: 
"(A) ELIGIBLE SINGLE FAMILY PROPERTIES.—For eligible 
single family properties— 
"(i) to purchasers described under subparagraphs (A) 
and (B) of subsection (c)(2); 
"(ii) if the purchaser is a purchaser described under 
subsection (c)(2)(B)(i), subject to the rent limitations 
under subsection (eXD; 
"(iii) subject to the requirement in the second sen-
tence of subsection (c)(2); and 
"(iv) subject to recapture by the Corporation of excess 
proceeds from resale of the properties under para-
graphs (3) and (4) of subsection (c). 
"(B) ELIGIBLE MULTIFAMILY HOUSING PROPERTIES.—For eli-
gible multifamily housing properties— 
"(i) to qualifying multifamily purchasers; 
"(ii) subject to the low-income occupancy require-
ments under subsection (d)(7); 
"(iii) subject to the provisions of subsection (d)(8); 
"(iv) subject to a preference, among financially 
acceptable offers, to the offer that would reserve the 
highest percentage of dwelling units for occupancy or 
purchase by very low- and low-income families and 
would retain such affordability for the longest term; 
and 
"(v) subject to the rent limitations under subsection 
(e)(1). 
"(4) AFFORDABILITY.—The State housing finance agency or 
State or local housing agency shall endeavor to make the 
properties transferred under this subsection more affordable to 
low-income families based upon the extent to which the acquisi-
tion price of a property under paragraph (2) is less than the 
market value of the property. 
"(k) EXCEPTION FOR SALES TO NONPROFIT ORGANIZATIONS AND 
PUBUC AGENCIES.— 
"(1) SUSPENSION OF OFFER PERIODS.—With respect to any eli-
gible residential property, the Corporation may (in the discre-
tion of the Corporation) suspend any of the requirements of 
paragraphs (1) and (2) of subsection (c) and paragraphs (1) 
through (4) of subsection (d), as applicable, but only to the 
extent that for the duration of the suspension the Corporation 
negotiates the sale of the property to a nonprofit organization or 
public agency. If the property is not sold pursuant to such 
negotiations, the requirements of any provisions suspended 
shall apply upon the termination of the suspension. Any time 
period referred to in such subsections shall toll for the duration 
of any suspension under this paragraph. 
"(2) USE RESTRICTIONS.— 
"(A) ELIGIBLE SINGLE FAMILY PROPERTY.—Any eligible 
single family property sold under this subsection shall be (i) 
made available for occupancy by and maintained as afford-
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2327 
able for low-income families for the remaining useful life of 
the property, or made available for purchase by such fami-
lies, (ii) subject to the rent limitations under subsection 
(eXl), (iii) subject to the requirements relating to residency 
of a qualifying household under subsection (p)(12) and to 
residency of a low-income family under subsection (cX2)(B), 
and (iv) subject to recapture by the Corporation of excess 
proceeds from resale of the property under paragraphs (3) 
and (4) of subsection (c). 
"(B) EuGiBLE MULTiFAMiLY HOUSING PROPERTY.—Any eli-
gible multifamily housing property sold under this subsec-
tion shall comply with the low-income occupancy require-
ments under subsection (dX7) and shall be subject to the 
rent limitations under subsection (eXD-
"(1) RULES GOVERNING DISPOSITION OF ELIGIBLE CONDOMINIUM 
PROPERTY.— 
"(1) NOTICE TO CLEARINGHOUSES.—Within a reasonable period 
of time after acquiring title to an eligible condominium prop-
erty, the Corporation shall provide written notice to clearing-
houses. Such notice shall contain basic information about the 
property. Each clearinghouse shall make such information 
available, upon request, to purchasers described in subpara-
graphs (A) through (D) of paragraph (2). The Corporation shall 
allow such purchasers reasonable access to an eligible con-
dominium property for purposes of inspection. 
"(2) OFFERS TO SELL.—For the 180-day period following the 
date on which the Corporation makes an eligible condominium 
property available for sale, the Corporation may offer to sell the 
property, at the discretion of the Corporation, to 1 or more of 
the following purchasers: 
"(A) Qualifying households. 
"(B) Nonprofit organizations. 
"(C) Public agencies. 
"(D) For-profit entities. 
"(3) LOW-INCOME OCCUPANCY REQUIREMENTS.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
f 
(B), any nonprofit organization, public agency, or for-profit 
entity that purchases an eligible condominium property 
shall (i) make the property available for occupancy by and 
maintain it as affordable for low-income families for the 
remaining useful life of the property, or (ii) make the 
property available for purchase by any such family who, 
' 
except as provided in paragraph (5), agrees to occupy the 
property as a principal residence for at least 12 months and 
; 
certifies in writing that the family intends to occupy the 
property for at least 12 months. The restriction described in 
clause (i) of the preceding sentence shall be contained in the 
deed or other recorded instrument. 
"(B) 
MULTIPLE-UNIT 
PURCHASES.—If 
any 
nonprofit 
> 
organization, public agency, or for-profit entity purchases 
f 
more than 1 eligible condominium property as a part of the 
8 
same negotiation or purchase, the Corporation may (in the 
discretion of the Corporation) waive the requirement under 
subparagraph (A) and provide instead that not less than 35 
percent of all eligible condominium properties purchased 
shall be (i) made available for occupancy by and maintained 
as affordable for low-income families for the remaining 
105 STAT. 2328 
PUBLIC LAW 102-242—DEC. 19, 1991 
useful life of the property, or (ii) made available for pur-
chase by any such family who, except as provided in para-
graph (5), agrees to occupy the property as a principal 
residence for at least 12 months and certifies in writing 
that the family intends to occupy the property for at least 
12 months. The restriction described in clause (i) of the 
preceding sentence shall be contained in the deed or other 
recorded instrument. 
"(C) SALE TO OTHER PURCHASERS.—If, upon the expiration 
of the 180-day period referred to in paragraph (2), no pur-
chaser described in subparagraphs (A) through (D) of para-
graph (2) has made a bona fide offer to purchase the 
property, the Corporation may offer to sell the property to 
any other purchaser. 
"(4) RECAPTURE OF PROFITS FROM RESALE.—Except as provided 
in paragraph (5), if any eligible condominium property sold (A) 
to a qualifying household, or (B) to a low-income family pursu-
ant to paragraph (3)(A)(ii) or (3)(B)(ii), is resold by the qualifying 
household or low-income family during the 1-year period begin-
ning upon initial acquisition by the household or family, the 
Corporation shall recapture 75 percent of the amount of any 
proceeds from the resale that exceed the sum of (i) the original 
sale price for the acquisition of the property by the qualifying 
— 
household or low-income family, (ii) the costs of any improve-
ments to the property made after the date of the acquisition, 
and (iii) any closing costs in connection with the acquisition. 
"(5) EXCEPTION TO RECAPTURE REQUIREMENT.—The Corpora-
tion (or its successor) may in its discretion waive the applicabil-
ity to any qualifying household or low-income family of the 
requirement under paragraph (4) and the requirements relating 
to residency of a qualifying household or low-income family 
(under subsection (p)(12) and paragraph (3) of this subsection, 
respectively). The Corporation may grant any such a waiver 
only for good cause shown, including any necessary relocation of 
the qualifying household or low-income family. 
^ 
"(6) LIMITATIONS ON MULTIPLE UNIT PURCHASES.—The Corpora-
tion may not sell or offer to sell as part of the same negotiation 
or purchase any eligible condominium properties that are not 
located in the same condominium project (as such term is 
defined in section 604 of the Housing and Community Develop-
ment Act of 1980). The preceding sentence may not be construed 
to require all eligible condominium properties offered or sold as 
part of the same negotiation or purchase to be located in the 
same structure. 
"(7) RENT UMITATIONS.—Rents charged to tenants of eligible 
condominium properties made available for occupancy by very 
low-income families shall not exceed 30 percent of the adjusted 
income of a family whose income equals 50 percent of the 
median income for the area, as determined by the Secretary, 
with adjustment for family size. Rents charged to tenants of 
eligible condominium properties made available for occupancy 
by low-income families other than very low-income families 
shall not exceed 30 percent of the adjusted income of a family 
whose income equals 65 percent of the median income for the 
area, as determined by the Secretary, with adjustment for 
family size. 
"(m) LiABiuTY PROVISIONS.— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2329 
1 J- "(1) i]sf GENERAL.—The provisions of this section, or any fail-
ure by the Corporation to comply with such provisions, may not 
be used by any person to attack or defeat any title to property 
' 
after it is conveyed by the Corporation. 
"(2) LOW-INCOME OCCUPANCY.—The low-income occupancy 
requirements under subsections (c), (d), (jX^), (k)(2), and (1)(3) 
shall be judicially enforceable against purchasers of property 
under this section and their successors in interest by affected 
very low- and low-income families. State housing finance agen-
cies, and any agency, corporation, or authority of the United 
States. The parties specified in the preceding sentence shall be 
entitled to reasonable attorney fees upon prevailing in any such 
judicial action. 
"(3) CLEARINGHOUSES.—A clearinghouse shall not be subject 
to suit for its failure to comply with the requirements of this 
section. 
"(4) CORPORATION.—The Corporation shall not be liable to any 
depositor, creditor, or shareholder of any insured depository 
institution for which the Corporation has been appointed re-
ceiver, or any claimant against such an institution, because the 
disposition of assets of the institution under this section affects 
the amount of return from the assets, 
"(n) AFFORDABLE HOUSING PROGRAM OFFICE.—The Corporation Establishment, 
shall establish an Affordable Housing Program Office within the 
Corporation to carry out the provisions of this section and shall 
dedicate certain staff of the Corporation to the office. 
"(o) REPORT.—To the extent applicable, in the annual report 
submitted by the Secretary to the Congress under section 8 of the 
Department of Housing and Urban Development Act, the Secretary 
shall include a detailed description of any activities under this 
section, including recommendations for any additional authority the 
Secretary considers necessary to implement the provisions of this 
section. 
"(p) DEFINITIONS.—For purposes of this section: 
"(1) ADJUSTED INCOME AND INCOME.—The terms 'adjusted 
income' and 'income' shall have the meaning given such terms 
in section ZQo) of the United States Housing Act of 1937. 
"(2) CLEARINGHOUSE.—The term 'clearinghouse' means— 
'i 
"(A) the State housing finance agency for the State in 
which an eligible residential property or eligible condomin-
ium property is located; 
"(B) the Office of Community Investment (or other com-
parable division) within the Federal Housing Finance 
Board; and 
"(C) any national nonprofit organizations (including any 
nonprofit entity established by the corporation established 
5 
under title IX of the Housing and Community Development 
Act of 1968) that the Corporation determines has the capac-
ity to act as a clearinghouse for information. 
* 
"(3) CORPORATION.—The term 'Corporation' means the Fed-
eral Deposit Insurance Corporation acting in its corporate 
capacity or its capacity as receiver. 
"(4) EUGIBLE CONDOMINIUM PROPERTY.—The term 'eligible 
condominium property' means a condominium unit, as such 
term is defined in section 604 of the Housing and Community 
Development Act of 1980— 
"(A) to which such Corporation acquires title; and 
105 STAT. 2330 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(B) that has an appraised value that does not exceed the 
applicable dollar amount set forth in the first sentence of 
section 203(b)(2) of the National Housing Act (which may, in 
the discretion of the Corporation, take into consideration 
any increase of such amount for high-cost areas). 
"(5) ELIGIBLE MULTIFAMILY HOUSING PROPERTY.—The term 'eli-
gible multifamily housing property' means a property consist-
ing of more than 4 dwelling units— 
"(A) to which the Corporation acquires title; and 
"(B) that has an appraised value that does not exceed the 
applicable dollar amount set forth in section 221(d)(3)(ii) of 
the National Housing Act for elevator-type structures 
(which may, in the discretion of the Corporation, take into 
consideration any increase of such amount for high-cost 
areas). 
"(6) ELIGIBLE RESIDENTIAL PROPERTY.—The term 'eligible resi-
dential property' includes eligible single family properties and 
eligible multifamily housing properties. 
"(7) ELIGIBLE SINGLE FAMILY PROPERTY.—The term 'eligible 
single family property' means a 1- to 4-family residence (includ-
ing a manufactured home)— 
"(A) to which the Corporation acquires title; and 
"(B) that has an appraised value that does not exceed the 
applicable dollar amount set forth in the first sentence of 
section 203(b)(2) of the National Housing Act (which may, in 
the discretion of the Corporation, take into consideration 
any increase of such amount for high-cost areas). 
"(8) LOW-INCOME FAMILIES.—The term 'low-income families' 
means families and individuals whose incomes do not exceed 80 
percent of the median income of the area involved, as deter-
mined by the Secretary, with adjustment for family size. 
"(9) NET REALIZABLE MARKET VALUE.—The term net realizable 
market value' means a price below the market value that takes 
into account (A) any reductions in holding costs resulting from 
the expedited sale of a property, including foregone real estate 
* 
taxes, insurance, maintenance costs, security costs, and loss of 
use of funds, and (B) the avoidance, if applicable, of fees paid to 
real estate brokers, auctioneers, or other individuals or 
organizations involved in the sale of property owned by the 
Corporation. 
"(10) 
NONPROFIT 
ORGANIZATION.—The 
term 
'nonprofit 
organization' means a private organization (including a limited 
equity cooperative)— 
"(A) no part of the earnings of which inures to the benefit 
of any member, shareholder, founder, contributor, or 
individual; and 
"(B) that is approved by the Corporation as to financial 
responsibility. 
"(11) PUBLIC AGENCY.—The term 'public agency' means any 
Federal, State, local, or other governmental entity, and includes 
any public housing agency. 
"(12) QUALIFYING HOUSEHOLD.—The term 'qualifying house-
hold' means a household— 
"(A) who intends to occupy eligible single family property 
as a principal residence; 
"(B) who agrees to occupy the property as a principal 
residence for at least 12 months; 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2331 
"(C) who certifies in writing that the household intends to 
occupy the property as a principal residence for at least 12 
months; and 
"(D) whose income does not exceed 115 percent of the 
median income for the area, as determined by the Sec-
retary, with adjustment for family size. 
"(13) 
QUAUFYING 
MULTIFAMILY 
PURCHASER.—The 
term 
'qualif5dng multifamily purchaser' means— 
"(A) a public agency; 
"(B) a nonprofit organization; or 
"(C) a for-profit entity, which makes a commitment (for 
itself or any related entity) to comply with the low-income 
occupancy requirements under subsection (dX7) for any 
eligible multifamily housing property for which an offer to 
purchase is made during or after the periods specified 
under subsection (d). 
"(14) SECRETARY.—The term 'Secretary' means the Secretary 
of Housing and Urban Development. 
"(15) STATE HOUSING FINANCE AGENCY.—The term 'State hous-
ing finance agency' means the public agency, authority, cor-
poration, or other instrumentality of a State that has the 
authority to provide residential mortgage loan 
financing 
throughout the State. 
"(16) VERY LOW-INCOME FAMILIES.—The term 'very low-income 
families' means families and individuals whose incomes do not 
exceed 50 percent of the median income of the area involved, as 
determined by the Secretary, with adjustment for family size.". 
(b) COORDINATION.—The Federal Deposit Insurance Corporation l2USC1831q 
and the Resolution Trust Corporation shall consult and coordinate "°^-
with each other in carrying out their respective responsibilities 
under the affordable housing programs under section 42 of the 
Federal Deposit Insurance Act and section 21A(c) of the Federal 
Home Loan Bank Act. Such corporations shall develop any proce-
dures, and may enter into any agreements, necessary to provide for 
the coordinated, efficient, and effective operation of such programs. 
(c) CONFORMING AMENDMENTS.— 
(1) FEDERAL DEPOSIT INSURANCE ACT.—Section 11(d) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(d)) is amended— 
(A) in paragraph (2)(B), in the matter preceding clause (i), 
by inserting "(subject to the provisions of section 42)" before 
the comma; and 
(B) in paragraph (2)(E), by inserting "(subject to the provi-
sions of section 42)" before the first comma. 
(2) HOUSING ACT OF 1959.—Section 202(h)(2) of the Housing 
Act of 1959 (12 U.S.g. 1701q(hX2)), as amended by section 801(a) 
of the Cranston-Gonzalez National Affordable Housing Act, is 
amended by inserting "or from the Federal Deposit Insurance 
Corporation under section 42 of the Federal Deposit Insurance 
Act" after "Federal Home Loan Bank Act". 
Subtitle E—Whistleblower Protections 
SEC. 251. ADDITIONAL WHISTLEBLOWER PROTECTIONS. 
(a) ADDITIONAL COVERAGE ESTABLISHED UNDER FEDERAL DEPOSIT 
INSURANCE ACT.— 
105 STAT. 2332 
PUBLIC LAW 102-242—DEC. 19, 1991 
(1) IN GENERAL.—Section 33(a) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1831j(a)) is amended to read as follows: 
"(a) IN GENERAL.— 
"(1) EMPLOYEES OF DEPOSITORY INSTITUTIONS.—No insured 
depository institution may discharge or otherwise discriminate 
against any employee with respect to compensation, terms, 
conditions, or privileges of employment because the employee 
(or any person acting pursuant to the request of the employee) 
provided information to any Federal banking agency or to the 
Attorney General regarding any possible violation of any law or 
regulation by the depository institution or any director, officer, 
or employee of the institution. 
"(2) EMPLOYEES OF BANKING AGENCIES.—No Federal banking 
agency, Federal home loan bank, or Federal Reserve bank may 
discharge or otherwise discriminate against any employee with 
respect to compensation, terms, conditions, or privileges of 
employment because the employee (or any person acting pursu-
ant to the request of the employee) provided information to any 
such agency or bank or to the Attorney General regarding any 
possible violation of any law or regulation by— 
i 
"(A) any depository institution or any such bank or 
agency; 
"(B) any director, officer, or employee of any depository 
institution or any such bank; or 
"(C) any officer or employee of the agency which employs 
such employee.". 
(2) TECHNICAL AND CONFORMING AMENDMENT.—Section 33(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1831j(c)) is amend-
ed by inserting ", Federal home loan bank. Federal Reserve 
bank, or Federal banking agency" after "depository institu-
tion". 
(3) DEFINITION.—Section 33 of the Federal Deposit Insurance 
Act (12 U.S.C. 1831J) is amended by adding at the end the 
following new subsection: 
"(e) FEDERAL BANKING AGENCY DEFINED.—For purposes of subsec-
tions (a) and (c), the term 'Federal banking agency' means the 
Corporation, the Board of Governors of the Federal Reserve System, 
the Federal Housing Finance Board, the Comptroller of the Cur-
rency, and the Director of the Office of Thrift Supervision.". 
12 use 1831J 
(4) EFFECTIVE DATE.—Paragraph (2) of section 33(a) of the 
note. 
Federal Deposit Insurance Act (as added under the amendment 
made by paragraph (1)) shall be treated as having taken effect 
on January 1, 1987, and for purposes of any cause of action 
arising under such paragraph (as so effective) before the date of 
the enactment of this Act, the 2-year period referred to in 
section 33(b) of such Act shall be deemed to begin on such date 
of enactment. 
(b) ADDITIONAL COVERAGE ESTABUSHED UNDER FEDERAL CREDIT 
UNION ACT.— 
(1) IN GENERAL.—Section 213(a) of the Federal Credit Union 
Act (12 U.S.C. 1790b(a)) is amended to read as follows: 
"(a) IN GENERAL.— 
"(1) EMPLOYEES OF CREDIT UNIONS.—No insured credit union 
may discharge or otherwise discriminate against any employee 
with respect to compensation, terms, conditions, or privileges of 
employment because the employee (or any person acting pursu-
ant to the request of the employee) provided information to the 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2333 
Board or the Attorney General regarding any possible violation 
of any law or regulation by the credit union or any director, 
officer, or employee of the credit union. 
"(2) EMPLOYEES OF THE ADMINISTRATION.—The Administration 
may not discharge or otherwise discriminate against any em-
ployee (including any employee of the National Credit Union 
Central Liquidity Facility) with respect to compensation, terms, 
conditions, or privileges of employment because the employee 
(or any person acting pursuant to the request of the employee) 
provided information to the Administration or the Attorney 
General regarding any possible violation of any law or regula-
tion by— 
"(A) any credit union the Administration; 
"(B) any director, officer, or employee of any depository 
institution or any such bank; or 
"(C) any officer or employee of the Administration.". 
(2) TECHNICAL AND CONFORMING AMENDMENT.—Section 213(c) 
of the Federal Credit Union Act (12 U.S.C. 1790b(c)) is amended 
by inserting "or the Administration" after "credit union". 
(3) EFFECTIVE DATE.—Paragraph (2) of section 213(a) of the 12 use 1790b 
Federal Credit Union Act (as added under the amendment made "
°
*
®
* 
by paragraph (1)) shall be treated as having taken effect on 
I 
January 1, 1987, and for purposes of any cause of action arising 
under such paragraph (as so effective) before the date of the 
enactment of this Act, the 2-year period referred to in section 
213(b) of such Act shall be deemed to begin on such date of 
enactment. 
(c) COVERAGE FOR EMPLOYEES OF RTC, OVERSIGHT BOARD, AND R T C 
CONTRACTORS.— 
(1) COVERAGE ESTABLISHED.—Section 21A of the Federal Home 
Loan Bank Act (12 U.S.C. 1441a) is amended by adding at the 
end the following new subsection: 
"(q) RTC, OVERSIGHT BOARD, AND RTC CONTRACTOR EMPLOYEE 
PROTECTION REMEDY.— 
"(1) PROHIBITION AGAINST DISCRIMINATION.—The Corporation, 
the Oversight Board, and any person who is performing, di-
rectly or indirectly, any function or service on behalf of the 
Corporation or the Oversight Board may not discharge or other-
wise discriminate Eigainst any employee (including any em-
ployee of the Federal Deposit Insurance Corporation on assign-
ment to the Corporation under this section or any personnel 
referred to in subparagraphs (C) and (F) of subsection (a)(5)) with 
respect to compensation, terms, conditions, or privileges of 
employment because the employee (or any person acting pursu-
ant to the request of the employee) provided informatioin to the 
C!orporation, the Oversight Board, the Attorney General, or any 
appropriate Federal banking agency (as defined in section 3(q) 
of the Federal Deposit Insurance Act) regarding any possible 
violation of any law or regulation by the Corporation, the 
Oversight Board, or such person or any director, officer, or 
employee of the Corporation, the Oversight Board, or the 
person. 
"(2) ENFORCEMENT.—Any employee or former employee who 
believes that such employee has been discharged or discrimi-
nated against in violation of paragraph (1) may file a civil action 
in the appropriate United States district court before the end of 
105 STAT. 2334 
PUBLIC LAW 102-242—DEC. 19, 1991 
12 u s e 1441a 
note. 
the 2-year period beginning on the date of such discharge or 
discrimination. 
"(3) REMEDIES.—If the district court determines that a viola-
tion has occurred, the court may order the Corporation or the 
person which committed the violation to— 
"(A) reinstate the employee to the employee's former 
position; 
"(B) pay compensatory damsiges; or 
"(C) take other appropriate actions to remedy any past 
discrimination. 
