Financial Institutions Reform, Recovery, and Enforcement Act of 1989
PL 101-73 (H.R.1278), enacted 08/09/1989

PUBLIC LAW 101-73—AUG. 9,1989 
103 STAT. 183 
Public Law 101-78 
101st Congress 
An Act 
To reform, recapitalize, and consolidate the Federal deposit insurance system, to 
^ 
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enhance the regulatory and enforcement powers of Federal financial institutions 
' 
regulatory agencies, and for other purposes. 
[H.K. l^bj 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
Financial 
„ 
Institutions 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
Reform, 
(a) SHORT TITLE.—This Act may be cited as the "Financial Institu- iSoSeS** 
tions Reform, Recovery, and Enforcement Act of 1989". 
Act of 1989. 
(b) T A B L E OF C O N T E N T S . — 
12 USC l 8 l l 
TITLE I—PURPOSES 
Sec. 101. Purposes. 
TITLE n—FEDERAL DEPOSrriNSURANCE CORPORATION 
Sec. 201. Depository institutions. 
Sec. 202. Duties of Federal Deposit Insurance Corporation. 
Sec. 203. FDIC Board members. 
Sec. 204. Definitions. 
Sec. 205. Insured savings associations. 
Sec. 206. Application process; insurance fees. 
Sec. 207. Insurability factors. 
Sec. 208. Assessments. 
Sec. 209. Corporate powers of the FDIC. 
Sec. 210. Administration of Corporation. 
Sec. 211. Insurance funds. 
Sec. 212. Conservatorship and receivership powers of the Corporation. 
Sec. 213. New banks. 
Sec. 214. Bridge banks. 
Sec. 215. FSLIC Resolution Fund. 
Sec. 216. Amendments to section 12. 
Sec. 217. Amendments to section 13. 
Sec. 218. FDIC borrowing authority. 
Sec. 219. Exemption from taxation; limitation on borrowing. 
Sec. 220. Reports. 
Sec. 221. R^ulations governing insured depository institutions. 
Sec. 222. Activities of savings associations. 
Sec. 223. Nondiscrimination. 
Sec. 224. Brokered deposits. 
Sec. 225. Contracts between depository institutions and persons providing goods, 
products, or services. 
Sec. 226. Savings association insurance fund industry advisory committee estab-
lished. 
TITLE in—SAVINGS ASSOOATIONS 
Sec. 301. Amendment to Home Owners' Loan Act of 1933. 
Sec. 302. Savings provisions. 
Sec. 303. Qualified thrift lender test. 
Sec. 304. Transitional rule for certain transactions with affiliates. 
Sec. 305. Transitional rules r^arding certain loans and effective dates. 
Sec. 306. Amendment of additional powers of Director. 
Sec. 307. Amendment to title 31, United States Code. 
Sec. 308. Preserving minority ownership of minority Hnancial institutions. 
TITLE IV—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY 
Sec. 401. FSLIC and Federal Home Loan Bank Board abolished. 
103 STAT. 184 
PUBLIC LAW 101-73—AUG. 9, 1989 
Sec. 402. Ck>ntinuation and coordination of certain r^ulations. 
Sec. 403. Determination of transferred functions and employees. 
Sec. 404. Rights of employees of abolished agencies. 
Sec. 405. Division of property and facilities. 
Sec. 406. Report. 
Sec. 407. Repeals. 
TITLE V—FINANCING FOR THRIFT RESOLUTIONS 
Subtitle A—Oversight Board and Resolution Trust Corporation 
Sec. 501. Oversight Board and Resolution Trust Corporation established. 
Subtitle B—Resolution Funding Corporation 
Sec. 511. Resolution Funding Corporation established. 
Sec. 512. Financing Corporation. 
TITLE VI—THRIFT ACQUISITION ENHANCEMENT PROVISIONS 
Sec. 601. Acquisition of thrift institutions by bank holding companies. 
Sec. 602. Technical amendments to the Bank Holding Company Act. 
Sec. 603. Passive investments by companies controlling certain nonbank banks. 
Sec. 604. Purchase of minority interest in undercapitelized savings associations by 
holding companies allowed. 
TITLE Vn—FEDERAL HOME LOAN BANK SYSTEM REFORMS 
Subtitle A—Federal Home Loan Bank Act Amendments 
Sec. 701. Definitions. 