"(4) LIMITATION.—The protections of this section shall not 
apply to £my employee who— 
"(A) deliberately causes or participates in the alleged 
violation of law or regulation; or 
"(B) knowingly or recklessly provides substantially false 
information to the Corporation, the Attorney General, or 
any appropriate Federal banking agency.". 
(2) EFFECTIVE DATE.—Subsection (q) of section 21A of the 
Federal Home Loan Bank Act (as added under the amendment 
made by paragraph (1)) shall be treated £is having taken effect 
on August 9, 1989, and for purposes of any cause of action 
arising under such subsection (as so effective) before the date of 
the enactment of this Act, the 2-year period referred to in 
section 21A(q)(2) of such Act shall be deemed to begin on such 
date of enactment. 
Truth in 
Savings Act. 
Consumer 
protection. 
Public 
information. 
12 u s e 4301 
note. 
12 u s e 4301. 
12 u s e 4302. 
Subtitle F—Truth in Savings 
SEC. 261. SHORT TITLE. 
This subtitle may be cited as the "Truth in Savings Act". 
SEC. 262. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress hereby finds that economic stability 
would be enhanced, competition between depository institutions 
would be improved, and the ability of the consumer to make 
informed decisions regarding deposit accounts, and to verify ac-
counts, would be strengthened if there was uniformity in the disclo-
sure of terms and conditions on which interest is paid and fees are 
assessed in connection with such accounts. 
(b) PURPOSE.—It is the purpose of this subtitle to require the clear 
and uniform disclosure o
f
— 
(1) the rates of interest which are payable on deposit accounts 
by depository institutions; and 
(2) the fees that are assessable against deposit accounts, 
so that consumers can make a meaningful comparison between the 
competing claims of depository institutions with regard to deposit 
accounts. 
SEC. 263. DISCLOSURE OF INTEREST RATES AND TERMS OF ACCOUNTS. 
(a) IN GENERAL.—Except as provided in subsection (b), each 
advertisement, announcement, or solicitation initiated by any 
depository institution or deposit broker relating to any demand or 
interest-bearing account offered by an insured depository institution 
which includes any reference to a specific rate of interest payable on 
amounts deposited in such account, or to a specific 5deld or rate of 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2335 
earnings on amounts so deposited, shall state the following informa-
tion, to the extent applicable, in a clear and conspicuous manner: 
(1) The annual percentage yield. 
(2) The period during which such annual percentage yield is 
in effect. 
(3) All minimum account balance and time requirements 
which must be met in order to earn the advertised yield (and, in 
the case of accounts for which more than 1 yield is stated, each 
annual percentage yield and the account minimum balance 
requirement associated with each such yield shall be in close 
proximity and have equal prominence). 
(4) The minimum amount of the initial deposit which is 
required to open the account in order to obtain the yield adver-
tised, if such minimum amount is greater than the minimum 
balance necessary to earn the advertised yield. 
(5) A statement that regular fees or other conditions could 
reduce the yield. 
(6) A statement that an interest penalty is required for early 
withdrawal. 
(b) BROADCAST AND ELECTRONIC MEDIA AND OUTDOOR ADVERTISING 
EXCEPTION.—The Board may, by regulation, exempt advertisements, 
announcements, or solicitations made by any broadcast or electronic 
medium or outdoor advertising display not on the premises of the 
depository institution from any disclosure requirements described in 
paragraph (4) or (5) of subsection (a) if the Board finds that any such 
disclosure would be unnecessarily burdensome. 
(c) MISLEADING DESCRIPTIONS OF FREE OR NO-COST ACCOUNTS 
PROHIBITED.—No advertisement, announcement, or solicitation 
made by any depository institution or deposit broker may refer to or 
describe an account as a free or no-cost account (or words of similar 
meaning) i
f
— 
(1) in order to avoid fees or service charges for any period— 
(A) a minimum balance must be maintained in the ac-
count during such period; or 
(B) the number of transactions during such period may 
not exceed a maximum number; or 
(2) any regular service or transaction fee is imposed. 
(d) MISLEADING OR INACCURATE ADVERTISEMENTS, ETC., PROHIB-
ITED.—No depository institution or deposit broker shall make any 
advertisement, announcement, or solicitation relating to a deposit 
account that is inaccurate or misleading or that misrepresents its 
deposit contracts. 
SEC. 264. ACCOUNT SCHEDULE. 
12 USC 4303. 
(a) IN GENERAL.—Each depository institution shall maintain a Regulations, 
schedule of fees, charges, interest rates, and terms and conditions 
applicable to each class of accounts offered by the depository institu-
tion, in accordance with the requirements of this section and regula-
tions which the Board shall prescribe. The Board shall specify, in 
regulations, which fees, charges, penalties, terms, conditions, and 
account restrictions must be included in a schedule required under 
this subsection. A depository institution need not include in such 
schedule any information not specified in such regulation. 
(b) INFORMATION ON FEES AND CHARGES.—The schedule required 
under subsection (a) with respect to any account shall contain the 
following information: 
105 STAT. 2336 
PUBLIC LAW 102-242—DEC. 19, 1991 
(1) A description of all fees, periodic service charges, and 
penalties which may be charged or assessed against the account 
(or against the account holder in connection with such account), 
the amount of any such fees, charge, or penalty (or the method 
by which such amount will be calculated), and the conditions 
under which any such amount will be assessed. 
(2) All minimum balance requirements that affect fees, 
charges, and penalties, including a clear description of how each 
such minimum balance is calculated. 
(3) Any minimum amount required with respect to the initial 
deposit in order to open the account. 
(c) INFORMATION ON INTEREST RATES.—The schedule required 
under subsection (a) with respect to any account shall include the 
following information: 
(1) Any annual percentage yield. 
(2) The period during which any such annual percenteige yield 
will be in effect. 
(3) Any annual rate of simple interest. 
(4) The frequency with which interest will be compounded and 
credited. 
(5) A clear description of the method used to determine the 
balance on which interest is paid. 
(6) The information described in paragraphs (1) through (4) 
with respect to any period after the end of the period referred to 
in paragraph (2) (or the method for computing any information 
described in any such paragraph), if applicable. 
(7) Any minimum balance which must be maintained to earn 
the rates and obtain the yields disclosed pursuant to this subsec-
tion and a clear description of how any such minimum balance 
is calculated. 
(8) A clear description of any minimum time requirement 
which must be met in order to obtain the yields disclosed 
pursuant to this subsection and any information described in 
paragraph (1), (2), (3), or (4) that will apply if any time require-
ment is not met. 
(9) A statement, if applicable, that any interest which has 
accrued but has not been credited to an account at the time of a 
withdrawal from the account will not be paid by the depository 
institution or credited to the account by reason of such with-
drawal. 
(10) Any provision or requirement relating to nonpayment of 
interest, including any charge or penalty for early withdrawal, 
and the conditions under which any such charge or penalty may 
be assessed. 
(d) OTHER INFORMATION.—The schedule required under subsection 
(a) shall include such other disclosures as the Board may determine 
to be necessary to allow consumers to understand and compare 
accounts, including frequency of interest rate adjustments, account 
restrictions, and renewal policies for time accounts. 
(e) STYLE AND FORMAT.—Schedules required under subsection (a) 
shall be written in clear and plain language and be presented in a 
format designed to allow consumers to readily understand the terms 
of the accounts offered. 
Regulations. 
SEC. 265. DISCLOSURE REQUIREMENTS FOR CERTAIN ACCOUNTS. 
12 use 4304. 
rpj^g Board shall require, in regulations which the Board shall 
prescribe, such modification in the disclosure requirements under 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2337 
this Act relating to annual percentage yield £is may be necessary to 
carry out the purposes of this Act in the case of— 
(1) accounts with respect to which determination of annual 
percentage yield is based on an annual rate of interest that is 
guaranteed for a period of less than 1 year; 
(2) variable rate accounts; 
(3) accounts which, pursuant to law, do not guarantee pay-
ment of a stated rate; 
(4) multiple rate accounts; and 
(5) accounts with respect to which determination of annual 
percentage yield is based on an annual rate of interest that is 
guaranteed for a stated term. 
. 
, 
SEC. 266. DISTRIBUTION OF SCHEDULES. 
12 USC 4305. 
(a) IN GENERAL.—A schedule required under section 264 for an 
appropriate account shall be— 
(1) made available to any person upon request; 
(2) provided to any potential customer before an account is 
opened or a service is rendered; and 
(3) provided to the depositor, in the case of any time deposit 
which is renewable at maturity without notice from the deposi-
tor, at least 30 days before the date of maturity. 
(b) DISTRIBUTION IN CASE OF CERTAIN INITIAL DEPOSITS.—If— 
(1) a depositor is not physically present at an office of a 
depository institution at the time an initial deposit is accepted 
with respect to an account established by or for such person; 
and 
(2) the schedule required under section 264(a) has not been 
furnished previously to such depositor, 
the depository institution shall mail the schedule to the depositor at 
the address shown on the records of the depository institution for 
such account no later than 10 days after the date of the initial 
deposit. 
(c) DISTRIBUTION OF NOTICE OF CERTAIN CHANGES.—If— 
(1) any change is made in any term or condition which is 
required to be disclosed in the schedule required under section 
264(a) with respect to any account; and 
(2) the change may reduce the yield or adversely affect any 
holder of the account, 
all account holders who may be affected by such change shall be 
notified and provided with a description of the change by mail at 
least 30 days before the change takes effect. 
(d) DISTRIBUTION IN CASE OF ACCOUNTS ESTABLISHED BY MORE 
THAN 1 INDIVIDUAL OR BY A GROUP.—If an account is established by 
more than 1 individual or for a person other than an individual, any 
distribution described in this section with respect to such account 
meets the requirements of this section if the distribution is made to 
1 of the individuals who established the account or 1 individual 
representative of the person on whose behalf such account was 
established. 
(e) NOTICE TO ACCOUNT HOLDERS AS OF THE EFFECTIVE DATE OF 
REGULATIONS.—For any account for which the depository institution 
delivers an account statement on a quarterly or more frequent basis, 
the depository institution shall include on or with any regularly 
scheduled mailing posted or delivered within 180 days after publica-
tion of regulations issued by the Board in final form, a statement 
that the account holder has the right to request an account schedule 
105 STAT. 2338 
PUBLIC LAW 102-242—DEC. 19, 1991 
containing the terms, charges, and interest rates of the account, and 
that the account holder may wish to request such an account 
schedule. 
12 use 4306. 
SEC. 267. PAYMENT OF INTEREST. 
(a) CALCULATED ON FULL AMOUNT OF PRINCIPAL.—Interest on an 
interest-bearing account at any depository institution shall be cal-
culated by such institution on the full amount of principal in the 
account for each day of the stated calculation period at the rate or 
rates of interest disclosed pursuant to this Act. 
(b) NO PARTICULAR METHOD OF COMPOUNDING INTEREST RE-
QUIRED.—Subsection (a) shall not be construed as prohibiting or 
requiring the use of any particular method of compounding or 
crediting of interest. 
(c) DATE BY WHICH INTEREST MUST ACCRUE.—Interest on accounts 
that are subject to this Act shall begin to accrue not later than the 
business day specified for interest-bearing accounts in section 606 of 
the Expedited Funds Availability Act, subject to subsections (b) and 
(c) of such section. 
12 use 4307. 
SEC. 268. PERIODIC STATEMENTS. 
Each depository institution shall include on or with each periodic 
statement provided to each account holder at such institution a 
clear and conspicuous disclosure of the following information with 
respect to such account: 
(1) The annual percentage yield earned. 
(2) The amount of interest earned. 
(3) The amount of any fees or charges imposed. 
(4) The number of days in the reporting period. 
12 use 4308. 
SEC. 269. REGULATIONS. 
(a) IN GENERAL.— 
(1) REGULATIONS REQUIRED.—Before the end of the 9-month 
period beginning on the date of the enactment of this Act, the 
Board, after consultation with each agency referred to in section 
270(a) and public notice and opportunity for comment, shall 
prescribe regulations to carry out the purpose and provisions of 
this Act. 
(2) EFFECTIVE DATE OF REGULATIONS.—The regulations pre-
scribed under paragraph (1) shall take effect not later than 6 
months after publication in final form. 
(3) CONTENTS OF REGULATIONS.—The regulations prescribed 
under paragraph (1) may contain such classifications, differen-
tiations, or other provisions, and may provide for such adjust-
ments and exceptions for any clsiss of accounts as, in the 
judgment of the Board, are necessary or proper to carry out 
the purposes of this Act, to prevent circumvention or evasion of 
the requirements of this Act, or to facilitate compliance with 
the requirements of this Act. 
(4) DATE OF APPUCABILITY.—The provisions of this Act shall 
not apply with respect to any depository institution before the 
effective date of regulations prescribed by the Board under this 
subsection (or by the National Credit Union Administration 
Board under section 12(b), in the case of any depository institu-
tion described in clause (iv) of section 19(b)(1)(A) of the Federal 
Reserve Act). 
(b) MODEL FORMS AND CLAUSES.— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2339 
(1) IN GENERAL.—The Board shall publish model forms and 
clauses for common disclosures to facilitate compliance with 
this Act. In devising such forms, the Board shall consider the 
use by depository institutions of data processing or similar 
automated machines. 
(2) USE OF FORMS AND CLAUSES DEEMED IN COMPLIANCE.— 
Nothing in this Act may be construed to require a depository 
institution to use any such model form or clause prescribed by 
the Board under this subsection. A depository institution shall 
be deemed to be in compliance with the disclosure provisions of 
this Act if the depository institution— 
(A) uses any appropriate model form or clause as pub-
lished by the Board; or 
(B) uses any such model form or clause and changes it 
b y -
(i) deleting any information which is not required by 
this Act; or 
(ii) rearranging the format, 
if in making such deletion or rearranging the format, the 
depository institution does not affect the substance, clarity, 
or meaningful sequence of the disclosure. 
(3) PUBLIC NOTICE AND OPPORTUNITY FOR COMMENT.—Model 
disclosure forms and clauses shall be adopted by the Board after 
duly given notice in the Federal Register and an opportunity for 
public comment in accordance with section 553 of title 5, United 
States Code. 
SEC. 270. ADMINISTRATIVE ENFORCEMENT. 
(a) IN GENERAL.—Compliance with the requirements imposed 
under this Act shall be enforced under— 
(1) section 8 of the Federal Deposit Insurance Act— 
(A) by the appropriate Federal banking agency (as de-
fined in section 3(q) of the Federal Deposit Insurance Act) 
in the case of insured depository institutions (as defined in 
section 3(c)(2) of such Act); 
(B) by the Federal Deposit Insurance Corporation in the 
case of depository institutions described in clause (i), (ii), or 
(iii) of section 19(b)(1)(A) of the Federal Reserve Act which 
are not insured depository institutions (as defined in section 
3(c)(2) of the Federal Deposit Insurance Act); and 
(C) by the Director of the Office of Thrift Supervision in 
the case of depository institutions described in clause (v) 
and or (vi) of section 19(b)(1)(A) of the Federal Reserve Act 
which are not insured depository institutions (as defined in 
section 3(c)(2) of the Federal Deposit Insurance Act); and 
(2) the Federal Credit Union Act, by the National Credit 
Union Administration Board in the case of depository institu-
tions described in clause (iv) of section 19(b)(1)(A) of the Federal 
Reserve Act. 
(b) ADDITIONAL ENFORCEMENT POWERS.^ 
(1) VIOLATION OF THIS ACT TREATED AS VIOLATION OF OTHER 
ACTS.—For purposes of the exercise by any agency referred to in 
subsection (a) of such agency's powers under any Act referred to 
in such subsection, a violation of a requirement imposed under 
this Act shall be deemed to be a violation of a requirement 
imposed under that Act. 
Federal 
Register, 
publication. 
12 u s e 4309. 
105 STAT. 2340 
PUBLIC LAW 102-242—DEC. 19, 1991 
(2) ENFORCEMENT AUTHORITY UNDER OTHER ACTS.—In addition 
to the powers of any agency referred to in subsection (a) under 
any provision of law specifically referred to in such subsection, 
each such agency may exercise, for purposes of enforcing 
compliance with any requirement imposed under this Act, any 
other authority conferred on such agency by law. 
(c) REGULATIONS BY AGENCIES OTHER THAN THE BOARD.—The 
authority of the Board to issue regulations under this Act does not 
impair the authority of any other agency referred to in subsection 
(a) to make rules regarding its own procedures in enforcing compli-
ance with the requirements imposed under this Act. 
12 use 4310. 
SEC. 271. CIVIL LIABILITY. 
(a) CIVIL LIABILITY.—Except as otherwise provided in this section, 
any depository institution which fails to comply with any require-
ment imposed under this Act or any regulation prescribed under 
this Act with respect to any person who is an account holder is 
liable to such person in an amount equal to the sum o
f
— 
(1) any actual damage sustained by such person as a result of 
the failure; 
(2)(A) in the case of an individual action, such additional 
amount as the court may allow, except that the liability under 
this subparagraph shall not be less than $100 nor greater than 
$1,000; or 
(B) in the case of a class action, such amount as the court may 
allow, except that— 
(i) as to each member of the class, no minimum recovery 
shall be applicable; and 
(ii) the total recovery under this subparagraph in any 
class action or series of class actions arising out of the same 
failure to comply by the same depository institution shall 
not be more than the lesser of $500,000 or 1 percent of the 
net worth of the depository institution involved; and 
(3) in the case of any successful action to enforce any liability 
under paragraph (1) or (2), the costs of the action, together with 
a reasonable attorney's fee as determined by the court. 
(b) CLASS ACTION AWARDS.—In determining the amount of any 
award in any class action, the court shall consider, among other 
relevant factors— 
(1) the amount of any actual damages awarded; 
(2) the frequency and persistence of failures of compliance; 
(3) the resources of the depository institution; 
(4) the number of persons adversely affected; and 
(5) the extent to which the failure of compliance was 
intentional. 
(c) BONA FIDE ERRORS.— 
(1) GENERAL RULE.—A depository institution may not be held 
liable in any action brought under this section for a violation of 
this Act if the depository institution demonstrates by a prepon-
derance of the evidence that the violation was not intentional 
and resulted from a bona fide error, notwithstanding the 
maintenance of procedures reasonably adapted to avoid any 
such error. 
(2) EXAMPLES.—Examples of a bona fide error include clerical, 
calculation, computer malfunction and programming, and 
printing errors, except that an error of legal judgment with 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2341 
respect to a depository institution's obligation under this Act is 
not a bona fide error. 
(d) No LiABiuTY FOR OVERPAYMENT.—A depository institution 
may not be held liable in any action under this section for a 
violation of this Act if the violation has resulted in— 
(1) an interest payment to the account holder in an amount 
greater than the amount determined under any disclosed rate of 
interest applicable with respect to such payment; or 
(2) a charge to the consumer in an amount less than the 
amount determined under the disclosed charge or fee schedule 
applicable with respect to such charge. 
(e) JURISDICTION.—Any action under this section may be brought 
in any United States district court, or in any other court of com-
petent jurisdiction, within 1 year after the date of the occurrence of 
the violation involved. 
(f) REUANCE ON BOARD RUUNGS.—No provision of this section 
imposing any liability shall apply to any act done or omitted in good 
faith in conformity with any regulation or order, or any interpreta-
tion of any regulation or order, of the Board, or in conformity with 
any interpretation or approval by an official or employee of the 
Board duly authorized by the Board to issue such interpretation or 
approval under procedures prescribed by the Board, notwithstand-
ing, the fact that after such act or omission has occurred, such 
regulation, order, interpretation, or approval is amended, rescinded, 
or determined by judicial or other authority to be invalid for any 
reason. 
(g) NOTIFICATION OF AND ADJUSTMENT FOR ERRORS.—A depository 
institution shall not be liable under this section or section 270 for 
any failure to comply with any requirement imposed under this Act 
with respect to any account if— 
(1) before— 
(A) the end of the 60-day period beginning on the date on 
which the depository institution discovered the failure to 
comply; 
(B) any action is instituted against the depository institu-
tion by the account holder under this section with respect 
to such failure to comply; and 
(C) any written notice of such failure to comply is 
received by the depository institution from the account 
holder, 
the depository institution notifies the account holder of the 
failure of such institution to comply with such requirement; and 
(2) the depository institution makes such adjustments £is may 
be necessary with respect to such account to ensure that— 
(A) the account holder will not be liable for any amount 
in excess of the amount actually disclosed with respect to 
any fee or charge; 
(B) the account holder will not be liable for any fee or 
charge imposed under any condition not actually disclosed; 
and 
(C) interest on amounts in such account will accrue at the 
annual percentage yield, and under the conditions, actually 
disclosed (and credit will be provided for interest already 
accrued at a different annual percentage yield and under 
different conditions than the yield or conditions disclosed). 
(h) MULTIPLE INTERESTS IN 1 ACCOUNT.—If more than 1 person 
holds an interest in any account— 
105 STAT. 2342 
PUBLIC LAW 102-242—DEC. 19, 1991 
(1) the minimum and maximum amounts of liability under 
subsection (a)(2)(A) for any failure to comply with the require-
ments of this Act shall apply with respect to such account; and 
(2) the court shall determine the manner in which the amount 
of any such liability with respect to such account shall be 
distributed among such persons. 
(i) CONTINUING FAILURE TO DISCLOSE.— 
(1) CERTAIN CONTINUING FAILURES TREATED AS i VIOLATION.— 
Except as provided in paragraph (2), the continuing failure of 
any depository institution to disclose any particular term re-
quired to be disclosed under this Act with respect to a particular 
account shall be treated as a single violation for purposes of 
determining the amount of any liability of such institution 
under subsection (a) for such failure to disclose. 
(2) SUBSEQUENT FAILURE TO DISCLOSE.—The continuing fsiilure 
of any depository institution to disclose any particular term 
required to be disclosed under this Act with respect to a particu-
lar account after judgment has been rendered in favor of the 
account holder in connection with a prior failure to disclose 
such term with respect to such account shall be treated as a 
subsequent violation for purposes of determining liability under 
subsection (a). 
(3) COORDINATION WITH SECTION 270.—This subsection shall 
not limit or otherwise affect the enforcement power under 
section 270 of any agency referred to in subsection (a) of such 
section. 
12 u s e 4311. 
SEC. 272. CREDIT UNIONS. 
(a) IN GENERAL.—No regulation prescribed by the Board under 
this Act shall apply directly with respect to any depository institu-
tion described in clause (iv) of section 19(b)(1)(A) of the Federal 
Reserve Act. 
(b) REGULATIONS PRESCRIBED BY THE NCUA.—Within 90 days of 
the effective date of any regulation prescribed by the Board under 
this Act, the National Credit Union Administration Board shall 
prescribe a regulation substantially similar to the regulation pre-
scribed by the Board taking into account the unique nature of credit 
unions and the limitations under which they may pay dividends on 
member accounts. 
12 u s e 4312. 
SEC. 273. EFFECT ON STATE LAW. 