Sec. 702. Federal Housing Finance Board established. 
Sec. 703. Termination of the Federal Home Loan Bank Board. 
Sec. 704. Eligibility for membership. 
Sec. 705. Repeal of provision relating to rate of interest on deposits. 
Sec. 706. Capital stock. 
Sec. 707. Election of Bank directors. 
Sec. 708. Repeal of provisions relating to certain powers of the Federal Home Loan 
Bank Board. 
Sec. 709. Powers and duties of Banks. 
Sec. 710. Eligibility of borrowers to secure advances. 
Sec. 711. Administrative expenses. 
Sec. 712. Nonadministrative expenses. 
Sec. 713. Federal Savings and Loan Insurance Corporation Industry Advisory Com-
mittee. 
Sec. 714. Advances. 
Sec. 715. Amendments relating to withdrawal from Federal Home Loan Bank mem-
bership. 
Sec. 716. Repeal of provisions relating to lawful contract rate. 
Sec. 717. Bcmk stock and obligations. 
Sec. 718. Thrift Advisory Council. 
Sec. 719. Examination of members. 
Sec. 720. Liquidity. 
Sec. 721. Affordable housing. 
Sec. 722. Transferred employees of Federal Home Loan Banks and joint ofiHces. 
Sec. 723. Transitional provisions. 
Sec. 724. Federal Home Loan Bank reserves. 
Sec. 725. Special account. 
Subtitle B—Federal Home Loan Mortgage Corporation 
Sec. 731. Federal Home Loan Mortgage Corporation. 
Subtitle C—Technical and Conforming Amendments 
Sec. 741. Repeal of limitation of obligation for administrative expenses. 
Sec. 742. Amendment of title 5, United States Code. 
Sec. 743. Amendment of Balanced Budget and Emergency Deficit Control Act 
provisions. 
Sec. 744. Conforming amendments to financial institution related Acts. 
TITLE Vra—BANK CONSERVATION ACT AMENDMENTS 
Sec. 801. Definitions. 
Sec. 802. Appointment of cq;nservator. 
Sec. 803. Elxaminations. 
Sec. 804. Termination of conservatorship. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 185 
Sec. 805. Ck)n8ervator; powers and duties. 
Sec. 806. Liability protection. 
Sec. 807. Rules and regulations. 
Sec. 808. Repeals. 
TITLE IX—REGULATORY ENFORCEMENT AUTHORITY AND CRIMINAL 
ENHANCEMENTS 
Subtitle A—Expanded Enforcement Powers, Increased Penalties, and Improved 
Accountability 
Sec. 901. Institution-affiliated parties of a depository institution subject to adminis-
trative enforcement orders; substitution of "depository institution" for 
"bank" in enforcement provisions. 
\ 
Sec. 902. Amendments to cease and desist authority with respect to restitution, re-
strictions on specific activities, grouncls for issuance of a temporary 
order, and incomplete or inaccurate records. 
Sec. 903. Merger of removal and prohibition authority. 
Sec. 904. Industrywide application of removal, suspension, and prohibition orders. 
Sec. 905. Enforcement proceedings allowed after separation from service. 
Sec. 906. Expansion of removal powers for state criminal proceedings. 
Sec. 907. Amendments to expand and increase civil money penalties. 
Sec. 908. Clariflcation of criminal penalty provisions for violation of certain orders. 
Sec. 909. Supervisory records. 
Sec. 910. Increased penalty for participation by convicted individuals. 
Sec. 911. Amendments to various provisions of law relating to reports. 
Sec. 912. Authority of the FDIC to take enforcement action against savings associa-
tions. 
Sec. 913. Public disclosure of enforcement actions required. 
Sec. 914. Agency disapproval of directors and senior executive ofHcers of certain de-
pository institutions. 
Sec. 915. Clarification of NCUA's authority to conduct compliance investigations. 
Sec. 916. Improved administrative hearings and procedures. 
Sec. 917. Task force study of delegation of enforcement actions. 
Sec. 918. Annual report to Congress. 
Sec. 919. Credit union audit requirements. 
Sec. 920. Technical amendments relating to administrative and judicial review. 
Subtitle B—Termination of Deposit Insurance 
Sec. 926. Revision of procedures for termination of FDIC deposit insurance. 
Subtitle C—Improving Early Detection of Misconduct and Encouraging Informants 
Sec. 931. Information required to be made available to outside auditors. 
Sec. 932. Depository institution employee protection remedy. 
Sec. 933. Reward for information leading to recoveries or civil penalties. 
Subtitle D—Right to Financial Privacy Act Amendments 
Sec. 941. Definitions. 
Sec. 942. Additional exceptions. 
Sec. 943. Prohibition. 
Sec. 944. Miscellaneous provisions. 
Subtitle E—Civil Penalties for Violations Involving Financial Institutions 
Sec. 951. Civil penalties. 
Subtitle F—Criminal Law and Procedure 
Sec. 961. Increased criminal penalties for certain financial institution offenses. 
Sec. 962. Miscellaneous revisions to title 18. 
Sec. 963. Civil and criminal forfeiture. 
Sec. 964. Grand jury secrecy. 
Sec. 965. Criminal Division Fraud Section regional office. 
Sec. 966. Department of Justice appropriation authorization. 
Sec. 967. Authorization of additional appropriations for the judiciary. 
Sec. 968. Racketeer influenced and corrupt organizations. 
TITLE X—STUDIES OF FEDERAL DEPOSIT INSURANCE, BANKING SERV- 
^ 
ICES, AND THE SAFETY AND SOUNDNESS OF GOVERNMENT-SPONSORED 
ENTERPRISES 
Sec. 1001. Study of Federal deposit insurance system. 
103 STAT. 186 
PUBLIC LAW 101-73—AUG. 9, 1989 
Sec. 1002. Survey of bank fees and services. 
Sec. 1003. General Accounting Office study. 
Sec. 1004. Study 
regarding 
capital 
requirements 
for 
government-sponsored 
enterprises. 
TITLE XI—REAL ESTATE APPRAISAL REFORM AMENDMENTS 
Sec. 1101. Purpose. 
Sec. 1102. Establishment of Appraisal Subcommittee of the Federal Financial Insti-
tutions Examination Council. 
Sec. 1103. Functions of Appraisal Subcommittee. 
Sec. 1104. Chairperson of Appraisal Subcommittee; term of Chairperson; meetings. 
Sec. 1105. Officers and staff. 
Sec. 1106. Powers of Appraisal Subcommittee. 
Sec. 1107. Procedures for establishing appraisal standards and requiring the use of 
certified and licensed appraisers. 
Sec. 1108. Startup funding. 
Sec. 1109. Roster of State certified or licensed appraisers; authority to collect and 
transmit fees. 
Sec. 1110. Functions of the Federal financial institutions regulatory agencies relat-
ing to appraisal standards. 
Sec. 1111. Time for proposal and adoption of standards. 
Sec. 1112. Functions of the Federal financial institutions regulatory agencies relat-
ing to appraiser qualifications. 
Sec. 1113. Transactions requiring the services of a State certified appraiser. 
Sec. 1114. Transactions requiring the services of a State licensed appraiser. 
Sec. 1115. Time for proposal and adoption of rules. 
Sec. 1116. Certification and licensing requirements. 
Sec. 1117. Establishment of State appraiser certifying and licensing agencies. 
Sec. 1118. Monitoring of State appraiser certifying and licensing agencies. 
Sec. 1119. Recognition of State certified and licensed appraisers for purposes of this 
title. 
Sec. 1120. Violations in obtaining and performing appraisals in federally related 
transactions. 
Sec. 1121. Definitions. 
Sec. 1122. Miscellaneous provisions. 
._ 
TITLE XII—MISCELLANEOUS PROVISIONS 
Sec. 1201. GAO study of credit union system. 
Sec. 1202. OCC employment provision. 
Sec. 1203. NCUA emplo3nment provision. 
Sec. 1204. Expansion of use of underutilized minority banks, women's banks, and 
low-income credit unions. 
Sec. 1205. Credit standards advisory committee. 
Sec. 1206. Comparability in compensation schedules. 
Sec. 1207. Study by Secretary of the Treasury. 
Sec. 1208. Expenditure of taxpayer money only for deposit insurance purposes. 
Sec. 1209. Amendment to section 5373 of title 5, United States Code. 
Sec. 1210. Farm Credit Administration and Farm Credit System Insurance Corpora-
tion employment provision. 
Sec. 1211. Fair lending oversight and enforcement. 
Sec. 1212. Amendment to the Community Reinvestment Act of 1977. 