The provisions of this Act do not supersede any provisions of the 
law of any State relating to the disclosure of yields payable or terms 
for accounts to the extent such State law requires the disclosure of 
such yields or terms for accounts, except to the extent that those 
laws are inconsistent with the provisions of this Act, and then only 
to the extent of the inconsistency. The Board may determine 
whether such inconsistencies exist. 
12 u s e 4313. 
SEC. 274. DEFINITIONS. 
For the purposes of this Act— 
(1) ACCOUNT.—The term "account" means any account 
offered 
to 1 or more individuals or an 
unincorporated 
nonbusiness association of individuals by a depository institu-
tion into which a customer deposits funds, including demand 
accounts, time accounts, negotiable order of withdrawal ac-
counts, and share draft accounts. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2343 
(2) ANNUAL PERCENTAGE YIELD.—The term "annual percent-
age yield" means the total amount of interest that would be 
received on a $100 deposit, based on the annual rate of simple 
interest and the frequency of compounding for a 365-day period, 
expressed as a percentage calculated by a method which shall 
be prescribed by the Board in regulations. 
(3) ANNUAL RATE OF SIMPLE INTEREST.—The term "annual rate 
of simple interest"— 
(A) means the annualized rate of interest paid with 
respect to each compounding period, expressed as a percent-
age; and 
(B) may be referred to as the "annual percentage rate". 
(4) BOARD.—The term "Board" means the Board of Governors 
of the Federal Reserve System. 
(5) DEPOSIT BROKER.—The term "deposit broker"— 
(A) has the meaning given to such term in section 29(f)(1) 
of the Federal Deposit Insurance Act; and 
(B) includes any person who solicits any amount from any 
other person for deposit in an insured depository institu-
tion. 
(6) DEPOSITORY INSTITUTION.—The term "depository institu-
tion" has the meaning given such term in clauses (i) through (vi) 
of section 19(b)(1)(A) of the Federal Reserve Act. 
(7) INTEREST.—The term "interest" includes dividends paid 
with respect to share draft accounts which are accounts within 
the meaning of paragraph (3). 
(8) MULTIPLE RATE ACCOUNT.—The term "multiple rate 
account" means any account that has 2 or more annual rates of 
simple interest which take effect at the same time or in succeed-
ing periods and which are known at the time of disclosure. 
TITLE III—REGULATORY IMPROVEMENT 
Subtitle A—Activities 
SEC. 301. LIMITATIONS ON BROKERED DEPOSITS AND DEPOSIT SOLICI-
TATIONS. 
(a) IN GENERAL.—Section 29 of the Federal Deposit Insurance Act 
(12 U.S.C. 1831f) is amended— 
(1) in subsection (a), by striking "troubled institution" and 
inserting "insured depository institution that is not well capital-
ized"; 
(2) in subsection (c), by inserting "which is adequately capital-
ized" after "insured depository institution"; 
(3) in subsection (d), by striking all after "unsound practice;" 
and inserting the following: 
"(2) is necessary to enable the institution to meet the de-
mands of its depositors or pay its obligations in the ordinary 
course of business; and 
"(3) is consistent with the conservator's fiduciary duty to 
minimize the institution's losses. 
Effective 90 days after the date on which the institution was placed Effective date, 
in conservatorship, the institution may not accept such deposits."; 
105 STAT. 2344 
PUBLIC LAW 102-242—DEC. 19, 1991 
(4) by redesignating subsections (e) through (g) as subsections 
(f) through (h), respectively, and inserting after subsection (d) 
the following: 
"(e) RESTRICTION ON INTEREST RATE PAID.—Any insured depository 
institution which, under subsection (c) or (d), accepts funds obtained, 
directly or indirectly, by or through a deposit broker, may not pay a 
rate of interest on such funds which, at the time that such funds are 
accepted, significantly exceeds— 
"(1) the rate paid on deposits of similar maturity in such 
institution's normal market area for deposits accepted in the 
institution's normal market area; or 
"(2) the national rate paid on deposits of comparable matu-
rity, as established by the Corporation, for deposits accepted 
outside the institution s normal market area."; 
(5) in subsection (f), as redesignated, by striking "troubled"; 
and 
(6) by striking subsection (h), as redesignated. 
(b) NOTIFICATION AND RECORDKEEPING.—The Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.) is amended by inserting after 
section 29 the following: 
12 use 1831f-l. 
"SEC. 29A. DEPOSIT BROKER NOTIFICATION AND RECORDKEEPING. 
"(a) NOTIFICATION.— 
"(1) IN GENERAL.—A deposit broker, as defined in section 
29(g), shall not solicit or place any deposit with an insured 
depository institution, unless such deposit broker has provided 
the Corporation with written notice that it is a deposit broker. 
"(2) TERMINATION OF DEPOSIT BROKER STATUS.—When a deposit 
broker referred to in paragraph (1) ceases to act as a deposit 
broker it shall provide the Corporation with a written notice 
that it is no longer acting as a deposit broker. 
"(3) FORM AND CONTENT.—The notices required by paragraphs 
(1) and (2) shall be in such form and contain such information 
concerning the deposit solicitation and placement activities of a 
deposit broker as the Corporation may prescribe as necessary or 
appropriate to carry out the purposes of this subsection. 
"(b) RECORDS.—The Corporation may prescribe regulations requir-
ing each deposit broker that has filed a notice under subsection (aXD 
to maintain separate records relating to the total amounts and 
maturities of the deposits placed by such broker for each insured 
depository institution during specified time periods. Such regula-
tions shall specify the format in which and the period for which such 
records shall be preserved, £is well as the time period within which 
the deposit broker shall furnish to the Corporation copies of such 
records (or designated portions thereof) as the Corporation may 
request. 
"(c) PERIODIC REPORTS.— 
"(1) IN GENERAL.—The Corporation may prescribe regulations 
requiring each deposit broker that has filed a notice under 
subsection (aXD to file with the Corporation separate quarterly 
reports relating to the total amounts and maturities of the 
deposits placed by such broker for each depository institution 
during the applicable quarter. Such regulations shall specify the 
form and content of such reports, as well as the applicable 
reporting period. 
(2) DESIGNATED AGENT.—The Corporation may designate an-
other entity as its agent for the purpose of receiving and 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2345 
maintaining reports under this subsection. If the Corporation 
designates such an agent the Corporation may, through its 
agent, prescribe and collect an appropriate quarterly fee from 
each deposit broker that filed reports with the agent during the 
applicable quarter, in an amount sufficient to defray the Cor-
poration's cost of retaining the agent and to reflect the propor-
tionate amount of the deposits placed with insured depository 
institutions by each broker during the applicable quarter.'. 
(c) DEPOSIT SOUCITATION RESTRICTED.—Section 29 of the Federal 
Deposit Insurance Act (12 U.S.C. 1831f) is amended by adding at the 
end the following: 
"(h) DEPOSIT SOUCITATION RESTRICTED.—An insured depository 
institution that is undercapitalized, as defined in section 38, shall 
not solicit deposits by offering rates of interest that are significantly 
higher than the prevailing rates of interest on insured deposits— 
"(1) in such institution's normal market areas; or 
"(2) in the market area in which such deposits would other-
wise be accepted.". 
(d) DEADLINE FOR REGULATIONS.—The Corporation shall promul- 12 USC I83lf 
gate final regulations to carry out the amendments made under "°*®-
subsections (a), (b), and (c) not later than 150 days after the date of 
enactment of this Act, and those regulations shall become effective 
not later than 180 days after that date of enactment, except that 
such regulations shall not apply to any specific time deposit made 
before that date of enactment until the stated maturity of the time 
deposit. 
SEC. 302. RISK-BASED ASSESSMENTS. 
(a) RISIC-BASED ASSESSMENT SYSTEM.—Section 70t>) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)) is amended to read as 
follows: 
"(h) ASSESSMENTS.— 
"(1) RISK-BASED ASSESSMENT SYSTEM.— 
"(A) 
RISK-BASED ASSESSMENT SYSTEM 
REQUIRED.—The 
Board of Directors shall, by regulation, establish a risk-
based 
assessment 
system 
for 
insured 
depository 
institutions. 
"(B) PRIVATE REINSURANCE AUTHORIZED.—In carrying out 
this paragraph, the Corporation may— 
"(i) obtain private reinsurance covering not more 
than 10 percent of any loss the Corporation incurs with 
respect to an insured depository institution; and 
"(ii) base that institution's semiannual assessment 
(in whole or in part) on the cost of the reinsurance. 
"(C) RISK-BASED ASSESSMENT SYSTEM DEFINED.—For pur-
poses of this paragraph, the term 'risk-based assessment 
system' means a system for calculating a depository institu-
tion's semiannual assessment based on— 
"(i) the probability that the deposit insurance fund 
will incur a loss with respect to the institution, taking 
into consideration the risks attributable to— 
"(I) different categories and concentrations of 
assets; 
"(II) different categories and concentrations of 
liabilities, both insured and uninsured, contingent 
and noncontingent; and 
105 STAT. 2346 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(III) any other factors the Corporation deter-
mines are relevant to assessing such probability; 
"(ii) the likely amount of any such loss; and 
"(iii) the revenue needs of the deposit insurance fund. 
"(D) SEPARATE ASSESSMENT SYSTEMS.—The Board of Direc-
tors may establish separate risk-beised assessment systems 
for large and small members of each deposit insurance 
fund. 
"(2) SETTING ASSESSMENTS.— 
"(A) ACHIEVING AND MAINTAINING DESIGNATED RESERVE 
RATIO.— 
"(i) IN GENERAL.—The Board of Directors shall set 
semiannual 
assessments 
for 
insured 
depository 
institutions— 
"(I) to maintain the reserve ratio of each deposit 
insurance fund at the designated reserve ratio; or 
"(II) if the reserve ratio is less than the des-
ignated reserve ratio, to increase the reserve ratio 
to the designated reserve ratio as provided in para-
graph (3). 
"(ii) 
FACTORS TO BE CONSIDERED.—In carrying 
out 
clause (i), the Board of Directors shall consider the 
deposit insurance fund's— 
"(I) expected operating expenses, 
"(II) case resolution expenditures and income, 
"(III) the effect of assessments on members' earn-
ings and capital, and 
"(IV) any other factors that the Board of Direc-
tors may deem appropriate, 
"(iii) MINIMUM ASSESSMENT.—The semiannual assess-
ment for each member of a deposit insurance fund shall 
be not less than $1,000. 
"(iv) DESIGNATED RESERVE RATIO DEFINED.—The des-
ignated reserve ratio of each deposit insurance fund for 
each year shall be— 
"(I) 1.25 percent of estimated insured deposits; or 
"(II) a higher percentage of estimated insured 
deposits that the Board of Directors determines to 
be justified for that year by circumstances raising 
a significant risk of substantial future losses to the 
fund. 
"(B) INDEPENDENT TREATMENT OF FUNDS.—The Board of 
Directors shall— 
"(i) set semiannual assessments for members of each 
deposit insurance fund independently from semiannual 
assessments for members of any other deposit insur-
ance fund; and 
"(ii) set the designated reserve ratio of each deposit 
insurance fund independently from the designated 
reserve ratio of any other deposit insurance fund. 
"(C) NOTICE OF ASSESSMENTS.—The Corporation shall 
notify each insured depository institution of that institu-
tion's semiannual assessment. 
"(D) PRIORITY OF FINANCING CORPORATION AND FUNDING 
CORPORATION ASSESSMENTS.—Notwithstanding any other 
provision of this paragraph, amounts assessed by the 
Financing Corporation under section 21 of the Federal 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2347 
Home Loan Bank Act against Savings Association Insur-
ance Fund members, shall be subtracted from the amounts 
authorized to be assessed by the Corporation under this 
paragraph. 
"(E) 
MINIMUM 
ASSESSMENTS.—The Corporation 
shall 
design the risk-based assessment system for any deposit 
insurance fund so that, if the Corporation has borrowings 
outstanding under section 14 on behalf of that fund or the 
reserve ratio of that fund remains below the designated 
reserve ratio, the total amount raised by semiannual assess-
ments on members of that fund shall be not less than the 
total amount that would have been raised if— 
"(i) section 7(b) as in effect on July 15, 1991 remained 
in effect; and 
"(ii) the assessment rate in effect on July 15, 1991 
remained in effect. 
"(F) TRANSITION RULE FOR SAVINGS ASSOCIATION INSUR-
ANCE FUND.—With respect to the Savings Association Insur-
ance Fund, during the period beginning on the effective 
date of the amendments made by section 302(a) of the 
Federal Deposit Insurance Corporation Improvement Act of 
1991 and ending on December 31,1997— 
"(i) subparagraph (A)(i)(II) shall apply as if such 
subparagraph did not include 'as provided in paragraph 
(3)'; and 
"(ii) subparagraph (E) shall be applied by substitut-
ing 'if section 7(b) as in effect on July 15,1991 remained 
in effect.' for 'if—' and all that follows through clause 
(ii). 
"(G) SPECIAL RULE UNTIL THE INSURANCE FUNDS ACHIEVE 
THE DESIGNATED RESERVE RATIO.—Until a dcposit insurance 
fund achieves the designated reserve ratio, the Corporation 
may limit the maximum assessment on insured depository 
institutions under the risk-based assessment system au-
thorized under paragraph (1) to not less than 10 basis points 
above the average assessment on insured depository institu-
tions under that system. 
"(3) 
SPECIAL RULE FOR RECAPITALIZING UNDERCAPITALIZED 
FUNDS.— 
"(A) IN GENERAL.—Except as provided in paragraph (2)(F), 
if the reserve ratio of any deposit insurance fund is less 
than 
the designated 
reserve ratio under 
paragraph 
(2)(A)(iv), the Board of Directors shall set semiannual 
assessment rates for members of that fund— 
"(i) that are sufficient to increase the reserve ratio 
for that fund to the designated reserve ratio not later 
than 1 year after such rates are set; or 
"(ii) in accordance with a schedule promulgated by 
the Corporation under subparagraph (B). 
"(B) 
RECAPITALIZATION SCHEDULES.—For 
purposes 
of 
subparagraph (A)(ii), the Corporation shall by regulation 
promulgate a schedule that specifies, at semiannual inter-
vals, target reserve ratios for that fund, culminating in a 
reserve ratio that is equal to the designated reserve ratio 
not later than 15 years after the date on which the schedule 
is implemented. 
105 STAT. 2348 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(C) AMENDING SCHEDULE.—The Corporation may, by 
regulation, amend a schedule promulgated under subpara-
graph (B), but such amendments may not extend the date 
specified in subparagraph (B). 
"(D) APPUCATION TO SAIF MEMBERS.—This paragraph 
shall become applicable to Savings Association Insurance 
Fund members on January 1,1998. 
"(4) SEMIANNUAL PERIOD DEFINED.—For purposes of this sec-
tion, the term 'semiannual period' means a period beginning on 
January 1 of any calendar year and ending on June 30 of the 
same year, or a period beginning on July 1 of any calendar year 
and ending on December 31 of the same year. 
"(5) RECORDS TO BE MAINTAINED.—Each insured depository 
institution shall maintain all records that the Corporation may 
require for verifying the correctness of the institution's semi-
annual assessments. No insured depository institution shall be 
required to retain those records for that purpose for a period of 
more than 5 years from the date of the filing of any certified 
statement, except that when there is a dispute between the 
insured depository institution and the Corporation over the 
amount of any assessment, the depository institution shall 
retain the records until final determination of the issue.", 
(b) CERTIFIED STATEMENTS AND PAYMENT PROCEDURES.—Section 
7(c) of the Federal Deposit Insurance Act (12 U.S.C. 1817(c)) is 
amended to read as follows: 
"(c) CERTIFIED STATEMENTS; PAYMENTS.— 
"(1) CERTIFIED STATEMENTS REQUIRED.— 
"(A) IN GENERAL.—Each insured depository institution 
shall file with the Corporation a certified 
statement 
containing such information as the Corporation may re-
quire for determining 
the institution's 
semiannual 
assessment. 
"(B) FORM OF CERTIFICATION.—The certified statement 
required under subparagraph (A) shall— 
"(i) be in such form and set forth such supporting 
information as the Board of Directors shall prescribe; 
and 
"(ii) be certified by the president of the depository 
institution or any other officer designated by its board 
of directors or trustees that to the best of his or her 
knowledge and belief, the statement is true, correct and 
complete, and in accordance with this Act and regula-
tions issued hereunder. 
"(2) PAYMENTS REQUIRED.— 
"(A) IN GENERAL.—Each insured depository institution 
shall pay to the Corporation the semiannual assessment 
imposed under subsection (b). 
"(B) FORM OF PAYMENT.—The payments required under 
subparagraph (A) shall be made in such manner and at 
such time or times as the Board of Directors shall prescribe 
by regulation. 
"(3) NEWLY INSURED INSTITUTIONS.—To facilitate the adminis-
tration of this section, the Board of Directors may waive the 
requirements of paragraphs (1) and (2) for the semiannual 
period in which a depository institution becomes insured.". 
12 use 1817 
(c) REGULATIONS.—To implement the risk-based 
assessment 
"°*®- 
system required under section 7(b) of the Federal Deposit Insurance 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2349 
Act (as amended by subsection (a)), the Federal Deposit Insurance 
Corporation shall— 
(1) provide notice of proposed regulations in the Federal 
Register, not later than December 31, 1992, with an opportunity 
for comment on the proposal of not less than 120 days; and 
(2) promulgate final regulations not later than July 1, 1993. 
(d) AUTHORITY TO PRESCRIBE REGULATIONS AND DEFINITIONS.— 
Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is 
amended by adding at the end the following: 
"(f) AUTHORITY TO PRESCRIBE REGULATIONS AND DEFINITIONS.— 
Except to the extent that authority under this Act is conferred on 
any of the Federal banking agencies other than the Corporation, the 
Corporation may— 
"(1) prescribe regulations to carry out this Act; and 
"(2) by regulation define terms as necessary to carry out this 
Act.". 
(e) CONFORMING AMENDMENTS.—The Federal Deposit Insurance 
Act (12 U.S.C. 1811 et seq.) is amended— 
(1) in section 5(d)(3)(B)— 
(A) by striking "average assessment base" and inserting 
"deposits"; and 
(B) by striking "shall—" and all that follows through "(iii) 
shall be treated" and inserting "shall be treated"; 
(2) in section 7(a)(5) by striking "and for the computation of 
assessments provided in subsection (b) of this section"; 
(3) in section 7 by amending subsection (d) to read as follows: 
"(d) CORPORATION EXEMPT FROM APPORTIONMENT.—Notwithstand-
ing any other provision of law, amounts received pursuant to any 
assessment under this section and any other amounts received by 
the Corporation shall not be subject to apportionment for the pur-
poses of chapter 15 of title 31, United States Code, or under any 
other authority."; and 
(4) in the last sentence of section 8(q) by striking "upon" and 
inserting "with respect to". 
(f) TRANSITION TO NEW ASSESSMENT SYSTEM.—To carry out the 
amendments made by this section, the Corporation may promulgate 
regulations governing the transition from the assessment system in 
effect on the date of enactment of this Act to the assessment system 
required under the amendments made by this section. 
(g) EFFECTIVE DATE OF AMENDMENTS.—The amendments made by 
this section shall become effective on the earlier of— 
(1) 180 days after the date on which final regulations promul-
gated in accordance with subsection (c) become effective; or 
(2) January 1, 1994. 
SEC. 303. RESTRICTIONS ON INSURED STATE BANK ACTIVITIES. 
(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 
1811 et seq.) is amended by inserting after section 23 the following 
new section: 
"SEC. 24. ACTIVITIES OF INSURED STATE BANKS. 
"(a) IN GENERAL.—After the end of the 1-year period beginning on 
the date of the enactment of the Federal Deposit Insurance Corpora-
tion Improvement Act of 1991, an insured State bank may not 
engage as principal in any type of activity that is not permissible for 
a national bank unless— 
Federal 
Register, 
publication. 
12 u s e 1815. 
12 u s e 1817. 
12 u s e 1818. 
12 u s e 1817 
note. 
12 u s e 1817 
note. 
12 use 1831a 
note. 
105 STAT. 2350 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(1) the Corporation has determined that the activity would 
pose no significant risk to the appropriate deposit insurance 
fund; and 
"(2) the State bank is, and continues to be, in compliance with 
applicable capital standards prescribed by the appropriate Fed-
eral banking agency. 
"(b) INSURANCE UNDERWRITING.— 
"(1) IN GENERAL.—Notwithstanding subsection (a), an insured 
State bank may not engage in insurance underwriting except to 
the extent that activity is permissible for national banks. 
"(2) 
EXCEPTION FOR CERTAIN FEDERALLY REINSURED CROP 
INSURANCE.—Notwithstanding any other provision of law, an 
insured State bank or any of its subsidiaries that provided 
insurance on or before September 30, 1991, which was reinsured 
in whole or in part by the Federal Crop Insurance Corporation 
may continue to provide such insurance.". 
"(c) EQUITY INVESTMENTS BY INSURED STATE BANKS.— 
"(1) IN GENERAL.—An insured State bank may not, directly or 
indirectly, acquire or retain any equity investment of a type 
that is not permissible for a national bank. 
"(2) 
EXCEPTION FOR CERTAIN SUBSIDIARIES.—Paragraph 
(1) 
shall not prohibit an insured State bank from acquiring or 
retaining an equity investment in a subsidiary of which the 
insured State bank is a majority owner. 
"(3) EXCEPTION FOR QUALIFIED HOUSING PROJECTS.— 
"(A) EXCEPTION.—Notwithstanding any other provision of 
this subsection, an insured State bank may invest as a 
limited partner in a partnership, the sole purpose of which 
is direct or indirect investment in the acquisition, re-
habilitation, or new construction of a qualified housing 
project. 
"(B) LIMITATION.—The aggregate of the investments of 
any insured State bank pursuant to this paragraph shall 
not exceed 2 percent of the total assets of the bank. 
"(C) QUALIFIED HOUSING PROJECT DEFINED.—As used in 
this paragraph— 
"(i) QuAUFiED HOUSING PROJECT.—The term 'quali-
fied housing project' means residential real estate that 
is intended to primarily benefit lower income people 
throughout the period of the investment. 
"(ii) LOWER INCOME.—The term lower income' means 
income that is less than or equal to the median income 
based on statistics from State or Federal sources. 
"(4) TRANSITION RULE.— 
"(A) IN GENERAL.—The Corporation shall require any 
insured State bank to divest any equity investment the 
retention of which is not permissible under this subsection 
as quickly as can be prudently done, and in any event 
before the end of the 5-year period beginning on the date of 
the enactment of the Federal Deposit Insurance Corpora-
tion Improvement Act of 1991. 
"(B) 
TREATMENT OF NONCOMPLIANCE 
DURING 
DIVEST-
MENT.—With respect to any equity investment held by any 
insured State bank on the date of enactment of the Federal 
Deposit Insurance Corporation Improvement Act of 1991 
which was lawfully acquired before such date, the bank 
shall be deemed not to be in violation of the prohibition in 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2351 
this subsection on retaining such investment so long as the 
bank complies with the applicable requirements established 
by the Corporation for divesting such investments. 