Sec. 1213. Comptroller General audit and access to records. 
Sec. 1214. Amendment related to the Hart-Scott-Rodino Act. 
Sec. 1215. Capital and accounting standards. 
Sec. 1216. Equal opportunity. 
Sec. 1217. NCUA powers as liquidating agent and conservator. 
Sec. 1218. Risk management training. 
Sec. 1219. Cross-marketing restrictions. 
Sec. 1220. Report on loan discrimination. 
Sec. 1221. Separability of provisions. 
TITLE XIII—PARTICIPATION BY STATE HOUSING FINANCE AUTHORITIES 
AND NONPROFIT ENTITIES 
Sec. 1301. Definitions. 
Sec. 1302. Authorization for State housing finance agencies and nonprofit entities 
to purchase mortgage-related assets. 
TITLE XrV—TAX PROVISIONS 
Sec. 1401. Early termination of special reorganization rules for financial insti-
tutions. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 187 
Sec. 1402. Tax exemption for Resolution Trust Corporation and Resolution Funding 
Corporation. 
Sec. 1403. Annual reports on transactions in which Federal financial assistance 
provided. 
Sec. 1404. Studies of relationship between public debt and activities of Government-
sponsored enterprises. 
TITLE I—PURPOSES 
SEC. 101. PURPOSES. 
12 USC 1811 
The purposes of this Act are as follows: 
(1) To promote, through regulatory reform, a safe and stable 
system of affordable housing finance. 
(2) To improve the supervision of savings associations by 
strengthening 
capital, accounting, and other 
supervisory 
standards. 
(3) To curtail investments and other activities of savings 
associations that pose unacceptable risks to the Federal deposit 
insurance funds. 
(4) To promote the independence of the Federal Deposit Insur-
ance Corporation from the institutions the deposits of which it 
insures, by providing an independent board of directors, ade-
quate funding, and appropriate powers. 
(5) To put the Federal deposit insurance funds on a sound 
financial footing. 
(6) To establish an Office of Thrift Supervision in the Depart-
ment of the Treasury, under the general oversight of the Sec-
retary of the Treasury. 
(7) To establish a new corporation, to be known as the Resolu-
tion Trust Corporation, to contain, manage, and resolve failed 
savings associations. 
(8) To provide funds from public and private sources to deal 
expeditiously with failed depository institutions. 
(9) To strengthen the enforcement powers of Federal regu-
lators of depository institutions. 
(10) To strengthen the civil sanctions and criminal penalties 
for defrauding or otherwise damaging depository institutions 
and their depositors. 
TITLE II—FEDERAL DEPOSIT INSURANCE 
CORPORATION 
SEC. 201. DEPOSITORY INSTITUTIONS. 
(a) AMENDMENTS TO REFERENCES TO INSURED BANK.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by striking out "insured bank", "insured banks", and 
"insured bank's" each place each term appears in such Act 
(except where any such term is preceded by "member" or 
"nonmember") and inserting in lieu thereof "insured depository 
institution", "insured depository institutions", and "insured 
depository institution's", respectively. 
(2) EXCEPTIONS.—The terms "insured bank" and "insured 
banks" shall not be amended pursuant to paragraph (1) in 
103 STAT. 188 
PUBLIC LAW 101-73—AUG. 9, 1989 
sections 3(h), 11(h), ll(i), 13(cXlXB), 13(f), and 18(d) of the Fed-
eral Deposit Insurance Act. 
(b) AMENDMENTS TO REFERENCES TO FEDERAL HOME LOAN BANK 
BOARD.—The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
is amended by striking out "Federal Home Loan Bank Board" each 
place such term appears and inserting in lieu thereof "Director of 
the Office of Thrift Supervision". 
SEC. 202. DUTIES OF FEDERAL DEPOSIT INSURANCE CORPORATION. 
Section 1 of the Federal Deposit Insurance Act (12 U.S.C. 1811) is 
amended by inserting "and savings associations" after "banks". 
SEC. 203. FDIC BOARD MEMBERS. 
12 use 1812. 
(a) IN GENERAL.—Section 2 of the Federal Deposit Insurance Act is 
amended to read as follows: 
"SEC. 2. MANAGEMENT. 
"(a) BOARD OF DIRECTORS.— 
"(1) IN GENERAL.—The management of the CJorporation shall 
be vested in a Board of Directors consisting of 5 members— 
"(A) 1 of whom shall be the (Comptroller of the Currency; 
"(B) 1 of whom shall be the Director of the Office of Thrift 
Supervision; and 
(C) 3 of whom shall be appointed by the President, by 
and with the advice and consent of the Senate, from among 
individuals who are citizens of the United States. 
"(2) POLITICAL AFFIUATION.—After February 28, 1993, not 
more than 3 of the members of the Board of Directors may be 
members of the same political party. 
"(b) (CHAIRPERSON AND VICE CHAIRPERSON.— 
"(1) CHAIRPERSON.—1 of the appointed members shall be des-
ignated by the President, by and with the advice and consent of 
the Senate, to serve as (Chairperson of the Board of Directors for 
a term of 5 years. 
"(2) VICE CHAIRPERSON.—1 of the appointed members shall be 
designated by the President, by and with the advice and consent 
of the Senate, to serve as vice Chairperson of the Board of 
Directors. 
"(3) ACTING CHAIRPERSON.—In the event of a vacancy in the 
position of Chairperson of the Board of Directors or during the 
absence or disability of the Chairperson, the Vice (Chairperson 
shall act as Chairperson. 
"(c) TERMS.— 
"(1) APPOINTED MEMBERS.—Each appointed member shall be 
appointed for a term of 6 years. 
"(2) INTERIM APPOINTMENTS.—Any member appointed to fill a 
vacancy occurring before the expiration of the term for which 
such member's predecessor was appointed shall be appointed 
only for the remainder of such term. 
"(3) CONTINUATION OF SERVICE.—The (Chairperson, Vice (Chair-
person, and each appointed member may continue to serve after 
the expiration of the term of office to which such member was 
^ 
appointed until a successor has been appointed £md qualified. 
"(d) VACANCY.— 
"(1) IN GENERAL.—Any vacancy on the Board of Directors 
shall be filled in the manner in which the original appointment 
was made. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 189 
"(2) ACTING OFFICIALS MAY SERVE.—In the event of a vacancy 
in the office of the Comptroller of the Currency or the office of 
Director of the Office of Thrift Supervision and pending the 
appointment of a successor, or during the absence or disability 
of the Comptroller or such Director, the acting Comptroller of 
the Currency or the acting Director of the Office of Thrift 
Supervision, as the case may be, shall be a member of the Board 
of Directors in the place of the Comptroller or Director. 
"(e) INELIGIBILITY FOR OTHER OFFICES.— 
"(1) POSTSERVICE RESTRICTION.— 
"(A) IN GENERAL.—No member of the Board of Directors 
may hold any office, position, or employment in any insured 
depository institution or any depository institution holding 
company during— 
"(i) the time such member is in office; and 
"(ii) the 2-year period beginning on the date such 
member ceases to serve on the Board of Directors. 
"(B) EXCEPTION FOR MEMBERS WHO SERVE FULL TERM.— 
The limitation contained in subparagraph (A)(ii) shall not 
apply to any member who has ceased to serve on the Board 
of Directors after serving the full term for which such 
member was appointed. 
"(2) RESTRICTION DURING SERVICE.—No member of the Board 
of Directors may— 
"(A) be an officer or director of any insured depository 
institution, depository institution holding company. Federal 
Reserve bank, or Federal home loan bank; or 
"(B) hold stock in any insured depository institution or 
depository institution holding company. 
"(3) CERTIFICATION.—Upon taking office, each member of the 
Board of Directors shall certify under oath that such member 
has complied with this subsection and such certification shall be 
filed with the secretary of the Board of Directors.", 
(b) TRANSITION PROVISION.— 
12 use 1812 
(1) CHAIRPERSON.—Notwithstanding any provision of section 2 note, 
of the Federal Deposit Insurance Act, the Chairman of the 
Board of Directors of the Federal Deposit Insurance Corporation 
on the date of the enactment of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 may continue 
to serve as the Chairperson until the end of the term to which 
such Chairman was appointed. 
(2) MEMBERS.—Notwithstanding any provision of section 2 of 
the Federal Deposit Insurance Act, the appointed member of 
the Board of Directors of the Federal Deposit Insurance Cor-
poration on the date of the enactment of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 who is not 
the Chairman shall continue to serve in office until the earlier 
of— 
(A) the end of the term to which such member was 
appointed; or 
(B) February 28, 1993, 
except that such member may continue to serve after the end of 
such term until a successor has been appointed and qualified. 