"(d) SUBSIDIARIES OF INSURED STATE BANKS.— 
"(1) IN GENERAL.—After the end of the 1-year period begin-
ning on the date of the enactment of the Federal Deposit 
Insurance Corporation Improvement Act of 1991, a subsidiary of 
an insured State bank may not engage as principal in any tjrpe 
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 appropriate deposit insur-
ance 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.—Notwithstanding paragraph (1), no 
subsidiary of an insured State bank may engage in insur-
ance underwriting except to the extent such activities are 
permissible for national banks. 
"(B) 
CONTINUATION OF EXISTING ACTIVITIES.—Notwith-
standing subparagraph (A), a well-capitalized insured State 
bank or any of its subsidiaries that was lawfully providing 
insurance as principal in a State on November 21, 1991, 
may continue to provide, as principal, insurance of the 
same type to residents of the State (including companies or 
partnerships incorporated in, organized under the laws of, 
licensed to do business in, or having an office in the State, 
but only on behalf of their employees resident in or prop-
erty located in the State), individuals employed in the 
State, and any other person to whom the bank or subsidiary 
hgis provided insurance as principal, without interruption, 
since such person resided in or was employed in such State. 
"(C) EXCEPTION.—Subparagraph (A) does not apply to a 
subsidiary of an insured State bank if— 
"(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. 
"(e) SAVINGS BANK LIFE INSURANCE.— 
"(1) IN GENERAL.—No provision of this Act 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 State listing, 
the State of New York or Connecticut; and 
"(B) meets the consumer disclosure requirements under 
section 18(k) with respect to such insurance. 
"(2) FDIC FINDING AND ACTION REGARDING RISK.— 
"(A) FINDING.—Before the end of the 1-year period begin-
ning on the date of the enactment of the Federal Deposit 
Insurance Corporation Improvement Act of 1991, the Cor-
poration shall make a finding whether savings bank life 
insurance activities of insured banks pose or may pose any 
105 STAT. 2352 
PUBLIC LAW 102-242—DEC. 19, 1991 
significant risk to the insurance fund of which such banks 
are members. 
"(B) ACTIONS.— 
"(i) IN GENERAL.—The Corporation shall, pursuant to 
any finding made under subparagraph (A), take appro-
priate actions to address any risk that exists or may 
subsequently develop with respect to insured banks 
described in paragraph (1)(A). 
"(ii) AUTHORIZED ACTIONS.—Actions the Corporation 
may take under this subparagraph include requiring 
the modification, suspension, or termination of insur-
ance activities conducted by any insured bank if the 
Corporation finds that the activities pose a significant 
risk to any insured bank described in paragraph (1)(A) 
or to the insurance fund of which such bank is a 
member. 
"(f) COMMON AND PREFERRED STOCK INVESTMENT.— 
"(1) IN GENERAL.—An insured State bank shall not acquire or 
retain, directly or indirectly, any equity investment of a type or 
in an amount that is not permissible for a national bank or is 
not otherwise permitted under this section. 
"(2) EXCEPTION FOR BANKS IN CERTAIN STATES.—Notwithstand-
ing 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; 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 INSTITUTIONS.—Notwith-
standing 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' liabil-
ity 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— 
s ^ f 
"(i) the institution engages only in activities permis-
sible 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 ac-
quired through a plan established for the benefit of the 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2353 
institution's officers and employees) are owned only by 
the institution. 
"(4) TRANSITION PERIOD FOR COMMON AND PREFERRED STOCK 
INVESTMENTS.— 
"(A) IN GENERAL.—During each year in the 3-year period 
beginning on the date of the enactment of the Federal 
Deposit Insurance Corporation Improvement Act of 1991, 
each insured State bank shall reduce by not less than 1/3 of 
its shares (as of such date of enactment) the bank's owner-
ship of securities in excess of the amount equal to 100 
percent of the capital of such bank. 
"(B) CoMPUANCE AT END OF PERIOD.—By the end of the 3-
year period referred to in subparagraph (A), each insured 
State bank and each subsidiary of a State bank shall be in 
compliance with the maximum amount limitations on 
investments referred to in paragraph (1). 
"(5) Loss OF EXCEPTION UPON ACQUISITION.—Any exception 
applicable under paragraph (2) with respect to any insured 
State bank shall cease to apply with respect to such bank upon 
any change in control of such bank or any conversion of the 
charter of such bank. 
"(6) NOTICE AND APPROVAL.—An 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 insur-
ance fund of which such bank is a member. 
"(7) DIVESTITURE.— 
"(A) IN GENERAL.—The Corporation may require divesti-
ture by an insured State bank of any investment permitted 
under this subsection if the Corporation determines that 
such investment will have an adverse effect on the safety 
and soundness of the bank. 
"(B) REASONABLE STANDARD.—The Corporation shall not 
require divestiture by any bank pursuant to subparagraph 
(A) without reason to believe that such investment will 
have an adverse effect on the safety and soundness of the 
bank. 
"(g) DETERMINATIONS.—The Corporation shall make determina-
tions under this section by regulation or order. 
"(h) ACTIVITY DEFINED.—For purposes of this section, the term 
'activity' includes acquiring or retaining any investment. 
"(i) OTHER AUTHORITY NOT AFFECTED.—This section shall not be 
construed as limiting the authority of any appropriate Federal 
banking gigency or any State supervisory authority to impose more 
stringent restrictions. . 
(b) TECHNICAL AND CONFORMING AMENDMENT.—The 13th undesig-
nated paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 
330) is amended by striking ": Provided, however, That no Federal 
reserve bank" and inserting ", except that the Board of Governors of 
the Federal Reserve System may limit the activities of State 
member banks and subsidiaries of State member banks in a manner 
consistent with section 24 of the Federal Deposit Insurance Act. No 
Federal reserve bank". 
105 STAT. 2354 
PUBLIC LAW 102-242—DEC. 19, 1991 
SEC. 304. RESTRICTIONS ON REAL ESTATE LENDING. 
(a) IN GENERAL.—Section 18 of the Federal Deposit Insurance Act 
(12 U.S.C. 1828) is amended by adding at the end the following new 
subsection: 
"(o) REAL ESTATE LENDING.— 
"(1) UNIFORM REGULATIONS.—Not more than 9 months after 
the date of enactment of the Federal Deposit Insurance Cor-
poration Improvement Act of 1991, each appropriate Federal 
banking agency shall adopt uniform regulations prescribing 
standards for extensions of credit that are— 
"(A) secured by liens on interests in real estate; or 
"(B) made for the purpose of financing the construction of 
a building or other improvements to real estate. 
"(2) STANDARDS.— 
"(A) CRITERIA.—In prescribing standards under para-
graph (1), the agencies shall consider— 
"(i) the risk posed to the deposit insurance funds by 
such extensions of credit; 
"(ii) the need for safe and sound operation of insured 
depository institutions; and 
"(iii) the availability of credit. 
"(B) VARIATIONS PERMITTED.—In prescribing standards 
under paragraph (1), the appropriate Federal banking agen-
cies may differentiate among types of loans— 
"(i) as may be required by Federal statute; 
"(ii) as may be warranted, based on the risk to the 
deposit insurance fund; or 
"(iii) as may be warranted, based on the safety and 
soundness of the institutions. 
"(3) LOAN EVALUATION STANDARD.—No appropriate Federal 
banking agency shall adversely evaluate an investment or a 
loan made by an insured depository institution, or consider such 
a loan to be nonperforming, solely because the loan is made to 
or the investment is in commercial, residential, or industrial 
property, unless such investment or loan may affect the institu-
tion's safety and soundness. 
"(4) EFFECTIVE DATE.—The regulations adopted under para-
graph (1) shall become effective not later than 15 months after 
the date of enactment of the Federal Deposit Insurance Cor-
poration Improvement Act of 1991. Such regulations shall con-
tinue in effect except as uniformly amended by the appropriate 
Federal banking agencies, acting in concert.". 
(b) CONFORMING AMENDMENT.—Section 24(a) of the Federal Re-
serve Act (12 U.S.C. 371(a)) is amended by striking "such terms," 
and all that follows through the period and inserting "section 18(o) 
of the Federal Deposit Insurance Act and such restrictions and 
requirements as the Comptroller of the Currency may prescribe by 
regulation or order.". 
SEC. 305. IMPROVING CAPITAL STANDARDS. 
(a) PERIODIC REVIEW OF CAPITAL STANDARDS GENERALLY.—Section 
18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended 
by adding at the end the following new subsection: 
"(o) PERIODIC REVIEW OF CAPITAL STANDARDS.—Each appropriate 
Federal banking agency shall, in consultation with the other Fed-
eral banking agencies, biennially review its capital standards for 
insured depository institutions to determine whether those stand-
publication. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2355 
ards require sufficient capital to facilitate prompt corrective action 
to prevent or minimize loss to the deposit insurance funds, consist-
ent with section 38.". 
(b) REVIEW OF RISK-BASED CAPITAL STANDARDS.— 
12 use 1828 
(1) IN GENERAL.—Each appropriate Federal banking agency "°**-
shall revise its risk-based capital standards for insured deposi-
tory institutions to ensure that those standards— 
(A) take adequate account of— 
(i) interest-rate risk; 
(ii) concentration of credit risk; and 
(iii) the risks of nontraditional activities; and 
(B) reflect the actual performance and expected risk of 
loss of multifamily mortgages. 
(2) INTERNATIONAL DISCUSSIONS.—The Federal banking agen-
cies shall discuss the development of comparable standards with 
members of the supervisory committee of the Bank for Inter-
national Settlements. 
(3) DEADUNE FOR PRESCRIBING REVISED STANDARDS.—Each 
appropriate Federal banking agency shall— 
(A) publish final regulations in the Federal Register to Federal 
implement paragraph (1) not later than 18 months after the ^^^f?^ 
date of enactment of this Act; gmd 
(B) establish reasonable transition rules to facilitate 
compliance with those regulations. 
(4) DEFINITIONS.—For purposes of this subsection, the terms 
"appropriate Federal banking Eigency", "Federal banking 
agency" and "insured depository institution" have the same 
meanings as in section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813). 
(c) CONFORMING AMENDMENT DEFINING FEDERAL BANKING AGEN-
CIES.—Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
1813) is amended by adding at the end the following: 
"(z) FEDERAL BANKING AGENCIES.—The term 'Federal banking 
agencies' means the Office of the Comptroller of the Currency, the 
Office of Thrift Supervision, the Board of Governors of the Federal 
Reserve System, and the Federal Deposit Insurance Corporation.". 
SEC. 306. SAFEGUARDS AGAINST INSIDER ABUSE. 
(a) RECODIFICATION OF CURRENT LAW RESTRICTING EXTENSIONS OF 
CREDIT TO INSIDERS.—Section 22(h) of the Federal Reserve Act (12 
U.S.C. 375b) is amended to read as follows: 
"(h) EXTENSIONS OF CREDIT TO EXECUTIVE OFFICERS, DIRECTORS, 
AND PRINCIPAL SHAREHOLDERS OF MEMBER BANKS.— 
"(1) IN GENERAL.—No member bank may extend credit to any 
of its executive officers, directors, or principal shareholders, or 
to any related interest of such a person, except to the extent 
permitted under paragraphs (2), (3), (4), and (6). 
"(2) PREFERENTIAL TERMS PROHIBITED.—A member bank may 
extend credit to its executive officers, directors, or principal 
shareholders, or to any related interest of such a person, only if 
the extension of credit— 
"(A) is made on substantially the same terms, including 
interest rates and collateral, as those prevailing at the time 
for comparable transactions by the bank with persons who 
are not executive officers, directors, principal shareholders, 
or employees of the bank; and 
105 STAT. 2356 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(B) does not involve more than the normal risk of repay-
ment or present other unfavorable features. 
"(3) PRIOR APPROVAL REQUIRED.—A member bank may extend 
credit to a person described in paragraph (1) in an amount that, 
when aggregated with the amount of all other outstanding 
extensions of credit by that bank to each such person and that 
person's related interests, would exceed an amount prescribed 
by regulation of the appropriate Federal banking agency (as 
defined in section 3 of the Federal Deposit Insurance Act) only 
"(A) the extension of credit has been approved in advance 
by a majority vote of that bank's entire board of directors; 
and 
"(B) the interested party has abstained from participat-
ing, directly or indirectly, in the deliberations or voting on 
the extension of credit. 
"(4) AGGREGATE UMIT ON EXTENSIONS OF CREDIT TO ANY EXECU-
TIVE OFFICER O
R PRINCIPAL SHAREHOLDER.—A member bank may 
extend credit to any executive officer or principal shareholder, 
or to any related interest of such a person, only if the extension 
of credit is in an amount that, when aggregated with the 
amount of all outstanding extensions of credit by that bank to 
that person and that person's related interests, would not 
exceed the limits on loans to a single borrower established by 
section 5200 of the Revised Statutes. For purposes of this para-
graph, section 5200 of the Revised Statutes shall be deemed to 
apply to a State member bank as if the State member bank 
were a national banking association. 
"(5) [Reserved.1 
"(6) 
OVERDRAFTS BY EXECUTIVE OFFICERS AND DIRECTORS 
PROHIBITED.— 
"(A) IN GENERAL.—If any executive officer or director has 
an account at the member bank, the bank may not pay on 
behalf of that person an amount exceeding the funds on 
deposit in the account. 
(B) EXCEPTIONS.—Subparagraph (A) does not prohibit a 
member bank from paying funds in accordance with— 
"(i) a written preauthorized, interest-bearing exten-
sion of credit specifying a method of repayment; and 
"(ii) a written preauthorized transfer of funds from 
another account of the executive officer or director at 
that bank. 
"(7) [Reserved.] 
"(8) EXECUTIVE OFFICER, DIRECTOR, OR PRINCIPAL SHAREHOLDER 
OF CERTAIN AFFIUATES TREATED AS EXECUTIVE OFFICER, DIRECTOR, 
O
R PRINCIPAL SHAREHOLDER OF MEMBER BANK.—For purpOSeS of 
this subsection, any executive officer, director, or principal 
shareholder (as the case may be) of any bank holding company 
of which the member bank is a subsidiary, or of any other 
subsidiary of that company, shall be deemed to be an executive 
officer, director, or principal shareholder (as the case may be) of 
the member bank. 
"(9) DEFINITIONS.—For purposes of this subsection: 
"(A) COMPANY.— 
"(i) IN GENERAL.—Except as provided in clause (ii), 
the term 'company' means any corporation, partner-
ship, business or other trust, association, joint venture. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2357 
pool syndicate, sole proprietorship, unincorporated 
organization, or other business entity. 
"(ii) EXCEPTIONS.—The term 'company' does not 
include— 
"(I) an insured depository institution (as defined 
in section 3 of the Federal Deposit Insurance Act); 
or 
"(II) a corporation the majority of the shares of 
which are owned by the United States or by any 
State. 
"(B) CONTROL.—A person controls a company or bank if 
that person, directly or indirectly, or acting through or in 
concert with 1 or more persons— 
"(i) owns, controls, or has the power to vote 25 per-
cent or more of any class of the company's voting 
securities; 
"(ii) controls in any manner the election of a majority 
of the company's directors; or 
"(iii) has the power to exercise a controlling influence 
over the company's management or policies. 
"(C) EXECUTIVE OFFICER.—A person is an 'executive offi-
cer' of a company or bank if that person participates or has 
authority to participate (other than as a director) in major 
policymaking functions of the company or bank. 
"(D) EXTENSION OF CREDIT.—A member bank extends 
credit by making or renewing any loan, granting a line of 
credit, or entering into any similar transaction as a result 
of which a person becomes obligated (directly or indirectly, 
or by any means whatsoever) to pay money or its equivalent 
to the bank. 
"(E) [Reserved.] 
"(F) PRINCIPAL SHAREHOLDER.—The term 'principal share-
holder' means any person that directly or indirectly, or 
acting through or in concert with one or more persons, 
owns, controls, or has the power to vote more than 10 
percent of any class of voting securities of a member bank 
or company. For purposes of paragraph (4), if a member 
bank has its main banking office in a city, town, or village 
with a population of less than 30,000, the preceding sen-
tence shall apply with '18 percent' substituted for '10 
percent'. 
"(G) RELATED INTEREST.—A 'related interest' of a person 
is— 
"(i) any company controlled by that person; and 
"(ii) any political or campaign committee that is 
controlled by that person or the funds or services of 
which will benefit that person. 
"(H) SUBSIDIARY.—The term 'subsidiary' has the same 
meaning as in section 2 of the Bank Holding Company Act 
of 1956. 
"(10) BOARD'S RULEMAKING AUTHORITY.—The Board of Gov-
ernors of the Federal Reserve System may prescribe such regu-
lations, including definitions of terms, as it determines to be 
necessary to effectuate the purposes and prevent evasions of 
this subsection.", 
(b) 
REQUIRING DEPOSITORY INSTITUTIONS To 
FOLLOW NORMAL 
CREDIT UNDERWRITING PROCEDURES WHEN EXTENDING CREDIT TO 
105 STAT. 2358 
PUBLIC LAW 102-242—DEC. 19, 1991 
INSIDERS.—Section 22(h)(2) of the Federal Reserve Act (12 U.S.C. 
375b(2)), as amended by subsection (a), is amended— 
(1) by striking "and" at the end of subparagraph (A); 
(2) by striking the period at the end of subparagraph (B) and 
inserting "; and '; and 
(3) by inserting after subparagraph (B) the following new 
subparagraph: 
"(C) the bank follows credit underwriting procedures that 
are not less stringent than those applicable to comparable 
transactions by the bank with persons who are not execu-
tive officers, directors, principal shareholders, or employees 
of the bank.". 
(c) APPLYING TO DIRECTORS THE LIMIT ON LOANS TO ONE BOR-
ROWER.—Section 22(h)(4) of the Federal Reserve Act (12 U.S.C. 
375b(4)), as amended by subsection (a), is amended— 
(1) by inserting ", DIRECTOR," after "AGGREGATE LIMIT ON 
EXTENSIONS OF CREDIT TO ANY EXECUTIVE OFFICER"; and 
(2) by inserting ", director," after "A member bank may 
extend credit to any executive officer". 
(d) LIMITING DEPOSITORY INSTITUTION'S AGGREGATE EXTENSIONS OF 
CREDIT TO INSIDERS.— 
(1) IN GENERAL.—Section 22(h)(5) of the Federal Reserve Act 
(12 U.S.C. 375b(5)), as amended by subsection (a), is amended to 
read as follows: 
"(5) A G G R E G A T E LIMIT O N EXTENSIONS OF CREDIT TO ALL EXECU-
TIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS.— 
"(A) IN GENERAL.—A member bank may extend credit to 
any executive officer, director, or principal shareholder, or 
to any related interest of such a person, if the extension of 
credit is in an amount that, when aggregated with the 
amount of all outstanding extensions of credit by that bank 
to its executive officers, directors, principal shareholders, 
and those persons' related interests would not exceed the 
bank's unimpaired capital and unimpaired surplus. 
"(B) MORE STRINGENT LIMIT AUTHORIZED.—The Board 
may, by regulation, prescribe a limit that is more stringent 
than that contained in subparagraph (A). 
"(C) BOARD MAY MAKE EXCEPTIONS FOR CERTAIN BANKS.— 
The Board may, by regulation, make exceptions to subpara-
graph (A) for member banks with less than $100,000,000 in 
deposits if the Board determines that the exceptions are 
important to avoid constricting the availability of credit in 
small communities or to attract directors to such banks. In 
no case may the aggregate amount of all outstanding exten-
sions of credit to a bank's executive officers, directors, 
principal shareholders, and those persons' related interests 
be more than 2 times the bank's unimpaired capital and 
unimpaired surplus.". 
(2) CONFORMING AMENDMENT.—Section 22(h)(1) of the Federal 
Reserve Act (12 U.S.C. 375b(l)), as amended by subsection (a), is 
amended by inserting "(5)," after "(4),". 
(e) PROHIBITING INSIDERS FROM ACCEPTING UNAUTHORIZED EXTEN-
SIONS OF CREDIT.—Section 22(h)(7) of the Federal Reserve Act (12 
U.S.C. 375b(7)), as amended by subsection (a), is amended to read as 
follows: 
"(7) 
PROHIBITION ON KNOWINGLY RECEIVING UNAUTHORIZED 
EXTENSION OF CREDIT.—No executive officer, director, or prin-
PUBLIC L A W 102-242—DEC. 19, 1991 
105 STAT. 2359 
cipal shareholder shall knowingly receive (or knowingly permit 
any of that person's related interests to receive) from a member 
bank, directly or indirectly, any extension of credit not au-
thorized under this subsection.". 
(f) APPLYING UNIFORM RULES TO A L L COMPANIES 
CONTROLLING 
DEPOSITORY INSTITUTIONS.—Section 22(hX8) of the Federal Reserve 
Act (12 U.S.C. 375b(8)), £is amended by subsection (a), is amended by 
striking "bank holding". 
(g) APPLYING SAFEGUARDS TO INSIDER TRANSACTIONS W I T H DEPOSI-
TORY INSTITUTION'S SUBSIDIARIES.—Section 22(hX9)(E) of the Federal 
Reserve Act (12 U.S.C. 375b(9XE)), as amended by subsection (a), is 
amended to read as follows: 
"(E) MEMBER BANK.—The term 'member bank' includes any 
subsidiary of a member bank.". 
(h) APPLYING UNIFORM RULES TO A L L PRINCIPAL SHAREHOLDERS.— 
Section 22(hX9)(F) of the Federal Reserve Act (12 U.S.C. 375b(9)(F)), 
£is amended by subsection (a), is amended by striking the last 
sentence. 
(i) LIMITING SAVINGS ASSOCIATIONS' EXTENSIONS OF CREDIT TO 
EXECUTIVE OFFICERS.—Section ll(bXl) of the Home Owners' Loan 
Act (12 U.S.C. 1468(bXl)) is amended by striking "Section 22(h)" and 
inserting "Subsections (g) and (h) of section 22". 
(j) 
PREVENTING 
SAVINGS 
ASSOCIATIONS 
FROM 
MAKING 
PREF-
ERENTIAL EXTENSIONS OF CREDIT THROUGH CORRESPONDENT INSTITU-
TIONS.—Section 106(bX2)(HXi) of the Bank Holding Company Act 
Amendments of 1970 (12 U.S.C. 1972(2XHXi)) is amended by insert-
ing ", a savings bank, and a savings association (as those terms are 
defined in section 3 of the Federal Deposit Insurance Act)" after 
"mutual savings bank". 
(k) LIMITING STATE NONMEMBER BANK'S EXTENSIONS OF CREDIT TO 
EXECUTIVE OFFICERS; CLARIFYING THE PROHIBITION ON PREFERENTIAL 
EXTENSIONS OF CREDIT TO INSIDERS.—Section 18(j) of the Federal 
Deposit Insurance Act (12 U.S.C. 1828(j)) is amended to read as 
follows: 
"(j) RESTRICTIONS ON TRANSACTIONS W I T H AFFILIATES AND INSID-
ERS.— 
"(1) TRANSACTIONS WITH AFFIUATES.— 
"(A) I N GENERAL.—Sections 23A and 23B of the Federal 
Reserve Act shall apply with respect to every nonmember 
insured bank in the same manner and to the same extent as 
if the nonmember insured bank were a member bank. 