(3) APPOINTMENTS BEFORE MARCH i, 1993.—Notwithstanding 
any provision of section 2 of the Federal Deposit Insurance Act, 
the term of any member appointed to the Board of Directors of 
the Federal Deposit Insurance Corporation before February 28, 
103 STAT. 190 
PUBLIC LAW 101-73—AUG. 9, 1989 
1993 (including the term of any Chairperson), shall end on such 
date. 
SEC. 204. DEFINITIONS. 
(a) DEFINITIONS OF BANK AND RELATED TERMS.—Section 3(a) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(a)) is amended to read 
as follows: 
"(a) DEFINITIONS OF BANK AND RELATED TERMS.— 
"(1) BANK.—The term 'bank'— 
"(A) means any national bank, State bank, and District 
bank, and any Federal branch and insured branch; 
"(B) includes any former savings association that— 
"(i) has converted from a savings association charter; 
and 
"(ii) is a Savings Association Insurance 
Fund 
member. 
"(2) STATE BANK.—The term 'State bank' means any bank, 
banking association, trust company, savings bank, industrial 
bank (or similar depository institution which the Board of 
Directors finds to be operating substantially in the same 
manner as an industrial bank), or other banking institution 
which— 
"(A) is engaged in the business of receiving deposits, 
other than trust funds (as defined in this section); and 
"(B) is incorporated under the laws of any State or which 
is operating under the Code of Law for the District of 
Columbia (except a national bank), 
including any cooperative bank or other unincorporated bank 
the deposits of which were insured by the Corporation on the 
day before the date of the enactment of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989. 
"(3) STATE.—The term 'State' means any State of the United 
States, the District of Columbia, any territory of the United 
States, Puerto Rico, Guam, American Samoa, the Trust Terri-
tory of the Pacific Islands, the Virgin Islands, and the Northern 
Mariana Islands. 
"(4) DISTRICT BANK.—The term 'District bank' means any 
State bank operating under the Code of Law of the District of 
Columbia. 
(b) DEFINITION OF SAVINGS ASSOCIATIONS AND RELATED TERMS.— 
Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)) 
is amended to read as follows: 
"(b) DEFINITION OF SAVINGS ASSOCIATIONS AND RELATED TERMS.— 
"(1) SAVINGS ASSOCIATION.—The term 'savings association' 
means— 
"(A) any Federal savings association; 
"(B) any State savings association; and 
"(C) any corporation (other than a bank) that the Board 
of Directors and the Director of the Office of Thrift Super-
vision jointly determine to be operating in substantially the 
same manner as a savings association. 
"(2) FEDERAL SAVINGS ASSOCIATION.—The term 'Federal sav-
ings association' means any Federal savings association or Fed-
eral savings bank which is chartered under section 5 of the 
Home Owners' Loan Act. 
"(3) STATE SAVINGS ASSOCIATION.—The term 'State savings 
association' means— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 191 
"(A) any building and loan association, savings and loan 
association, or homestead association; or 
"(B) any cooperative bank (other than a cooperative bank 
which is a State bank £is defined in subsection (aX2)), 
which is organized and operating according to the laws of the 
State (as defined in subsection (a)(3)) in which it is chartered or 
organized.". 
(c) DEFINITIONS RELATING TO DEPOSITORY INSTITUTIONS.—Section 
3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)) is 
amended to read as follows: 
"(c) DEFINITIONS RELATING TO DEPOSITORY INSTITUTIONS.— 
"(1) DEPOSITORY INSTITUTION.—The term 'depository institu-
tion' means any bank or savings association. 
"(2) INSURED DEPOSITORY INSTITUTION.—The term 'insured 
depository institution' means any bank or savings association 
the deposits of which are insured by the (Corporation pursuant 
to this Act. 
"(3) INSTITUTIONS INCLUDED FOR CERTAIN PURPOSES.—The term 
'insured depository institution' includes any uninsured branch 
or Eigency of a foreign bank or a commercial lending company 
owned or controlled by a foreign bank for purposes of section 8 
of this Act. 
"(4) FEDERAL DEPOSITORY INSTITUTION.—The term 'Federal 
depository institution' means any nationgil bank, any Federal 
savings association, and any Federal branch. 
"(5) STATE DEPOSITORY INSTITUTION.—The term 'State deposi-
tory institution' means any State bank, any State savings 
association, and any insured branch which is not a Federal 
branch.". 
(d) DEFINITIONS RELATING TO MEMBER BANKS.—Section 3(d) of the 
Federal Deposit Insurance (12 U.S.C. 1813(d)) is amended to read as 
follows: 
"(d) DEFINITIONS RELATING TO MEMBER BANKS.— 
"(1) NATIONAL MEMBER BANK.—The term 'national member 
bank' means any national bank which is a member of the 
Federal Reserve System. 
"(2) STATE MEMBER BANK.—The term 'State member bank' 
means any State bank which is a member of the Federal 
Reserve System.". 
(e) DEFINITIONS RELATING TO NONMEMBER BANKS.—Section 3(e) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(e)) is amended to 
read as follows: 
"(e) DEFINITIONS RELATING TO NONMEMBER BANKS.— 
"(1) 
NATIONAL 
NONMEMBER 
BANK.—The term 
'national 
nonmember bank' means any national bank which— 
"(A) is located in any territory of the United States, 
Puerto Rico, Guam, American Samoa, the Virgin Islands, or 
the Northern Mariana Islands; and 
"(B) is not a member of the Federal Reserve System. 
"(2) STATE NONMEMBER BANK.—The term 'State nonmember 
bank' means any State bank which is not a member of the 
Federal Reserve System.". 
(f) ADDITIONAL AMENDMENTS TO DEFINITIONS.—Section 3 of 
the 
Federal Deposit Insurance Act (12 U.S.C. 1813) is amended— 
(1) in subsection (j), by inserting "or savings Eissociation" after 
"of a bank"; 
(2) in subsection (1)— 
103 STAT. 192 
PUBLIC LAW 101-73—AUG. 9, 1989 
(A) by inserting "or savings association" after "a bank", 
"the bank", "another bank", "receiving bank", and "such 
bank" each place such terms appear; 
(B) by inserting "or savings association's" after the word 
"bank's" each place such term appears; 
(C) in paragraph (5), by inserting ", Director of the Office 
of Thrift Supervision," after "Comptroller of the Currency"; 
and 
(D) in paragraph (5)(A), by striking out "and the Virgin 
Islands" and inserting in lieu thereof "the Virgin Islands, 
and the Northern Mariana Islands"; 
(3) in subsection (m)— 
(A) in paragraph (1)— 
(i) by striking out "the bank" and inserting in lieu 
thereof "the depository institution"; and 
(ii) by inserting "of the Northern Mariana Islands," 
after "Virgin Islands,"; and 
(B) in paragraph (2), by striking out "ther" sind inserting 
in lieu thereof "term"; 
(4) by striking out subsection (q) and inserting in lieu thereof 
the following: 
"(q) APPROPRIATE FEDERAL BANKING AGENCY.—The term 'appro-
priate Federal banking agency' means— 
"(1) the Comptroller of the Currency, in the case of any 
national banking association, any District bank, or any Federal 
branch or agency of a foreign bank; 
"(2) the Board of Governors of the Federal Reserve System, in 
the case of— 
"(A) any State member insured bank (except a District 
bank), 
"(B) any branch or agency of a foreign bank with respect 
to any provision of the Federal Reserve Act which is made 
applicable under the International Banking Act of 1978, 
"(C) any foreign bank which does not operate an insured 
branch, 
"(D) any agency or commercial lending company other 
than a Federal agency, 
"(E) supervisory or regulatory proceedings arising from 
the authority given to the Board of Governors under section 
7(c)(1) of the International Banking Act of 1978, including 
such proceedings under the Depository Institutions Super-
visory Act, and 
"(F) any bank holding company and any subsidiary of a 
bank holding company (other than a bank); 
"(3) the Federal Deposit Insurance Corporation in the case of 
a State nonmember insured bank (except a District bank), or a 
foreign bank having an insured branch; and 
"(4) the Director of the Office of Thrift Supervision in the case 
of any savings association or any savings and loan holding 
company. 
Under the rule set forth in this subsection, more than one agency 
may be an appropriate Federal banking agency with respect to any 
given institution."; and 
(5) by striking out subsection (t) and inserting in lieu thereof 
the following new subsection: 
"(t) INCLUDES, INCLUDING.— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 193 
"(1) IN GENERAL.—The terms 'includes' and 'including' shall 
not be construed more restrictively than the ordinary usage of 
such terms so as to exclude any other thing not referred to or 
described. 