"(B) AFFILIATE DEFINED.—For the purpose of subpara-
graph (A), any company that would be an affiliate (as 
defined in sections 23A and 23B) of a nonmember insured 
bank if the nonmember insured bank were a member bank 
shall be deemed to be an affiliate of that 
nonmember 
insured bank. 
"(2) EXTENSIONS OF CREDIT TO OFFICERS, DIRECTORS, AND PRIN-
CIPAL SHAREHOLDERS.—Subsections (g) and (h) of section 22 of 
the Federal Reserve Act shall apply with respect to every 
nonmember insured bank in the same manner and to the same 
extent as if the nonmember insured bank were a member bank. 
"(3) AVOIDING 
EXTRATERRITORIAL 
APPLICATION TO FOREIGN 
BANKS.— 
"(A) TRANSACTIONS WITH AFFILIATES.—Paragraph (1) shall 
not apply with respect to a foreign bank solely because the 
foreign bank has an insured branch. 
105 STAT. 2360 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(B) EXTENSIONS OF CREDIT TO OFFICERS, DIRECTORS, AND 
PRINCIPAL SHAREHOLDERS.—Paragraph (2) shall not apply 
with respect to a foreign bank solely because the foreign 
bank has an insured branch, but shall apply with respect to 
the insured branch. 
"(C) FOREIGN BANK DEFINED.—For purposes of this para-
graph, the term 'foreign bank' has the same meaning as in 
section 1(b)(7) of the International Banking Act of 1978.". 
12 use 375b 
(1) EFFECTIVE DATE.—The amendments made by this section shall 
"°*®- 
become effective upon the earlier of— 
(1) the date on which final regulations under subsection (m)(l) 
become effective; or 
(2) 150 days after the date of enactment of this Act. 
12 use 375b 
(m) REGULATIONS.— 
^°*®- 
(1) IN GENERAL.—The Board of Governors of the Federal 
Reserve System shall, not later than 120 days after the date of 
enactment of this Act, promulgate final regulations to imple-
ment the amendments made by this section, other than the 
amendments made by subsections (i) and (k). 
(2) LIMITING EXTENSIONS OF CREDIT TO EXECUTIVE OFFICERS.— 
The Federal Deposit Insurance Corporation and Director of the 
Office of Thrift Supervision shall each, not later than 120 days 
after the date of enactment of this Act, promulgate final regula-
tions prescribing the maximum amount that a nonmember 
insured bank or insured savings association (as the case may be) 
may lend under section 22(g)(4) of the Federal Reserve Act, as 
made applicable to those institutions by subsections (k) and (i), 
respectively. 
12 use 375b 
(n) EXISTING TRANSACTIONS NOT AFFECTED.—The amendments 
^°^- 
made by this section do not affect the validity of any extension of 
credit or other transaction lawfully entered into on or before the 
effective date of those amendments. 
12 use 375b 
(o) REPORTING OF CREDIT BY EXECUTIVE OFFICERS AND DIRECTORS.— 
"°*®- 
An executive officer or director of an insured depository institution, 
a bank holding company, or a savings and loan holding company, 
the shares of which are not publicly traded, shall report annually to 
the board of directors of the institution or holding company the 
outstanding amount of any credit that was extended to such execu-
tive officer or director and that is secured by shares of the institu-
tion or holding company. 
SEC. 307. FDIC BACK-UP ENFORCEMENT AUTHORITY. 
Section 8(t) of the Federal Deposit Insurance Act (12 U.S.C. 
1818(t)) is amended to read as follows: 
"(t) AUTHORITY OF FDIC To TAKE ENFORCEMENT ACTION AGAINST 
INSURED DEPOSITORY INSTITUTIONS AND INSTITUTION-AFFILIATED PAR-
TIES.— 
"(1) RECOMMENDING ACTION BY APPROPRIATE FEDERAL BANKING 
AGENCY.—The Corporation, based on an examination of an in-
sured depository institution by the Corporation or by the appro-
priate Federal banking agency or on other information, may 
recommend in writing to the appropriate Federal banking 
agency that the agency take any enforcement action authorized 
under section 7(j), this section, or section 18(j) with respect to 
any insured depository institution or any institution-affiliated 
party. The recommendation shall be accompanied by a written 
explanation of the concerns giving rise to the recommendation. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2361 
"(2) FDIC'S AUTHORITY T
O ACT IF APPROPRIATE FEDERAL BANK-
ING AGENCY FAILS T
O FOLLOW RECOMMENDATION.—If the appro-
priate Federal banking agency does not, before the end of the 
60-day period beginning on the date on which the agency re-
ceives the recommendation under paragraph (1), take the 
enforcement action recommended by the Corporation or provide 
a plan acceptable to the Corporation for responding to the 
Corporation's concerns, the Corporation may take the rec-
ommended enforcement action if the Board of Directors deter-
mines, upon a vote of its members, that— 
"(A) the insured depository institution is in an unsafe or 
unsound condition; 
"(B) the institution is engaging in unsafe or unsound 
practices, and the recommended enforcement action will 
prevent the institution from continuing such practices; or 
"(C) the institution's conduct or threatened conduct 
(including any acts or omissions) poses a risk to the deposit 
insurance fund, or may prejudice the interests of the 
institution's depositors. 
"(3) EFFECT OF EXIGENT CIRCUMSTANCES.— 
"(A) AUTHORITY TO ACT.—The Corporation may, upon a 
vote of the Board of Directors, and after notice to the 
appropriate Federal banking agency, exercise its authority 
under paragraph (2) in exigent circumstances without 
regard to the time period set forth in paragraph (2). 
"(B) AGREEMENT ON EXIGENT CIRCUMSTANCES.—The Cor-
poration shall, by agreement with the appropriate Federal 
banking agency, set forth those exigent circumstances in 
which the Corporation may act under subparagraph (A). 
"(4) CORPORATION'S POWERS; INSTITUTION'S DUTIES.—For pur-
poses of this subsection— 
"(A) the Corporation shall have the same powers with 
respect to any insured depository institution and its affili-
ates as the appropriate Federsil banking agency has with 
respect to the institution and its affiliates; and 
"(B) the institution and its affiliates shall have the same 
duties and obligations with respect to the Corporation as 
the institution and its affiliates have with respect to the 
appropriate Federal banking agency. 
"(5) REQUESTS FOR FORMAL ACTIONS AND INVESTIGATIONS.— 
"(A) SUBMISSION OF REQUESTS.—A regional office of an 
appropriate Federal banking agency (including a Federal 
Reserve bank) that requests a formal investigation of or 
civil enforcement action gigainst an insured depository 
institution shall submit the request concurrently to the 
chief officer of the appropriate Federal banking agency and 
to the Corporation. 
"(B) AGENCIES REQUIRED TO REPORT ON REQUESTS.—Each 
appropriate Federal banking agency shall report semiannu-
ally to the Corporation on the status or disposition of all 
requests under subparagraph (A), including the reasons for 
any decision by the agency to approve or deny such 
requests.". 
105 STAT. 2362 
PUBLIC LAW 102-242—DEC. 19, 1991 
SEC. 308. INTERBANK LIABILITIES. 
(a) REDUCING SYSTEMIC RISKS POSED BY LARGE BANK FAILURES.— 
The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended by 
inserting after section 22 the following new section: 
"INTERBANK LIABILITIES 
12 use 37ib-2. 
"SEC. 23. (a) PURPOSE.—The purpose of this section is to limit the 
risks that the failure of a large depository institution (whether or 
not that institution is an insured depository institution) would pose 
to insured depository institutions. 
"(b) AGGREGATE LIMITS ON INSURED DEPOSITORY INSTITUTIONS' 
EXPOSURE TO OTHER DEPOSITORY INSTITUTIONS.—The Board shall, by 
regulation or order, prescribe standards that have the effect of 
limiting the risks posed by an insured depository institution's expo-
sure to any other depository institution. 
"(c) EXPOSURE DEFINED.— 
"(1) IN GENERAL.—For purposes of subsection (b), an insured 
depository institution's 'exposure' to another depository institu-
tion means— 
"(A) all extensions of credit to the other depository 
institution, regardless of name or description, including— 
"(i) all deposits at the other depository institution; 
"(ii) all purchases of securities or other assets from 
the other depository institution subject to an agree-
ment to repurchgise; and 
"(iii) all guarantees, acceptances, or letters of credit 
(including endorsements or standby letters of credit) on 
behalf of the other depository institution; 
"(B) all purchases of or investments in securities issued 
by the other depository institution; 
"(C) all securities issued by the other depository institu-
tion accepted as collateral for an extension of credit to any 
person; and 
"(D) all similar transactions that the Board by regulation 
determines to be exposure for purposes of this section. 
"(2) EXEMPTIONS.—The Board may, at its discretion, by regu-
lation or order, exempt transactions from the definition of 
'exposure' if it finds the exemptions to be in the public interest 
and consistent with the purpose of this section. 
"(3) ATTRIBUTION RULE.—For purposes of this section, any 
transaction by an insured depository institution with any 
person is a transaction with another depository institution to 
the extent that the proceeds of the transaction are used for the 
benefit of, or transferred to, that other depository institution. 
"(d) INSURED DEPOSITORY INSTITUTION.—For purposes of this sec-
tion, the term 'insured depository institution' has the same meaning 
as in section 3 of the Federal Deposit Insurance Act. 
"(e) RULEMAKING AUTHORITY; ENFORCEMENT.—The Board may 
issue such regulations and orders, including definitions consistent 
with this section, as may be necessary to administer and carry out 
the purpose of this section. The appropriate Federal banking agency 
shall enforce compliance with those regulations under section 8 of 
the Federal Deposit Insurance Act.". 
l2USC371b-2 
(b) TRANSITION RULES.—The Board shall prescribe reasonable 
"°*®- 
transition rules to facilitate compliance with section 23 of the 
Federal Reserve Act (as added by subsection (a)). 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2363 
(c) EFFECTIVE DATE.—The amendment made by this section shall 12 USC 37lb-2 
become effective 1 year after the date of enactment of this Act. "°*®-
Subtitle B—Coverage 
SEC. 311. DEPOSIT AND PASS-THROUGH INSURANCE. 
(a) EXCLUSION OF CERTAIN OBUGATIONS FROM DEPOSIT INSURANCE 
COVERAGE.— 
(1) I N GENERAL.—Section 11(a) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821(a)) is amended by adding at the end the 
following new paragraph: 
"(8) CERTAIN INVESTMENT CONTRACTS NOT TREATED AS INSURED 
DEPOSITS.— 
"(A) I N GENERAL.—A liability of an insured depository 
institution shall not be treated as an insured deposit if the 
liability arises under any insured depository institution 
investment 
contract 
between 
any insured 
depository 
institution and any employee benefit plan which expressly 
permits benefit-responsive withdrawals or transfers. 
"(B) DEFINITIONS.—For purposes of subparagraph (A)— 
"(i) 
BENEFIT-RESPONSIVE WITHDRAWALS OR TRANS-
FERS.—The term 'benefit-responsive withdrawals or 
transfers' means any withdrawal or transfer of funds 
(consisting of any portion of the principal and any 
interest credited at a rate guaranteed by the insured 
depository institution investment contract) during the 
period in which any guaranteed rate is in effect, with-
out substantial penalty or adjustment, to pay benefits 
provided by the employee benefit plan or to permit a 
plan participant or beneficiary to redirect the invest-
ment of his or her account balance. 
"(ii) EMPLOYEE BENEFIT PLAN.—The term 'employee 
benefit plan'— 
"(I) has the meaning given to such term in sec-
tion 3(3) of the Employee Retirement Income Secu-
rity Act of 1974; and 
"(II) includes any plan described in section 401(d) 
of the Internal Revenue Code of 1986.". 
(2) EXCLUSION OF OBLIGATIONS FROM TREATMENT AS DEPOSITS 
FOR OTHER PURPOSES.—Section 7(b)(6) of the Federal Deposit 
Insurance Act (12 U.S.C. 1817(b)(6)) is amended— 
(A) by striking "and" at the end of subparagraph (B); 
(B) by striking the period at the end of subparagraph (C) 
and inserting "; and"; and 
(C) by adding at the end the following new subparagraph: 
"(D) any liability of the insured depository institution 
which is not treated as an insured deposit pursuant to 
section 11(a)(8).". 
(b) INSURANCE OF DEPOSITS.— 
(1) INSURED AMOUNTS PAYABLE.—Section 11(a) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(a)) (as amended bv subsec-
tion (a)(1) of this section) is amended by striking "(a)(1) and all 
that follows through paragraph (1) and inserting the following: 
"(a) DEPOSIT INSURANCE.— 
"(1) INSURED AMOUNTS PAYABLE.— 
105 STAT. 2364 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(A) IN GENERAL.—The Corporation shall insure the de-
posits of all insured depository institutions as provided in 
this Act. 
"(B) NET AMOUNT OF INSURED DEPOSIT.—The net amount 
due to any depositor at an insured depository institution 
shall not exceed $100,000 as determined in accordance with 
subparagraphs (C) and (D). 
"(C) AGGREGATION OF DEPOSITS.—For the purpose of deter-
mining the net amount due to any depositor under subpara-
graph (B), the Corporation shall aggregate the amounts of 
all deposits in the insured depository institution which are 
maintained by a depositor in the same capacity and the 
same right for the benefit of the depositor either in the 
name of the depositor or in the name of any other person, 
other than any amount in a trust fund described in section 
7(i)(l). 
"(D) COVERAGE ON PRO RATA OR 'PASS-THROUGH' BASIS.— 
"(i) IN GENERAL.—Except as provided in clause (ii), 
for the purpose of determining the amount of insurance 
due under subparagraph (B), the Corporation shall pro-
vide deposit insurance coverage with respect to deposits 
accepted by any insured depository institution on a pro 
rata or 'pass-through' basis to a participant in or bene-
ficiary of an employee benefit plan (as defined in sec-
tion ll(a)(8)(B)(ii)), including any eligible deferred com-
pensation plan described in section 457 of the Internal 
Revenue Code of 1986. 
"(ii) EXCEPTION.—After the end of the 1-year period 
beginning on the date of the enactment of the Federal 
Deposit Insurance Corporation Improvement Act of 
1991, the Corporation shall not provide insurance cov-
erage on a pro rata or 'pass-through' basis pursuant to 
clause (i) with respect to deposits accepted by any 
insured depository institution which, at the time such 
deposits are accepted, may not accept brokered deposits 
under section 29. 
"(iii) COVERAGE UNDER CERTAIN CIRCUMSTANCES.— 
Clause (ii) shall not apply with respect to any deposit 
accepted by an insured depository institution described 
in such clause if, at the time the deposit is accepted— 
"(I) the institution meets each applicable capital 
standard; and 
"(II) the depositor receives a written statement 
from the institution that such deposits at such 
institution are eligible for insurance coverage on a 
pro rata or 'pass-through' basis.". 
(2) CERTAIN RETIREMENT ACCOUNTS.—Section 11(a)(3) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(3)) is amended 
to read as follows: 
"(3) CERTAIN RETIREMENT ACCOUNTS.— 
"(A) IN GENERAL.—Notwithstanding any limitation in 
this Act relating to the amount of deposit insurance avail-
able for the account of any 1 depositor, deposits in an 
insured depository institution made in connection with— 
"(i) any individual retirement account described in 
section 408(a) of the Internal Revenue Code of 1986; 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2365 
"(ii) subject to the exception contained in paragraph 
(l)(D)(ii), any eligible deferred compensation plan de-
scribed in section 457 of such Code; and 
"(iii) any individual account plan defined in section 
3(34) of the Employee Retirement Income Security Act, 
and any plan described in section 401(d) of the Internal 
Revenue Code of 1986, to the extent that participants 
and beneficiaries under such plan have the right to 
direct the investment of assets held in individual ac-
counts maintained on their behalf by the plan, 
shall be aggregated and insured in an amount not to exceed 
$100,000 per participant per insured depository institution. 
"(B) AMOUNTS TAKEN INTO ACCOUNT.—For purposes of 
subparagraph (A), the amount aggregated for insurance 
coverage under this paragraph shall consist of the present 
vested and ascertainable interest of each participant under 
the plan, excluding any remainder interest created by, or as 
a result of, the plan.". 
(3) CERTAIN TRUST FUNDS.—Section 7(i) of the Federal Deposit 
Insurance Act (12 U.S.C. 1817(i)) is amended to read as follows: 
"(i) INSURANCE OF TRUST FUNDS.— 
"(1) IN GENERAL.—Trust funds held on deposit by an insured 
depository institution in a fiduciary capacity as trustee pursu-
ant to any irrevocable trust established pursuant to any statute 
or written trust agreement shall be insured in an amount not to 
exceed $100,000 for each trust estate. 
"(2) INTERBANK DEPOSITS.—Trust funds described in para-
graph (1) which are deposited by the fiduciary depository 
institution in another insured depository institution shall be 
similarly insured to the fiduciary depository institution accord-
ing to the trust estates represented. 
"(3) REGULATIONS.—The Board of Directors may prescribe 
such regulations as may be necessary to clarify the insurance 
coverage under this subsection and to prescribe the manner of 
reporting and depositing such trust funds.". 
(4) EXPANDED COVERAGE BY REGULATION.— 
12 use 1821 
(A) REVIEW OF COVERAGE.—For the purpose of prescribing "°*®-
regulations, during the 1-year period beginning on the date 
of the enactment of this Act, the Board of Directors shall 
review the capacities and rights in which deposit accounts 
are maintained and for which deposit insurance coverage is 
provided by the Corporation. 
(B) REGULATIONS.—After the end of the 1-year period 
referred to in subparagraph (A), the Board of Directors may 
prescribe regulations that provide for separate insurance 
coverage for the different capacities and rights in which 
deposit accounts are maintained if a determination is made 
by the Board of Directors that such separate insurance 
coverage is consistent with— 
(i) the purpose of protecting small depositors and 
limiting the undue expansion of deposit insurance cov-
erage; and 
(ii) the insurance provisions of the Federal Deposit 
Insurance Act. 
(C) DELAYED EFFECTIVE DATE FOR REGULATIONS.—No regu-
lation prescribed under subparagraph (B) may take effect 
105 STAT. 2366 
PUBLIC LAW 102-242—DEC. 19, 1991 
before the 2-year period beginning on the date of the enact-
ment of this Act. 
(5) TECHNICAL AND CONFORMING AMENDMENTS.— 
(A) Section 3(m) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(m)) is amended by striking "(mXD" and all that 
follows through par£igraph (1) and inserting the following: 
"(m) INSURED DEPOSIT.— 
"(1) IN GENERAL.—Subject to paragraph (2), the term 'insured 
deposit' means the net amount due to any depositor for deposits 
in an insured depository institution as determined under sec-
tions 7(i) and 11(a).". 
(B) Section 11(a)(2)(A) of the Federal Deposit Insurance 
Act (12 U.S.C. 1821(aX2)(A)) is amended by striking "his 
deposit shall be insured" and inserting "such depositor 
shall, for the purpose of determining the amount of insured 
deposits under this subsection, be deemed a depositor in 
such custodial capacity separate and distinct from any 
other officer, employee, or agent of the United States or any 
public unit referred to in clause (ii), (iii), (iv), or (v) and the 
deposit of any such depositor shall be insured in an amount 
not to exceed $100,000 per account". 
(C) The 2d subparagraph of section 11(a)(2) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(aX2)) is amended by 
striking "(b)" and inserting "(B)". 
12 use 1821 
(c) EFFECTIVE DATE.— 
"*'*®- 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by subsection (a) and paragraphs (2) and (3) 
of subsection (b) shall take effect at the end of the 2-year period 
beginning on the date of the enactment of this Act, 
(2) APPLICATION TO TIME DEPOSITS.— 
(A) CERTAIN DEPOSITS EXCLUDED,—Except with respect to 
the amendment referred to in paragraph (3), the amend-
ments made by subsections (a) and (b) shall not apply to any 
time deposit which— 
(i) was made before the date of enactment of this Act; 
and 
(ii) matures after the end of the 2-year period re-
ferred to in paragraph (1). 
(B) ROLLOVERS AND RENEWALS TREATED AS NEW DEPOSIT,— 
Any renewal or rollover of a time deposit described in 
subparagraph (A) after the date of the enactment of this 
Act shall be treated as a new deposit which is not described 
in such subparagraph. 
(3) EFFECTIVE DATE FOR AMENDMENT RELATING TO CERTAIN 
EMPLOYEE PLANS.— 
(A) Section 11(a)(1)(B) of the Federal Deposit Insurance 
Act (as amended by subsection (b)(1) of this section) shall 
take effect on the earlier o
f
— 
(i) the date of the enactment of this Act; or 
(ii) January 1,1992. 
(B) Section 11(a)(3)(A) of the Federal Deposit Insurance 
Act (as amended by subsection (b)(2) of this section) shall 
take effect on the earlier of the dates described in clauses (i) 
and (ii) of subparagraph (A) with respect to plans described 
in clause (ii) of such section. 
12 use 1821 
(d) INFORMATIONAL STUDY,— 
note. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2367 
(1) IN GENERAL.—The Federal Deposit Insurance Corporation, 
in conjunction with such consultants and technical experts as 
the Corporation determines to be appropriate, shall conduct a 
study of the cost and feasibility of tracking the insured and 
uninsured deposits of any individual and the exposure, under 
any Act of Congress or any regulation of any appropriate 
Federal banking agency, of the Federal Government with re-
spect to all insured depository institutions. 
(2) ANALYSIS OF COSTS AND BENEFITS.—The study under para-
graph (1) shall include detailed, technical analysis of the costs 
and benefits associated with the least expensive way to imple-
ment the system. 
(3) SPECIFIC FACTORS TO BE STUDIED.—As part of the study 
under paragraph (1), the Corporation shall investigate, review, 
and evaluate— 
(A) the data systems that would be required to track 
deposits in all insured depository institutions; 
(B) the reporting burdens of such tracking on individual 
depository institutions; 
(C) the systems which exist or which would be required to 
be developed to aggregate such data on an accurate basis; 
(D) the implications such tracking would have for individ-
ual privacy; and 
(E) the manner in which systems would be administered 
and enforced. 
(4) FEDERAL RESERVE BOARD SURVEY.—As part of the informa-
tional study required under paragraph (1), the Board of Gov-
ernors of the Federal Reserve System shall conduct, in conjunc-
tion with other Federal departments and agencies as necessary, 
a survey of the ownership of deposits held by individuals includ-
ing the dollar amount of deposits held, the type of deposit 
accounts held, and the type of financial institutions in which 
the deposit accounts are held. 
(5) ANALYSIS BY FDIC.—The results of the survey under para-
graph (4) shall be provided to the Federal Deposit Insurance 
Corporation before the end of the 1-year period beginning on the 
date of the enactment of this Act for analysis and inclusion in 
the informational study. 
(6) REPORT TO CONGRESS.—Before the end of the 18-month 
period beginning on the date of the enactment of this Act, the 
Federal Deposit Insurance Corporation shall submit to the Con-
gress a report containing a detailed statement of findings made 
and conclusions drawn from the study conducted under this 
section, including such recommendations for administrative and 
legislative action as the Corporation determines to be appro-
priate. 
SEC. 312. FOREIGN DEPOSITS. 
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by inserting after section 40 (as added by preceding provi-
sions of this Act) the following new section: 
"SEC. 41. PAYMENTS ON FOREIGN DEPOSITS PROHIBITED. 
12 USC 1831r. 
"(a) IN GENERAL.—Notwithstanding any other provision of law, 
the Corporation, the Board of Governors of the Federal Reserve 
System, the Resolution Trust Corporation, any other agency, depart-
ment, and instrumentality of the United States, and any corporation 
105 STAT. 2368 
PUBLIC LAW 102-242—DEC. 19, 1991 
owned or controlled by the United States may not, directly or 
indirectly, make any payment or provide any assistance, guarantee, 
or transfer under this Act or any other provision of law in connec-
tion with any insured depository institution which would have the 
direct or indirect effect of satisfying, in whole or in part, any claim 
against the institution for obligations of the institution which would 
constitute deposits as defined in section 3(1) but for subparagraphs 
(A) and (B) of section 3(1)(5).". 
"(b) EXCEPTION.—Subsection (a) shall not apply to any payment, 
assistance, guarantee, or transfer made or provided by the Corpora-
tion if the Board of Directors determines in writing that such action 
is not inconsistent with any requirement of section 13(c). 
"(c) DISCOUNT WINDOW LENDING.—No provision of this section 
shall be construed as prohibiting any Federal Reserve bank from 
making advances or otherwise extending credit pursuant to the 
Federal Reserve Act to any insured depository institution to the 
extent that such advance or extension of credit is consistent with 
the conditions and limitations imposed under section lOB of such 
Act". 
SEC. 313. PENALTY FOR FALSE ASSESSMENT REPORTS. 
(a) INSURED DEPOSITORY INSTITUTIONS.—Section 7(c) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(c)) is amended by adding at 
the end the following new paragraph: 
"(5) PENALTY FOR FAILURE TO MAKE ACCURATE CERTIFIED STATE-
MENT.— 
"(A) FIRST TIER.—Any insured depository institution 
which— 
"(i) maintains procedures reasonably adapted to 
avoid any inadvertent error and, unintentionally and 
as a result of such an error, fails to submit the certified 
statement under paragraph (1) or (2) within the period 
of time required under paragraph (1) or (2) or submits a 
false or misleading certified statement; or 
"(ii) submits the statement at a time which is mini-
mally after the time required in such paragraph, 
shall be subject to a penalty of not more than $2,000 for 
each day during which such failure continues or such false 
and misleading information is not corrected. The institution 
shall have the burden of proving that an error was 
inadvertent or that a statement was inadvertently submit-
ted late. 
"(B) SECOND TIER,—Any insured depository institution 
which fails to submit the certified statement under para-
graph (1) or (2) within the period of time required under 
paragraph (1) or (2) or submits a false or misleading cer-
tified statement in a manner not described in subparagraph 
(A) shall be subject to a penalty of not more than $20,000 for 
each day during which such failure continues or such false 
and misleading information is not corrected. 
"(C) THIRD TIER.—Notwithstanding subparagraphs (A) 
and (B), if any insured depository institution knowingly or 
with reckless disregard for the accuracy of any certified 
statement described in paragraph (1) or (2) submits a false 
or misleading certified statement under paragraph (1) or (2), 
the Corporation may assess a penalty of not more than 
$1,000,000 or not more than 1 percent of the total assets of 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2369 
the institution, whichever is less, per day for each day 
during which the failure continues or the false or mislead-
ing information in such statement is not corrected. 
"(D) ASSESSMENT 
PROCEDURE.—Any penalty 
imposed 
under this paragraph shall be assessed and collected by the 
Corporation in the manner provided in subparagraphs (E), 
(F), (G), and (I) of section 8(iX2) (for penalties imposed under 
such section) and any such assessment (including the deter-
mination of the amount of the penalty) shall be subject to 
the provisions of such section. 
"(E) 
HEARING.—Any 
insured 
depository 
institution 
against which any penalty is assessed under this paragraph 
shall be afforded an agency hearing if the institution sub-
mits a request for such hearing within 20 days after the 
issuance of the notice of the assessment. Section 8(h) shall 
apply to any proceeding under this subparagraph.", 
(b) INSURED CREDIT UNIONS.—Section 202(d)(2) of the Federal 
Credit Union Act (12 U.S.C. 1782(dX2)) is amended to read as follows: 
"(2) PENALTY FOR FAILURE TO MAKE ACCURATE CERTIFIED STATE-
MENT OR TO PAY DEPOSIT OR PREMIUM.— 
"(A) FIRST TIER.—Any insured credit union which— 
"(i) maintains procedures reasonably adapted to 
avoid any inadvertent error and, unintentionally and 
as a result of such an error, fails to submit any certified 
statement under subsection (bXD within the period of 
time required or submits a false or misleading certified 
statement under such subsection; or 
"(ii) submits the statement at a time which is mini-
mally after the time required, 
shall be subject to a penalty of not more than $2,000 for 
each day during which such failure continues or such false 
and misleading information is not corrected. The insured 
credit union shall have the burden of proving that an error 
was inadvertent or that a statement was inadvertently 
submitted late. 
"(B) SECOND TIER.—Any insured credit union which— 
"(i) fails to submit any certified statement under 
subsection (b)(1) within the period of time required or 
submits a false or misleading certified statement in a 
manner not described in subparagraph (A); or 
"(ii) fails or refuses to pay any deposit or premium 
for insurance required under this title, 
shall be subject to a penalty of not more than $20,000 for 
each day during which such failure continues, such false 
and misleading information is not corrected, or such deposit 
or premium is not paid. 
"(C) THIRD TIER.—Notwithstanding subparagraphs (A) 
and (B), if any insured depository institution knowingly or 
with reckless disregard for the accuracy of any certified 
statement under subsection (bXD or submits a false or 
misleading certified statement under such subsection, the 
Corporation may assess a penalty of not more than 
$1,000,000 or not more than 1 percent of the total assets of 
the institution, whichever is less, per day for each day 
during which the failure continues or the false or mislead-
ing information in such statement is not corrected. 
105 STAT. 2370 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(D) 
ASSESSMENT 
PROCEDURE.—Any penalty 
imposed 
under this paragraph shall be assessed and collected by the 
Corporation in the manner provided in section 206(k)(2) (for 
penalties imposed under such section) and any such assess-
ment (including the determination of the amount of the 
penalty) shall be subject to the provisions of such section. 
"(E) 
HEARING.—Any 
insured 
depository 
institution 
against which any penalty is assessed under this paragraph 
shall be afforded an agency hearing if the institution sub-
mits a request for such hearing within 20 days after the 
issuance of the notice of the assessment. Section 206(j) shall 
apply to any proceeding under this subparagraph. 
"(F) SPECIAL RULE FOR DISPUTED PAYMENTS.—No penalty 
may be assessed for the failure of any insured credit union 
to pay any deposit or premium for insurance if— 
"(i) the failure is due to a dispute between the credit 
union and the Board over the amount of the deposit or 
premium which is due from the credit union; and 
"(ii) the credit union deposits security satisfactory to 
the Board for payment of the deposit or insurance 
premium upon final determination of the dispute.". 
Subtitle C—Demonstration Project and Studies 
12 use 1811 
SEC. 321. FEASIBILITY STUDY ON AUTHORIZING INSURED AND UNIN-
note. 
SURED DEPOSIT ACCOUNTS. 
(a) STUDY REQUIRED.—The Federal Deposit Insurance Corporation 
shall study the feasibility of authorizing insured depository institu-
tions to offer both insured and uninsured deposit accounts to cus-
tomers. 
(b) FACTORS TO CONSIDER.—In conducting the study required under 
subsection (a), the Corporation shall consider the following factors: 
(1) The risk a 2-window deposit system would pose to the 
deposit insurance system. 
(2) The disclosure standards which would be necessary to 
prevent customer confusion over the insured status of deposits 
and fraudulent or misleading practices with respect to such 
insured status. 
(3) The extent to which accounting standards would have to 
be revised or changed. 
(4) The manner in which a 2-window deposit plan could be 
implemented with the least disruption to the stability of, and 
the confidence of consumers in, the banking system. 
(c) REPORT.—Before the end of the 6-month period beginning on 
the date of the enactment of this Act, the Corporation shall submit a 
report to the Congress containing the Corporation's findings and 
conclusions with respect to the study under subsection (a) and any 
recommendations for legislative or administrative action the Cor-
poration may determine to be appropriate. 
12 use 1811 
SEC. 322. PRIVATE REINSURANCE STUDY. 
(a) STUDY.— 
(1) IN GENERAL.—The Board of Directors of the Federal De-
posit Insurance Corporation, in consultation with the Secretary 
of the Treasury and individuals from the private sector with 
expertise in private insurance, private reinsurance, depository 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2371 
institutions, or economics, shall conduct a study of the feasibil-
ity of establishing a private reinsurance system. 
(2) PROJECT.—The study conducted under this subsection shall 
include a demonstration project consisting of a simulation, by a 
sample of private reinsurers and insured depository institu-
tions, of the activities required for a private reinsurance system, 
including— 
(A) establishment of a pricing structure for risk-based 
premiums; 
(B) formulation of insurance or reinsurance contracts; 
and 
(C) identification and collection of information necessary 
to evaluate and monitor the risks in insured depository 
institutions. 
(3) ACTUAL REINSURANCE TRANSACTIONS.—The Federal Deposit 
Insurance Corporation may engage in actual reinsurance trans-
actions as part of a demonstration project conducted under 
paragraph (2). 
(b) REPORT.— 
(1) IN GENERAL.—Before the end of the 18-month period begin-
ning on the date of the enactment of this Act, the Federal 
Deposit Insurance Corporation shall submit to the Congress a 
report on the study conducted under this section. 
(2) CONTENTS.—The report under this subsection shall in-
clude— 
(A) an analysis and review of the project conducted under 
subsection (a)(2); 
(B) conclusions regarding the feasibility of a private re-
insurance system; 
(C) recommendations regarding whether— 
(i) such a system should be restricted to depository 
institutions over a certain asset size; 
(ii) similar systems are feasible for depository institu-
tions or groups of depository institutions of a lesser 
asset size; and 
(iii) public policy goals can be satisfied by such sys-
tems; and 
(D) recommendations for administrative and legislative 
action that may be necessary to establish such systems. 
TITLE IV—MISCELLANEOUS PROVISIONS 
Subtitle A—Payment System Risk Reduction 
SEC. 401. FINDINGS AND PURPOSE. 
12 USC 4401. 
The Congress finds that— 
(1) many financial institutions engage daily in thousands of 
transactions with other financial institutions directly and 
through clearing organizations; 
(2) the efficient processing of such transactions is essential to 
a smoothly functioning economy; 
(3) such transactions can be processed most efficiently if, 
consistent with applicable contractual terms, obligations among 
financial institutions are netted; 
105 STAT. 2372 
PUBLIC LAW 102-242—DEC. 19, 1991 
(4) such netting procedures would reduce the systemic risk 
within the banking system and financial markets; and 
(5) the effectiveness of such netting procedures can be assured 
only if they are recognized as valid and legally binding in the 
event of the closing of a financial institution participating in 
the netting procedures. 
12 use 4402. 
SEC. 402. DEFINITIONS. 
For purposes of this subtitle— 
(1) BROKER OR DEALER.—The term 'broker or dealer' means— 
(A) any company that is registered or licensed under 
Federal or State law to engage in the business of brokering, 
underwriting, or dealing in securities in the United States; 
and 
(B) to the extent consistent with this title, as determined 
by the Board of Governors of the Federal Reserve System, 
any company that is an affiliate of a company described in 
subparagraph (A) and that is engaged in the business of 
entering into netting contracts. 
(2) CLEARING ORGANIZATION.—The term "clearing organiza-
tion" means a clearinghouse, clearing association, clearing cor-
poration, or similar organization— 
(A) that provides clearing, netting, or settlement services 
for its members and— 
(i) in which all members other than the clearing 
organization itself are financial institutions or other 
clearing organizations; or 
(ii) which is registered as a clearing agency under the 
Securities Exchange Act of 1934; or 
(B) that performs clearing functions for a contract market 
designated pursuant to the Commodity Exchange Act. 
(3) COVERED CLEARING OBLIGATION.—The term "covered clear-
ing obligation" means an obligation of a member of a clearing 
organization to make payment to another member of a clearing 
organization, subject to a netting contract. 
(4) COVERED CONTRACTUAL PAYMENT ENTITLEMENT.—The term 
"covered contractual payment entitlement" means— 
(A) an entitlement of a financial institution to receive a 
payment, subject to a netting contract from another finan-
cial institution; and 
(B) an entitlement of a member of a clearing organization 
to receive payment, subject to a netting contract, from 
another member of a clearing organization of a covered 
clearing obligation. 
(5) COVERED CONTRACTUAL PAYMENT OBLIGATION.—The term 
"covered contractual payment obligation" means— 
(A) an obligation of a financial institution to make pay-
ment, subject to a netting contract to another 
financial 
institution; and 
(B) a covered clearing obligation. 
(6) DEPOSITORY INSTITUTION.—The term "depository institu-
tion" means— 
(A) a depository institution 
as defined in section 
19(b)(1)(A) of the Federal Reserve Act (other than clause 
(vii)); 
(B) a branch or agency as defined in section 1(b) of the 
International Banking Act of 1978; 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2373 
(C) a corporation chartered under section 25(a) of the 
Federal Reserve Act; or 
(D) a corporation having an agreement or undertaking 
with the Board of Governors of the Federal Reserve System 
under section 25 of the Federal Reserve Act. 
(7) FAILED FINANCIAL INSTITUTION.—The term "failed financial 
institution" means a financial institution that— 
(A) fails to satisfy a covered contractual payment obliga-
tion when due; 
(B) has commenced or had commenced against it insol-
vency, liquidation, reorganization, receivership (including 
the appointment of a receiver), conservatorship, or similar 
proceedings; or 
(C) has generally ceased to meet its obligations when due. 
(8) FAILED MEMBER.—The term "failed member" means any 
member that— 
(A) fails to satisfy a covered clearing obligation when due, 
(B) has commenced or had commenced against it insol-
vency, liquidation, reorganization, receivership (including 
the appointment of a receiver), conservatorship, or similar 
proceedings, or 
(C) has generally ceased to meet its obligations when due. 
(9) FINANCIAL INSTITUTION.—The term "financial institution" 
means a broker or dealer, a depository institution, a futures 
commission merchant, or any other institution as determined 
by the Board of Governors of the Federal Reserve System. 
(10) FUTURES COMMISSION MERCHANT.—The term "futures 
commission merchant" means a company that is registered or 
licensed under Federal law to engage in the business of selling 
futures and options in commodities. 
(11) MEMBER.—The term "member" means a member of or 
participant in a clearing organization, and includes the clearing 
organization. 
(12) NET ENTITLEMENT.—The term "net entitlement" means 
the amount by which the covered contractual payment entitle-
ments of a financial institution or member exceed the covered 
contractual payment obligations of the institution or member 
after netting under a netting contract. 
(13) NET OBLIGATION.—The term "net obligation" meajis the 
amount by which the covered contractual payment obligations 
of a financial institution or member exceed the covered contrac-
tual payment entitlements of the institution or member after 
netting under a netting contract. 
(14) NETTING CONTRACT.— 
(A) IN GENERAL.—The term "netting contract"— 
(i) means a contract or agreement between 2 or more 
financial institutions or members, that— 
(I) is governed by the laws of the United States, 
any State, or any political subdivision of any State, 
and 
(II) provides for netting present or future pay-
ment obligations or payment entitlements (includ-
ing liquidation or close-out values relating to the 
obligations or entitlements) among the parties to 
the agreement; and 
(ii) includes the rules of a clearing organization. 
105 STAT. 2374 
PUBLIC LAW 102-242—DEC. 19, 1991 
(B) INVALID CONTRACTS NOT INCLUDED.—The term "net-
ting contract" does not include any contract or agreement 
that is invalid under or precluded by Federal commodities 
law. 
12 use 4403. 
SEC. 403. BILATERAL NETTING. 
(a) GENERAL RULE.—Notwithstanding any other provision of law, 
the covered contractual payment obligations and the covered 
contractual payment entitlements between any 2 financial institu-
tions shall be netted in accordance with, and subject to the condi-
tions of, the terms of any applicable netting contract. 
(b) LIMITATION ON OBLIGATION TO MAKE PAYMENT.—The only 
obligation, if any, of a financial institution to make payment with 
respect to covered contractual payment obligations to another finan-
cial institution shall be equal to its net obligation to such other 
financial institution, and no such obligation shall exist if there is no 
net obligation. 
(c) LIMITATION ON RIGHT TO RECEIVE PAYMENT.—The only right, if 
any, of a financial institution to receive payments with respect to 
covered contractual payment entitlements from another financial 
institution shall be equal to its net entitlement with respect to such 
other financial institution, and no such right shall exist if there is 
no net entitlement. 
(d) PAYMENT OF NET ENTITLEMENT OF FAILED FINANCIAL INSTITU-
TION.—The net entitlement of any failed financial institution, if any, 
shall be paid to the failed financial institution in accordance with, 
and subject to the conditions of, the applicable netting contract. 
(e) 
EFFECTIVENESS 
NOTWITHSTANDING 
STATUS 
AS 
FINANCIAL 
INSTITUTION.—This section shall be given effect notwithstanding 
that a financial institution is a failed financial institution. 
12 use 4404. 
SEC. 404. CLEARING ORGANIZATION NETTING. 
(a) GENERAL NETTING RULE.—Notwithstanding any other provi-
sion of law, the covered contractual payment obligations and cov-
ered contractual payment entitlements of a member of a clearing 
organization to and from all other members of a clearing organiza-
tion shall be netted in accordance with and subject to the conditions 
of any applicable netting contract. 
(b) LIMITATION OF OBLIGATION TO MAKE PAYMENT.—The only 
obligation, if any, of a member of a clearing organization to make 
payment with respect to covered contractual payment obligations 
arising under a single netting contract to any other member of a 
clearing organization shall be equal to its net obligation arising 
under that netting contract, and no such obligation shall exist if 
there is no net obligation. 
(c) LIMITATION ON RIGHT TO RECEIVE PAYMENT.—The only right, if 
any, of a member of a clearing organization to receive payment with 
respect to a covered contractual payment entitlement arising under 
a single netting contract from other members of a clearing organiza-
tion shall be equal to its net entitlement arising under that netting 
contract, and no such right shall exist if there is no net entitlement. 
(d) ENTITLEMENT OF FAILED MEMBERS.—The net entitlement, if 
any, of any failed member of a clearing organization shall be paid to 
the failed member in accordance with, and subject to the conditions 
of, the applicable netting contract. 
(e) OBLIGATIONS OF FAILED MEMBERS.—The net obligation, if any, 
of any failed member of a clearing organization shall be determined 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2375 
in accordance with, and subject to the conditions of, the applicable 
netting contract. 
(f) LIMITATION ON CLAIMS FOR ENTITLEMENT.—A failed member of 
a clearing organization shall have no recognizable claim against any 
member of a clearing organization for any amount based on such 
covered contractual payment entitlements other than its net 
entitlement. 
(g) EFFECTIVENESS NOTWITHSTANDING STATUS AS MEMBER.—This 
section shall be given effect notwithstanding that a member is a 
failed member. 
SEC. 405. PREEMPTION. 
12 USC 4405. 
No stay, injunction, avoidance, moratorium, or similar proceeding 
or order, whether issued or granted by a court, administrative 
agency, or otherwise, shall limit or delay application of otherwise 
enforceable netting contracts in accordance with sections 403 and 
404. 
SEC. 406. RELATIONSHIP TO OTHER PAYMENTS SYSTEMS. 
12 USC 4406. 
This subtitle shall have no effect by implication or otherwise on 
the validity or legal enforceability of a netting arrangement of any 
payment system which is not subject to this subtitle. 
SEC. 407. NATIONAL EMERGENCIES. 
12 USC 4407. 
The provisions of this subtitle may not be construed to limit the 
authority of the President under the Trading With the Enemy Act 
(50 U.S.C. App. 1 et seq.) or the International Emergency Economic 
Powers Act (50 U.S.C. 1701 et seq.). 
Subtitle B—Right to Financial Privacy Act of 
1978 
SEC. 411. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 
1978. 
The Right to Financial Privacy Act of 1978 is amended— 
(1) in section 1112(f)(2) (12 U.S.C. 3412(f)(2))— 
(A) by inserting "for civil actions under section 951 of the 
Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989, or for forfeiture under sections 981 or 982 of 
title 18, United States Code" after "purposes"; and 
(B) by adding at the end the following new sentence: "No 
agency or department so transferring such records shall be 
deemed to have waived any privilege applicable to those 
records under law."; 
(2) in section 1113(h)(1)(A) (12 U.S.C. 3413(h)(1)(A)), by striking 
"the financial institution in possession of such records" and 
inserting "a financial institution (whether or not such proceed-
ing, investigation, examination, or inspection is also directed at 
(3) in section 1113(h)(4) (12 U.S.C. 3413(h)(4)) bv striking "the 
financial institution in possession of such records and inserting 
"a financial institution (whether or not such proceeding, inves-
tigation, examination, or inspection is also directed at a cus-
tomer)"; and 
(4) in section 1113(1) (12 U.S.C. 3413(1)), by adding after para-
graph (2) the following new sentence: 
105 STAT. 2376 
PUBLIC LAW 102-242—DEC. 19, 1991 
"No supervisory agency which transfers any such record under this 
subsection shall be deemed to have waived any privilege applicable 
to that record under law.". 
Subtitle C—Final Settlement Payment 
Procedure 
SEC. 416. FINAL SETTLEMENT PAYMENT PROCEDURE. 
Section 11(d)(4) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(d)) is amended to read as follows: 
"(4) RULEMAKING AUTHORITY RELATING TO DETERMINATION OF 
CLAIMS.— 
"(A) IN GENERAL.—The Corporation may prescribe regu-
lations regarding the allowance or disallowance of claims 
by the receiver and providing for administrative determina-
tions of claims and review of such determination. 
"(B) FINAL SETTLEMENT PAYMENT PROCEDURE.— 
"(i) IN GENERAL.—In the handling of receiverships of 
insured depository institutions, to maintain essential 
liquidity and to prevent financial disruption, the Cor-
poration may, after the declaration of an institution's 
insolvency, settle all uninsured and unsecured claims 
on the receivership with a final settlement payment 
which shall constitute full payment and disposition of 
the Corporation's obligations to such claimants. 
"(ii) FINAL SETTLEMENT PAYMENT.—For purposes of 
clause (i), a final settlement payment shall be payment 
of an amount equal to the product of the final settle-
ment payment rate and the amount of the uninsured 
and unsecured claim on the receivership; and 
"(iii) FINAL SETTLEMENT PAYMENT RATE.—For pur-
poses of clause (ii), the final settlement payment rate 
shall be a percentage rate reflecting an average of the 
Corporation's receivership recovery experience, deter-
mined by the Corporation in such a way that over such 
time period as the Corporation may deem appropriate, 
the Corporation in total will receive no more or less 
than it would have received in total as a general credi-
tor standing in the place of insured depositors in each 
specific receivership. 
"(iv) CORPORATION AUTHORITY.—The Corporation may 
undertake such supervisory actions and promulgate 
such regulations as may be necessary to assure that the 
requirements of this section can be implemented with 
respect to each insured depository institution in the 
event of its insolvency.". 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2377 
Subtitle D—Miscellaneous Committees, 
Studies, and Reports 
SEC. 421. AMENDMENTS RELATING TO FEDERAL RESERVE BOARD RE-
SERVE REQUIREMENTS. 
(a) STUDY ON PAYMENT OF IMPUTED EARNINGS ON STERILE RE-
SERVES T
O INSURANCE FUNDS.—The Board of Governors of the Fed-
eral Reserve System, the Federal Deposit Insurance Corporation, 
the Comptroller of the Currency, the Director of the Office of Thrift 
Supervision, and the National Credit Union Administration shall 
jointly— 
(1) conduct a study on the feasibility of assessing Federal 
Reserve banks an amount equal to the imputed earnings on 
reserves held at such banks by insured depository institutions 
under section 19(b) of the Federal Reserve Act; and 
(2) assess the likely beneficial and adverse effects such an 
assessment would have on the Federal reserve banks, the de-
posit insurance funds, the insured depository institutions, and 
the Federal payment system, including a comparison of the 
effects on each such subject of the study. 
(b) REPORT TO CONGRESS.—Before the end of the 6-month period 
beginning on the date of the enactment of this Act, the Board of 
Governors of the Federal Reserve System, the Federal Deposit 
Insurance Corporation, the Comptroller of the Currency, the Direc-
tor of the Office of Thrift Supervision, and the National Credit 
Union Administration shall jointly submit a report to the Congress 
on the findings and conclusions made with respect to the study 
under subsection (a), together with any recommendation for any 
legislative or administrative action which such agencies may deter-
mine to be appropriate. 
(c) REPORT OF DISSENTING 
VIEWS.—Any agency described in 
subsections (a) and (b) which does not concur in the findings, conclu-
sions, or recommendations referred to in subsection (b) or has 
additional findings, conclusions, or recommendations which were 
not included in the report may submit a report to the Congress 
describing— 
(1) the reasons why the agency does not concur in the find-
ings, conclusions, or recommendations referred to in subsection 
(b); and 
(2) such additional findings, conclusions, or recommendations. 
SEC. 422. PERMANENT AUTHORIZATION OF CREDIT STANDARDS BOARD. 
(a) IN GENERAL.—Section 1205 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1818 
note) is amended by adding at the end the following new subsec-
tion: 
"(f) FEDERAL ADVISORY COMMITTEE ACT DOES NOT APPLY.—The 
Federal Advisory Committee Act shall not apply with respect to the 
Committee.". 
(b) CHAIRPERSON.—Section 1205(b)(3) of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1818 
note) is amended to read as follows: 
"(3) CHAIRPERSON.—The Chairperson of the Committee shall President, 
be designated by the President from among the members ap-
pointed under paragraph (1)(F).". 
105 STAT. 2378 
PUBLIC LAW 102-242—DEC. 19, 1991 
Subtitle E—Utilization of Private Sector 
SEC. 426. UTILIZATION OF PRIVATE SECTOR. 
Section 11(d)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(d)(2)) is amended by adding at the end the following new 
subparagraph: 
"(K) UTIUZATION OF PRIVATE SECTOR.—In carrying out 
its 
responsibilities in the management and disposition of assets 
from insured depository institutions, as conservator, re-
ceiver, or in its corporate capacity, the Corporation shall 
utilize the services of private persons, including real estate 
and loan portfolio asset management, property manage-
ment, auction marketing, and brokerage services, if such 
services are available in the private sector and the Corpora-
tion determines utilization of such services is practicable, 
efficient, and cost effective.". 
SEC. 427. REPORTING. 
Section 17 of the Federal Deposit Insurance Act (12 U.S.C. 1827) is 
amended by adding at the end the following new subsection: 
"(h) ADDITIONAL REPORTS.— 
"(1) IN GENERAL.—In addition to the reports required under 
subsections (a), (b), and (c), the Corporation shall submit to 
Congress not later than April 30 and October 31 of each year, a 
semiannual report on the activities and efforts of the Corpora-
tion for the 6-month period ending on the last day of the month 
prior to the month in which such report is required to be 
submitted. 
"(2) CONTENTS OF REPORT.—Each semiannual report required 
under this subsection shall include the following information 
with respect to the Corporation's assets and liabilities and the 
assets and liabilities of institutions for which the Corporation 
serves as a conservator or receiver: 
"(A) A statement of the total book value of all assets held 
or managed by the Corporation at the beginning and end of 
the reporting period. 
"(B) A statement of the total book value of such assets 
which are under contract to be managed by private persons 
and entities at the beginning and end of the reporting 
period. 
"(C) The number of employees of the Corporation at the 
beginning and end of the reporting period. 
"(D) A statement of the total amount expended on private 
contractors for the mansigement of such assets. 
"(E) A statement of the efforts of the Corporation to 
maximize the efficient utilization of the resources of the 
private sector during the reporting period and in future 
reporting periods and a description of the policies and 
procedures adopted to ensure adequate competition and fair 
and consistent treatment of qualified third parties seeking 
to provide services to the Corporation.". 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2379 
Subtitle F—Emergency Assistance for Rhode 
Island 
SEC. 
4
3
1
. 
EMERGENCY 
LOAN 
GUARANTEE. 
; 
(a) IN GENERAL.— 
(1) PROVISION FOR GUARANTEE.—Subject to the terms and 
conditions established by or under this subsection, the Secretary 
of the Treasury shall guarantee the repayment of any amount 
not to exceed $180,000,000 borrowed by the State of Rhode 
Island and Providence Plantations (hereafter in this section 
referred to as the "State of Rhode Island"), or the Depositors 
Economic Protection Corporation established by such State, to 
expedite the repayment of depositors at State-chartered banks 
and credit unions in receivership in such State and to facilitate 
the resolution of such receiverships. 
(2) LOAN COLLATERAL REQUIRED AS CONDITION FOR GUARAN-
TEE.—The Secretary of the Treasury may not guarantee the 
repayment of any amount under paragraph (1) unless the 
amount of any loan for which the guarantee is sought is fully 
secured as follows: 
(A) A first lien on assets held or controlled by the Deposi-
tors Economic Protection Corporation and the proceeds 
from the sale of such assets, are irrevocably pledged to the 
extent necessary to provide collateral for the guarantee. 
(B) If the liens and assets described in subparagraph (A) 
are insufficient to fully secure the guarantee, then a first 
lien on any assets held or controlled by the State of Rhode 
Island or any instrumentality of the State of Rhode Island 
and the proceeds from the sale of such assets, are irrev-
ocably pledged to the extent necessary to provide collateral 
for the guarantee. 
(C) If the liens and assets described in subparagraphs (A) 
and (B) are insufficient to fully secure the guarantee, then 
any revenue from the State sales tax which is dedicated to 
the Depositors Economic Protection Corporation under the 
law of the State of Rhode Island in excess of the amount 
necessary to pay principal and interest on any obligation of 
the State or the Corporation issued before the date of the 
loan is irrevocably dedicated to the extent necessal-y to 
provide collateral for the guarantee. 
(3) GUARANTEE FEES.—The Secretary may assess and collect 
with respect to loans guaranteed under this subsection an 
annual guarantee fee computed daily at a rate which may not 
exceed one-half of 1 percent of the outstanding principal 
amount of the guaranteed loan. 
(4) PLEDGE OF CERTAIN INCOME FOR REPAYMENT.—The Sec-
retary may not guarantee under this section the repayment of 
any loan proposed to be made to the Depositors Economic 
Protection Corporation unless, for each fiscal year of the Deposi-
tors Economic Protection Corporation, all rents, issues, profits, 
products, proceeds, revenues, and other income (including insur-
ance proceeds and condemnation awards) received by the Cor-
poration from, or attributable to, the assets pledged to the 
United States in accordance with this subsection, in excess of 
the amount necessary to pay the interest, or principal and 
105 STAT. 2380 
PUBLIC LAW 102-242—DEC. 19, 1991 
interest on any loan to the Corporation guaranteed under para-
graph (1) that is payable in such fiscal year are irrevocably 
pledged to be deposited into a sinking fund or defeasance fund 
maintained by the Corporation and are irrevocably pledged and 
dedicated to the repayment of the principal of such guaranteed 
loan in the inverse order of the maturity of such principal 
installments. 
(5) INVESTMENT GRADE RATING.—The Secretary may not 
, 
guarantee under this section the repayment of any loan pro-
posed to be made to the State of Rhode Island or the Depositors 
Economic Protection Corporation unless each such proposed 
loan has received a rating (for purposes of which the collateral 
securing the guarantee is considered to be securing the loan) 
of-
(A) the highest investment grade from a nationally recog-
nized statistical rating organization; 
(B) not less than 1 less than the investment grade rating 
from 2 nationally recognized statistical rating organiza-
tions; or 
(C) not less than 2 less than the highest investment grade 
from 2 nationally recognized statistical rating organizations 
to the extent that— 
(i) a rating of not less than 1 less than the highest 
investment grade rating from 2 nationally recognized 
statistical rating organization has not been achieved 
through the use of all of the collateral listed in subsec-
tion (a)(2)(A) and the available collateral 
under 
subparagraph (B) or (C) of subsection (aX2) at the time 
of the State of Rhode Island's request for the loan 
guarantee; and 
(ii) representatives of the State of Rhode Island and 
the Secretary are able to agree upon the lesser grade 
rating based on changes negotiated to other terms of 
this subtitle, including the purchase of bond insurance. 
(6) TERMS.— 
(A) IN GENERAL.—The guarantee provided for in this 
subsection shall be with respect to a loan which— 
(i) is made not more than 1 year after the date of 
enactment of this Act; 
(ii) will mature not later than 8 years after the date 
of such loan; and 
(iii) is scheduled to be repaid in equal installments of 
principal during the last 4 years of the repayment term 
of such loan. 
(B) AUTHORITY TO VARY TIME PERIODS.—The Secretary and 
the duly authorized representative of the State of Rhode 
Island may, by mutual agreement, modify any durational 
requirement specified in subparagraph (A). 
(7) ADDITIONAL TERMS AND CONDITIONS.—Except as otherwise 
provided in this subsection, the terms and conditions of any loan 
guarantee under this section shall be established by mutual 
agreement of the Secretary of the Treasury and the duly au-
thorized representative of the State of Rhode Island. 
(b) APPROPRIATION OF AMOUNTS.—There are hereby appropriated 
to the Secretary of the Treasury such sums as may be necessary for 
any fiscal year to meet the obligation of the United States under 
subsection (aXD. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2381 
Subtitle G—Qualified Thrift Lender Test 
gnlStJorm 
Improvements 
Act of 1991 
SEC. 436. SHORT TITLE. 
12 USC 1461 
This subtitle may be cited as the "QuaHfied Thrift Lender Reform 
Act of 1991". 
SEC. 437. ADJUSTMENT OF COMPLIANCE PERIODS FOR PURPOSES OF 
QUALIFIED THRIFT LENDER TEST. 
Section 10(m)(l)(B) of the Home Owners' Loan Act (12 U.S.C. 
1467a(m)(l)(B)) (as in effect on July 1, 1991) is amended to read as 
follows: 
"(B) the savings association's qualified thrift investments 
continue to equal or exceed 65 percent of the savings 
association's portfolio assets on a monthly average basis in 
9 out of every 12 months.". 
SEC. 438. INCREASE IN AMOUNT OF LIQUID ASSETS EXCLUDABLE FROM 
PORTFOLIO ASSETS. 
Section 10(m)(4)(B)(iii) of the Home Owners' Loan Act (12 U.S.C. 
1467a(m)(4)(B)(iii)) (as in effect on July 1, 1991) is amended by 
striking "10 percent" and inserting "20 percent". 
SEC. 439. ADDITIONAL INVESTMENTS INCLUDED IN DEFINITION OF 
QUALIFIED THRIFT ASSETS. 
Section 10(m)(4)(C) of the Home Owners' Loan Act (12 U.S.C. 
1467a(m)(4)(C)) (as in effect on July 1, 1991) is amended— 
(1) by adding at the end of clause (ii) the following new 
subclause: 
"(VI) Shares of stock issued by any Federal home 
loan bank."; and 
(2) by adding at the end of clause (iii) the following new 
subclause: 
"(VII) Shares of stock issued by the Federal 
Home Loan Mortgage Corporation or the Federal 
National Mortgage Association.". 
SEC. 440. PRUDENT DIVERSIFICATION OF ASSETS. 
(a) IN GENERAL.—Section 10(m)(4)(C)(iii)(VI) of the Home Owners' 
Loan Act (12 U.S.C. 1467a(m)(4)(C)(iii)(VI)) (as in effect on July 1, 
1991) is amended by striking "5 percent" and inserting "10 percent". 
(b) 
TECHNICAL 
AND 
CONFORMING 
AMENDMENT.—Section 
10(m)(4)(C)(iv) of the Home 
Owners' 
Loan 
Act (12 U.S.C. 
1467a(m)(4)(C)(iv)) (as in effect on July 1, 1991) is amended by 
striking "15 percent" and inserting "20 percent". 
SEC. 441. CONSUMER LENDING BY FEDERAL SAVINGS ASSOCIATIONS. 
(a) PERCENTAGE ADJUSTMENT.—Section 5(c)(2)(D) of the Home 
Owners' Loan Act (12 U.S.C. 1464(c)(2)(D)) is amended in the second 
sentence by striking "30 percent" and inserting "35 percent". 
(b) LOANS TO ORIGINAL OBLIGOR.—Section 5(c)(2)(B) of the Home 
Owners' Loan Act (12 U.S.C. 1464(c)(2)(B)) is amended by inserting 
before the period at the end the following: ", provided however, that 
no amount in excess of 30 percent of the assets may be invested in 
loans made directly by the association to the original obligor, and 
105 STAT. 2382 
PUBLIC LAW 102-242—DEC. 19, 1991 
the association does not pay finder, referral, or other fees, directly or 
indirectly, to a third party.". 
Subtitle H—Prohibition on Entering Secrecy 
Agreements and Protective Orders 
SEC. 446. PROHIBITION ON ENTERING INTO SECRECY AGREEMENTS AND 
PROTECTIVE ORDERS. 
Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is 
amended by adding at the end the following new subsection: 
"(s) PROHIBITION ON ENTERING SECRECY AGREEMENTS AND PROTEC-
TIVE ORDERS.—The Corporation may not enter into any agreement 
or approve any protective order which prohibits the Corporation 
from disclosing the terms of any settlement of an administrative or 
other action for damages or restitution brought by the Corporation 
in its capacity as conservator or receiver for an insured depository 
institution.". 
Subtitle I—Bank and Thrift Employee 
Provisions 
12 u s e 1821 
SEC. 451. CONTINUATION OF HEALTH PLAN COVERAGE IN CASES OF 
*^ote 
FAILED FINANCIAL INSTITUTIONS. 
(a) CONTINUATION COVERAGE.—The Federal Deposit Insurance 
Corporation— 
(1) shall, in its capacity as a successor of a failed depository 
institution (whether acting directly or through any bridge 
bank), have the same obligation to provide a group health plan 
meeting the requirements of section 602 of the Employee Retire-
ment Income Security Act of 1974 (relating to continuation 
coverage requirements of group health plans) with respect to 
former employees of such institution as such institution would 
have had but for its failure, and 
(2) shall require that any successor described in subsection 
(b)(l)(B)(iii) provide a group health plan with respect to former 
employees of such institution in the same manner as the failed 
depository institution would have been required to provide but 
for its failure. 
(b) DEFINITIONS.—For purposes of this section— 
(1) SUCCESSOR.—An entity is a successor of a failed depository 
institution during any period i
f
— 
(A) such entity holds substantially all of the assets or 
liabilities of such institution, and 
(B) such entity is— 
(i) the Federal Deposit Insurance Corporation, 
(ii) any bridge bank, or 
(iii) an entity that acquires such assets or liabilities 
from the Federal Deposit Insurance Corporation or a 
bridge bank. 
(2) FAILED DEPOSITORY INSTITUTION.—The term "failed deposi-
tory institution" means any depository institution (as defined in 
section 3(c) of the Federal Deposit Insurance Act) for which a 
receiver has been appointed. 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2383 
(3) BRIDGE BANK.—The term "bridge bank" has the meaning 
given such term by section ll(i) of the Federal Deposit Insur-
ance Act. 
(c) No PREMIUM COSTS IMPOSED ON FDic.—Subsection (a) shall not 
be construed as requiring the Federal Deposit Insurance Corpora-
tion to incur, by reason of this section, any obligation for any 
premium under any group health plan referred to in such 
subsection. 
(d) EFFECTIVE DATE.—This section shall apply to plan years begin-
ning on or after the date of the enactment of this Act, regardless of 
whether the qualifying event under section 603 of the Employee 
Retirement Income Security Act of 1974 occurred before, on, or after 
such date. 
Subtitle J—Sense of the Congress Regarding 
the Credit Crisis 
SEC. 456. CREDIT CRUNCH. 
(a) FINDINGS.—The Congress finds that— 
(1) during the past year and a half a credit crunch of crisis 
proportions has taken hold of the economy and grown increas-
ingly severe, particularly for real estate; 
(2) to date the credit crisis has shown no sign of improvement 
with its effects being felt broadly throughout the Nation as 
business failures soar, financial institutions weaken, real estate 
values decline, and State and local property tax bases further 
erode; 
(3) 
approximately 
$200,000,000,000 
of 
the 
nearly 
),000,000,000 in commercial real estate loans now held by 
commercial banks are coming due within the next 2 years; 
(4) banks for a variety of reasons, are reluctant to renew these 
maturing real estate loans; 
(5) both pension funds in the United States, with assets of 
nearly $2,000,000,000,000, and a stronger and more active 
secondary market for commercial real estate debt and equity 
could play a more significant role in providing liquidity and 
credit to the real estate and banking sectors of the economy; 
(6) many regulatory practices encourage banks to reduce their 
real estate lending without regard to long-term historical risk; 
and 
(7) the stability of real estate has suffered during the past 
decade first from tax rules that in 1981 stimulated excessive 
investment in real estate, and then in 1986 when rules were 
adopted that discourage capital investment in real estate, artifi-
cially eroding real estate values. 
0)) SENSE OF THE CONGRESS.—It is the sense of the Congress that— 
(1) immediate and carefully-coordinated action should be 
taken by the Congress and the President to arrest the credit 
crisis referred to in subsection (a) and provide a healthy and 
efficient marketplace that works for owners, lenders, and inves-
tors; and 
(2) that efforts should be undertaken to explore measures 
that— 
105 STAT. 2384 
PUBLIC LAW 102-242—DEC. 19, 1991 
(A) modernize and simplify the rules that apply to pen-
sion investment in real estate to remove unnecessary bar-
riers to pension funds seeking to invest in real estate; 
(B) strengthen the secondary market for commercial real 
estate debt and equity by removing arbitrary obstacles to 
private forms of credit enhancement; 
(C) restore balance to the regulatory environment by 
considering the impact of risk-based capital standards on 
commercial, multifamily and single-family real estate; 
ending 
mark-to-market, 
liquidation-based, 
appraisals; 
encourEiging loan renewals; and, fully communicating the 
supervisory policy to bank examiners in the field; and 
(D) rationalize the tax system for real estate owners and 
operators by modifying the passive loss rules and encourag-
ing loan restructures. 
Subtitle K—Aquisition of Insolvent Savings 
Associations 
SEC. 461. ACQUISITION OF INSOLVENT SAVINGS ASSOCIATIONS. 
Section 4(i) of the Bank Holding Company Act (12 U.S.C. 1843(i)) is 
amended by adding at the end the following new paragraph: 
"(3) ACQUISITION OF INSOLVENT SAVINGS ASSOCIATIONS.— 
"(A) IN GENERAL.—Notwithstanding any other provision 
of this Act, any qualified savings association which became 
a federally chartered stock company in December of 1986 
and which is acquired by any bank holding company with-
out Federal financial assistance after June 1, 1991, and 
before March 1, 1992, and any subsidiary of any such 
association, may after such acquisition continue to engage 
within the home State of the qualified savings association 
in insurance agency activities in which any Federal savings 
association (or any subsidiary thereof) may engage in 
accordance with the Home Owners' Loan Act and regula-
tions pursuant to such Act if the qualified savings associa-
tion or subsidiary thereof was continuously engaged in such 
activity from June 1, 1991, to the date of the acquisition. 
"(B) DEFINITION OF QUALIFIED SAVINGS ASSOCIATION.—For 
purposes of this paragraph, the term 'qualified savings 
association' means any savings association that— 
"(i) was chartered or organized as a savings associa-
tion before June 1,1991; 
"(ii) had, immediately before the acquisition of such 
association by the bank holding company referred to in 
subparagraph (A), negative tangible capital and total 
insured deposits in excess of $3,000,000,000; and 
"(iii) will meet all applicable regulatory capital 
requirements as a result of such acquisition.". 
Subtitle L—Creditability of Service 
SEC. 466. CREDITABILITY OF SERVICE. 
(a) CHAPTER 83.—Section 8332 of title 5, United States Code, is 
amended by adding at the end the following new subsection: 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2385 
"(n) Any employee who— 
"(1) served in a position in which the employee was excluded 
from coverage under this subchapter because the employee was 
covered under a retirement system established under section 10 
of the Federal Reserve Act; and 
"(2) transferred without a break in service to a position to 
which the employee was appointed by the President, with the 
advice and consent of the Senate, and in which position the 
employee is subject to this subchapter, 
shall be treated for all purposes of this subchapter as if any service 
that would have been creditable under the retirement system estab-
lished under section 10 of the Federal Reserve Act was service 
performed while subject to this subchapter if any employee and 
employer deductions, contributions or rights with respect to the 
employee's service are transferred from such retirement system to 
the Fund.". 
0?) CHAPTER 84.—Section 8411 of title 5, United States Code, is 
amended by adding at the end the following new subsection: 
"(g) Any employee who— 
"(1) served in a position in which the employee was excluded 
from coverage under this subchapter because the employee was 
covered under a retirement system established under section 10 
of the Federal Reserve Act; and 
"(2) transferred without a break in service to a position to 
which the employee was appointed by the President, with the 
advice and consent of the Senate, and in which position the 
employee is subject to this subchapter, 
shall be treated for all purposes of this subchapter as if any service 
that would have been creditable under the retirement system estab-
lished under section 10 of the Federal Reserve Act was service 
performed while subject to this subchapter if any employee and 
employer deductions, contributions or rights with respect to the 
employee's service are transferred from such retirement system to 
the Fund.". 
(c) APPLICABILITY.—The amendment made by this section shall 5USC8332 
apply with respect to any individual who transfers to a position in »
o
*
®
-
which he or she is subject to subchapter III of chapter 83 or chapter 
84 of title 5, United States Code, on or after October 1, 1991. 
Subtitle M—Other Miscellaneous Provisions 
SEC. 471. PROVIDING SERVICES TO INSURED DEPOSITORY INSTITUTIONS. 
Section 21A of the Home Owners' Loan Act (12 U.S.C. 1441a) is 
amended by adding at the end the following: 
"(q) CONTINUATION OF OBLIGATION TO PROVIDE SERVICES.—No 
person obligated to provide services to an insured depository institu-
tion at the time the Resolution Trust Corporation is appointed 
conservator or receiver for the institution shall fail to provide those 
services to any person to whom the right to receive those services 
was transferred by the Resolution Trust Corporation after August 9, 
1989, unless the refusal is based on the transferee's failure to comply 
with any material term or condition of the original obligation. This 
subsection does not limit any authority of the Resolution Trust 
Corporation as conservator or receiver under section 11(e) of the 
Federal Deposit Insurance Act.". 
105 STAT. 2386 
PUBLIC LAW 102-242—DEC. 19, 1991 
SEC. 472. REAL ESTATE APPRAISALS. 
(a) CERTIFICATION AND LICENSING REQUIREMENTS.—Section 1116 of 
the Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3345) is amended by adding at the end the 
following new subsection: 
"(e) AUTHORITY OF THE APPRAISAL SUBCOMMITTEE.—The Appraisal 
Subcommittee shall not set qualifications or experience require-
ments for the States in licensing real estate appraisers, including a 
de minimus standard. Recommendations of the Subcommittee shall 
be nonbinding on the States.". 
(b) USE OF STATE CERTIFIED AND STATE LICENSED APPRAISERS.— 
(1) EFFECTIVE DATE FOR USE.—Section 1119(a)(1) of the Finan-
cial Institutions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3348(a)(1)) is amended by striking "July 1, 1991" 
and inserting "December 31,1992". 
(2) EXTENSION OF EFFECTIVE DATE.—Section 1119(b) of the 
Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3348(b)) is amended— 
(A) in the first sentence, by striking "leading to inordi-
nate delays" and inserting ", or in any geographical politi-
cal subdivision of a State, leading to significant delays"; and 
(B) in the second sentence, by striking "inordinate" and 
inserting "significant". 
(c) 0MB STUDY OF DE MINIMUS STANDARDS.—Before the end of the 
6-month period beginning on the date of the enactment of this Act, 
the Director of the Office of Management and Budget shall conduct 
a study of whether there is a need to establish de minimus levels for 
commercial real estate. 
SEC. 473. EMERGENCY LIQUIDITY. 
Section 13 of the Federal Reserve Act (12 U.S.C. 343) is amended 
in the third paragraph by striking "of the kinds and maturities 
made eligible for discount for member banks under other provisions 
of this Act". 
SEC. 474. DISCRIMINATION AGAINST REORGANIZED DEBTORS. 
Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1817(a)) is amended by adding at the end the following new para-
graph: 
"(9) A Federal banking agency may not, by regulation or 
otherwise, designate, or require an insured institution or an 
affiliate to designate, a corporation as highly leveraged or a 
transaction with a corporation as a highly leveraged transaction 
solely because such corporation is or has been a debtor or 
bankrupt under title 11, United States Code, if, after confirma-
tion of a plan of reorganization, such corporation would not 
otherwise be highly leveraged.". 
12 u s e 1828 
SEC. 475. PURCHASED MORTGAGE SERVICING RIGHTS. 
(a) IN GENERAL.—Notwithstanding section 5(t)(4) of the Home 
Owners' Loan Act, each appropriate Federal banking agency shall 
determine, with respect to insured depository institutions for which 
it is the appropriate Federal regulator, the amount of readily 
marketable purchased mortgage servicing rights that may be in-
cluded in calculating such institution's tangible capital, risk-based 
capital, or leverage limit, i
f
— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2387 
(1) such servicing rights are valued at not more than 90 
percent of their fair market value; and 
(2) the fair market value of such servicing rights is deter-
mined not less often than quarterly. 
(b) DEFINITION.—For purposes of this section, the terms "appro-
priate Federal banking gigency" and "insured depository institu-
tion" have the same meanings as in section 3 of the Federal Deposit 
Insurance Act. 
(c) EFFECTIVE DATE.—The amendments made by this Act shall 
take effect at the end of the 60-day period beginning on the date of 
the enactment of this Act. 
SEC. 476. LIMITATION ON SECURITIES PRIVATE RIGHTS OF ACTION. 
The Securities Exchange Act of 1934 is amended by inserting after 
section 27 (15 U.S.C. 78aa) the following new section: 
"SPECIAL PROVISION RELATING TO STATUTE OF UMITATIONS ON 
PRIVATE CAUSES OF ACTION 
"SEC. 27A. (a) EFFECT ON PENDING CAUSES OF ACTION.—The limita- 15 use 78aa-l. 
tion period for any private civil action implied under section lOO^) of 
this Act that was commenced on or before June 19,1991, shall be the 
limitation period provided by the laws applicable in the jurisdiction, 
including principles of retroactivity, as such laws existed on June 
19,1991. 
"(b) EFFECT ON DISMISSED CAUSES OF ACTION.—Any private civil 
action implied under section 10(b) of this Act that was commenced 
on or before June 19,1991— 
"(1) which was dismissed as time barred subsequent to June 
19,1991, and 
"(2) which would have been timely filed under the limitation 
period provided by the laws applicable in the jurisdiction, 
including principles of retroactivity, as such laws existed on 
June 19,1991, 
shall be reinstated on motion by the plaintiff not later than 60 days 
after the date of enactment of this section.". 
SEC. 477. MODIFIED SMALL BUSINESS LENDING DISCLOSURE. 
12 USC 251. 
The Federal Reserve Board shall collect and publish, on an annual 
basis, information on the availability of credit to small businesses. 
The information shall, to the extent practicable— 
(1) include information on commercial loans to small 
businesses, agricultural loans to small farms, and loans to 
minority-owned small businesses; 
(2) be given for categories of small businesses determined by 
annual sales and for small businesses in existence for less than 
1 year; and 
(3) be given for each geographic region of the United States. 
In collecting the information, the Federal Reserve Board shall take 
into consideration the need to minimize reporting costs, if any, on 
financial institutions. 
105 STAT. 2388 
PUBLIC LAW 102-242—DEC. 19, 1991 
New York. 
SEC. 478. SPECIAL INSURED DEPOSITS. 
For purposes of the Federal Deposit Insurance Act (12 U.S.C. 1811 
et seq,), the deposits of the Freedom National Bank of New York and 
the deposits of Community National Bank and Trust Company of 
New York that— 
(1) were deposited by a charitable organization as such term is 
defined by New York State law, or by a religious organization; 
and 
(2) were deposits of such bank on the date of its closure by the 
Office of the Comptroller of the Currency, 
shall be fully insured notwithstanding any other provisions of the 
Federal Deposit Insurance Act. 
Subtitle N—Severability 
12 use 1811 
SEC. 481. SEVERABILITY. 
If any provision of this Act, or any application of any provision of 
this Act to any person or circumstance, is held invalid, the remain-
der of the Act, and the application of any remaining provision of the 
Act to any other person or circumstance, shall not be affected by 
such holding. 
TITLE V~DEPOSITORY INSTITUTION 
CONVERSIONS 
SEC. 501. MERGERS AND ACQUISITIONS OF INSURED 
DEPOSITORY 
INSTITUTIONS DURING CONVERSION MORATORIUM. 
(a) IN GENERAL.—Section 5(d)(3) of the Federal Deposit Insurance 
Act (12 U.S.C. 1815(d)(3)) is amended to read as follows: 
"(3) OPTIONAL CONVERSIONS SUBJECT TO SPECIAL RULES ON DE-
POSIT INSURANCE PAYMENTS.— 
"(A) CONVERSIONS ALLOWED.— 
"(i) IN GENERAL.—Notwithstanding paragraph (2)(A) 
and subject to the requirements of this paragraph, any 
insured depository institution may participate in a 
transaction described in clause (ii), (iii), or (iv) of para-
graph (2XB) with the prior written approval of the 
responsible agency under section 18(c)(2). 
(ii) HOLDING COMPANY SUBSIDIARIES.—If, in connec-
tion with any transaction referred to in clause (i), the 
acquiring, assuming, or resulting depository institution 
is a Bank Insurance Fund member which is a sub-
sidiary of a bank holding company, the prior written 
approval of the Board shall be required for such 
transaction in addition to the approval of any agency 
referred to in clause (i). 
"(B) ASSESSMENTS ON DEPOSITS ATTRIBUTABLE TO FORMER 
DEPOSITORY INSTITUTION.— 
"(i) ASSESSMENTS BY SAIF.—In the case of any acquir-
ing, assuming, or resulting depository institution which 
is a Bank Insurance Fund member, that portion of the 
average assessment base of such member for any 
semiannual period which is equal to the adjusted 
attributable deposit amount (determined under sub-
paragraph (C) with respect to the transaction) shall— 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2389 
"(I) be subject to assessment at the assessment 
rate applicable under section 7 for Savings Associa-
tion Insurance Fund members; 
"(II) not be taken into account for purposes of 
any assessment under section 7 for Bank Insurance 
Fund members; and 
"(III) be treated as deposits which are insured by 
the Savings Association Insurance Fund. 
"(ii) ASSESSMENTS BY BIF.—In the case of any acquir-
ing, assuming, or resulting depository institution which 
is a Savings Association Insurance Fund member, that 
portion of the average assessment base of such member 
for any semiannual period which is equal to the ad-
justed attributable deposit amount (determined under 
subparagraph (C) with respect to the transaction) 
shall— 
"(I) be subject to assessment at the assessment 
rate applicable under section 7 for Bank Insurance 
Fund members; 
"(II) not be taken into account for purposes of 
any assessment under section 7 for Savings 
Association Insurance Fund members; and 
"(III) be treated as deposits which are insured by 
the Bank Insurance Fund. 
"(C) DETERMINATION OF ADJUSTED ATTRIBUTABLE DEPOSIT 
AMOUNT.—The adjusted attributable deposit amount which 
shall be taken into account for purposes of determining the 
amount of the assessment under subparagraph (B) for any 
semiannual period by any acquiring, assuming, or resulting 
depository institution in connection with a transaction 
under subparagraph (A) is the amount which is equal to the 
sum o
f
— 
"(i) the amount of any deposits acquired by the 
institution in connection with the transaction (as deter-
mined at the time of such transaction); 
"(ii) the total of the amounts determined under 
clause (iii) for semiannual periods preceding the semi-
annual period for which the determination is being 
made under this subparagraph; and 
"(iii) the amount by which the sum of the amounts 
described in clauses (i) and (ii) would have increased 
during the preceding semiannual period (other than 
any semiannual period beginning before the date of 
such transaction) if such increase occurred at a rate 
equal to the annual rate of growth of deposits of the 
acquiring, assuming, or resulting depository institution 
minus the amount of any deposits acquired through the 
acquisition, in whole or in part, of another insured 
depository institution. 
"(D) DEPOSIT OF ASSESSMENT.—That portion of any assess-
ment under section 7 which— 
"(i) is determined in accordance with subparagraph 
(B)(i) shall be deposited in the Savings Association 
Insurance Fund; and 
"(ii) is determined in accordance with subparagraph 
(B)(ii) shall be deposited in the Bank Insurance Fund. 
"(E) CONDITIONS FOR APPROVAL, GENERALLY.— 
105 STAT. 2390 
PUBLIC LAW 102-242—DEC. 19, 1991 
"(i) FACTORS TO BE CONSIDERED; APPROVAL PROCESS.— 
In reviewing any application for a proposed transaction 
under subparagraph (A), the responsible agency (and, 
in the event the acquiring, assuming, or resulting 
depository institution is a Bank Insurance Fund 
member which is a subsidiary of a bank holding com-
pany, the Board) shall follow the procedures and con-
sider the factors set forth in section 18(c). 
"(ii) 
INFORMATION REQUIRED.—An application 
to 
engage in any transaction under this paragraph shall 
contain such information relating to the factors to be 
considered for approval as the responsible agency or 
Board may require, by regulation or by specific request, 
in connection with any particular application. 
"(iii) No TRANSFER OF DEPOSIT INSURANCE PER-
MITTED.—This paragraph shall not be construed as au-
thorizing transactions which result in the transfer of 
any insured depository institution's Federal deposit 
insurance from 1 Federal deposit insurance fund to the 
other Federal deposit insurance fund. 
"(iv) MINIMUM CAPITAL.—The responsible agency, 
and the appropriate Federal banking agency for any 
depository institution holding company, shall dis-
approve any application for any transaction under this 
paragraph unless each such agency determines that the 
acquiring, assuming, or resulting depository institu-
tion, and any depository institution holding company 
which controls such institution, will meet all applicable 
- 
capital requirements upon consummation of the trans-
action. 
"(F) CERTAIN INTERSTATE TRANSACTIONS.—The Board may 
not approve any transaction under subparagraph (A) in 
which the acquiring, assuming, or resulting depository 
institution is a Bank Insurance Fund member which is a 
subsidiary of a bank holding company unless the Board 
determines that the transaction would comply with the 
requirements of section 3(d) of the Bank Holding Company 
Act of 1956 if, at the time of such transaction, the Savings 
Association Insurance Fund member involved in such 
transaction was a State bank that the bank holding com-
pany was applying to acquire. 
( 
"(G) EXPEDITED APPROVAL OF ACQUISITIONS.— 
"(i) IN GENERAL.—Any application by a State 
nonmember insured bank to acquire another insured 
depository institution that is required to be filed with 
the Corporation by subparagraph (A) or any other ap-
plicable law or regulation shall be approved or dis-
approved in writing by the Corporation before the end 
of the 60-day period beginning on the date such applica-
tion is filed with the Corporation. 
"(ii) EXTENSIONS OF PERIOD.—The period for approval 
or disapproval referred to in clause (i) may be extended 
for an additional 30-day period if the Corporation deter-
mines that— 
"(I) an applicant has not furnished all of the 
information required to be submitted; or 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2391 
"(II) in the Corporation's judgment, any material 
information submitted is substantially inaccurate 
or incomplete. 
"(H) ALLOCATION OF COSTS IN EVENT OF DEFAULT.—If any 
acquiring, assuming, or resulting depository institution is 
in default or danger of default at any time before this 
paragraph ceases to apply, any loss incurred by the Cor-
poration shall be allocated between the Bank Insurance 
Fund and the Savings Association Insurance Fund, in 
amounts reflecting the amount of insured deposits of such 
acquiring, assuming, or resulting depository institution as-
sessed by the Bank Insurance Fund and the Savings 
Association Insurance Fund, respectively, under subpara-
graph (B). 
"(I) 
SUBSEQUENT 
APPROVAL 
OF 
CONVERSION 
TRANS-
ACTION.—This paragraph shall cease to apply if— 
"(i) after the end of the 5-year period referred to in 
paragraph (2)(A), the Corporation approves an applica-
tion by any acquiring, assuming, or resulting deposi-
tory institution to treat the transaction described in 
subparagraph (A) as a conversion transaction; and 
"(ii) the acquiring, assuming, or resulting depository 
institution pays the amount of any exit and entrance 
fee assessed by the Corporation under subparagraph (E) 
of paragraph (2) with respect to such transaction. 
"(J) 
ACQUIRING, ASSUMING, OR RESULTING DEPOSITORY 
INSTITUTION DEFINED.—For purposes of this paragraph, the 
term 'acquiring, assuming, or resulting depository institu-
« 
tion' means any insured depository institution which— 
"(i) results from any transaction described in para-
graph (2XBXii) and approved under this paragraph; 
"(ii) in connection with a transaction described in 
"
"
* 
paragraph (2)(BXiii) and approved under this para-
graph, assumes any liability to pay deposits of another 
insured depository institution; or 
"(iii) in connection with a transaction described in 
paragraph (2XBXiv) and approved under this para-
graph, acquires assets from any insured depository 
institution in consideration o^ the assumption of liabil-
ity for any deposits of such institution.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) to 12 USC 1815 
section 5(dX3XC) of the Federal Deposit Insurance Act shall apply ^°*®-
with respect to semiannual periods beginning after the date of the 
enactment of this Act. 
(c) 
TRANSITION RULE FOR SAVINGS ASSOCIATIONS ACQUIRING 
BANKS.—Section 5(c) of the Home Owners' Loan Act (12 U.S.C. 
1464(c)) is amended— 
(1) by redesignating paragraph (5) as paragraph (6); and 
(2) by inserting after paragraph (4) the following new para-
graph: 
"(5) TRANSITION RULE FOR SAVINGS ASSOCIATIONS ACQUIRING 
BANKS.— 
"(A) IN GENERAL.—If, under section 5(dX3) of the Federal 
Deposit Insurance Act, a savings association acquires all or 
substantially all of the eissets of a bank that is a member of 
the Bank Insurance Fund, the Director may permit the 
105 STAT. 2392 
PUBLIC LAW 102-242—DEC. 19, 1991 
savings association to retain any such asset during the 2-
year period beginning on the date of the acquisition. 
"(B) EXTENSION.—The Director may extend the 2-year 
period described in subparagraph (A) for not more than 1 
year at a time and not more than 2 years in the aggregate, 
if the Director determines that the extension is consistent 
with the purposes of this Act.". 
SEC. 502. MERGERS, CONSOLIDATIONS, AND OTHER ACQUISITIONS AU-
THORIZED. 
(a) FEDERAL SAVINGS ASSOCIATIONS.—Section 10 of the Home 
Owners' Loan Act (12 U.S.C. 1467a) is amended by adding at the end 
the following new subsection: 
"(t) MERGERS, CONSOUDATIONS, AND OTHER ACQUISITIONS AU-
THORIZED.— 
"(1) IN GENERAL.—Subject to sections 5(dX3) and 18(c) of the 
Federal Deposit Insurance Act and all other applicable laws, 
any Federal savings association may acquire or be acquired by 
any insured depository institution. 
"(2) EXPEDITED APPROVAL OF ACQUISITIONS.— 
"(A) IN GENERAL.—Any application by a savings associa-
tion to acquire or be acquired by another insured depository 
institution which is required to be filed with the Director 
under section 5(d)(3) of the Federal Deposit Insurance Act 
or any other applicable law or regulation shall be approved 
or disapproved in writing by the Director before the end of 
the 60-day period beginning on the date such application is 
filed with the agency. 
"(B) EXTENSION OF PERIOD.—The period for approval or 
disapproval referred to in subparagraph (A) may be ex-
tended for an additional 30-day period if the Director deter-
mines that— 
"(i) an applicant has not furnished all of the informa-
tion required to be submitted; or 
"(ii) in the Director's judgment, any 
material 
information submitted is substentially inaccurate or 
incomplete. 
"(3) ACQUIRE DEFINED.—For purposes of this subsection, the 
term 'acquire' means to acquire, directly or indirectly, owner-
ship or control through a merger or consolidation or an acquisi-
tion of assets or assumption of liabilities, provided that follow-
ing such merger, consolidation, or acquisition, an acquiring 
insured depository institution may not own the shares of the 
acquired insured depository institution. 
(4) REGULATIONS.— 
"(A) REQUIRED.—The Director shall prescribe such regu-
lations as may be necessary to carry out paragraph (1). 
"(B) EFFECTIVE DATE.—The regulations required under 
subparagraph (A) shall— 
"(i) be prescribed in final form before the end of the 
90-day period beginning on the date of the enactment of 
this subsection; and 
"(ii) take effect before the end of the 120-day period 
beginning on such date. 
"(5) LIMITATION.—No provision of this section shall be con-
strued to authorize a national bank or any subsidiary thereof to 
engEige in any activity not otherwise authorized under the 
PUBLIC LAW 102-242—DEC. 19, 1991 
105 STAT. 2393 
National Bank Act or any other law governing the powers of a 
national bank.", 
(b) NATIONAL BANKS.—Chapter 1 of title LXII of the Revised 
Statutes of the United States (12 U.S.C. 5138 et seq.) is amended by 
adding at the end the following new section: 
"SEC. 5156A. MERGERS, CONSOLIDATIONS, AND OTHER ACQUISITIONS AU- 
12 USC 215c. 
THORIZED. 
"(a) IN GENERAL.—Subject to sections 5(d)(3) and 18(c) of the 
Federal Deposit Insurance Act and all other applicable laws, any 
national bank may acquire or be acquired by any insured depository 
institution. 
"(b) EXPEDITED APPROVAL OF ACQUISITIONS.— 
"(1) IN GENERAL.—Any application by a national bank to 
acquire or be acquired by another insured depository institution 
which is required to be filed with the Comptroller of the Cur-
rency by section 5(d)(3) of the Federal Deposit Insurance Act or 
any other applicable law or regulation shall be approved or 
disapproved in writing by the agency before the end of the 60-
day period beginning on the date such application is filed with 
the agency. 
"(2) EXTENSIONS OF PERIOD.—The period for approval or dis-
approval referred to in paragraph (1) may be extended for an 
additional 30-day period if the Comptroller of the Currency 
determines that— 
"(A) an applicant has not furnished all of the information 
required to be submitted; or 
jy 
"(B) in the Comptroller's judgment, any 
material 
information submitted is substantially inaccurate or in-
complete. 
"(c) RULE OF CONSTRUCTION.—No provision of this section shall be 
construed as authorizing a national bank or a subsidiary of a 
national bank to engage in any activity not otherwise authorized 
under this Act or any other law governing the powers of national 
banks. 
"(d) ACQUIRE DEFINED.—For purposes of this section, the term 
'acquire' means to acquire, directly or indirectly, ownership or 
control through a merger or consolidation or an acquisition of £issets 
or assumption of liabilities, provided that following such merger, 
consolidation, or acquisition, an acquiring insured depository 
institution may not own the shares of the acquired insured deposi-
tory institution.". 
Approved December 19, 1991. 
LEGISLATIVE HISTORY—S. 543 (H.R. 3768): 
HOUSE REPORTS: Nos. 102-330 accompanying H.R. 3768 (Comm. on Banking, 
Finance and Urban Affairs) and 102-407 (Comm. of Conference). 
SENATE REPORTS: No. 102-167 (Comm. on Banking, Housing, and Urban Affairs). 
CONGRESSIONAL RECORD, Vol. 137 (1991): 
Nov. 13, 14, 18, 19, 21, considered and passed Senate. 
Nov. 21, H.R. 3768 considered and passed House. 
Nov. 23, S. 543 considered and passed House, amended, in lieu of H.R. 3768. 
Nov. 26, House agreed to conference report. 
Nov. 27, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 27 (1991): 
Dec. 19, Presidential statement.