"(2) RULE OF CONSTRUCTION.—Paragraph (1) shall not be con-
strued as creating any inference that the term 'includes' or 
'including' in any other provision of Federal law may be deemed 
to exclude any other thing not referred to or described."; 
(6) by adding at the end thereof the following new subsections: 
"(u) INSTITUTION-AFFIUATED PARTY.—The term 'institution-affili-
ated party' means— 
' 
"(1) any director, officer, employee, or controlling stockholder 
(other than a bank holding company) of, or agent for, an insured 
depository institution; 
(2) any other person who has filed or is required to file a 
change-in-control notice with the appropriate Federal banking 
agency under section 7(j); 
"(3) any shareholder (other than a bank holding company), 
consultant, joint venture partner, and any other person as 
determined by the appropriate Federal banking agency (by 
regulation or case-by-case) who participates in the conduct of 
the affairs of an insured depository institution; and 
"(4) any independent contractor (including any attorney, ap-
praiser, or accountant) who knowingly or recklessly participates 
in— 
"(A) any violation of any law or regulation; 
"(B) any breach of fiduciary duty; or 
"(C) any unsafe or unsound practice, 
which caused or is likely to cause more than a minimal finan-
cial loss to, or a significant adverse effect on, the insured 
depository institution. 
"(v) VIOLATION.—The term 'violation' includes any action (alone 
or with another or others) for or toward causing, bringing about, 
participating in, counseling, or aiding or abetting a violation. 
"(w) DEFINITIONS RELATING TO HOLDING COMPANIES.— 
"(1) DEPOSITORY INSTITUTION HOLDING COMPANY.—The term 
'depository institution holding company' means a bank holding 
^ 
company or a savings and loan holding company. 
"(2) BANK HOLDING COMPANY.—The term 'bank holding com-
pany' has the meaning given to such term in section 2 of the 
Bank Holding Company Act of 1956. 
"(3) SAVINGS AND LOAN HOLDING COMPANY.—The term 'sav-
ings and loan holding company' has the meaning given to such 
'^ 
term in section 10 of the Home Owners' Loan Act. 
"(4) SUBSIDIARY.—The term'subsidiary'— 
"(A) means any company which is owned or controlled 
directly or indirectly by another company; and 
"(B) includes any service corporation owned in whole or 
in part by an insured depository institution or any subsidi-
ary of such a service corporation. 
"(5) CONTROL.—The term 'control' has the meaning given to 
such term in section 2 of the Bank Holding Clompany Act of 
I 
1956. 
"(6) AFFILIATE.—The term 'affiliate' has the meaning given to 
such term in section 2(k) of the Bank Holding Company Act of 
1956. 
"(x) DEFiNmoNS RELATING TO DEFAULT.— 
103 STAT. 194 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(1) DEFAULT.—The term 'default' means, with respect to an 
insured depository institution, any adjudication or other official 
determination by any court of competent jurisdiction, the appro-
priate Federal banking agency, or other public authority pursu-
' ant to which a conservator, receiver, or other legal custodian is 
appointed for an insured depository institution or, in the case of 
a foreign bank having an insured branch, for such branch. 
"(2) IN DANGER OF DEFAULT.—The term 'in danger of default' 
means an insured depository institution with respect to which 
(or in the CEise of a foreign bank having an insured branch, with 
respect to such insured branch) the appropriate Federal bank-
ing agency or State chartering authority has advised the Cor-
poration (or, if the appropriate Federal banking agency is the 
Corporation, the Corporation has determined) that— 
"(A) in the opinion of such agency or authority— 
"(i) the depository institution or insured branch is 
not likely to be able to meet the demands of the 
institution's or branch's depositors or pay the institu-
tion's or branch's obligations in the normal course of 
business; and 
"(ii) there is no reasonable prospect that the deposi-
tory institution or insured branch will be able to meet 
such demands or pay such obligations without Federal 
, 
assistance; or 
"(B) in the opinion of such c^ency or authority— 
"(i) the depository institution or insured branch has 
incurred or is likely to incur losses that will deplete all 
or substantially all of its capital; and 
"(ii) there is no reasonable prospect that the capital 
of the depository institution or insured branch will be 
replenished without Federal assistance.". 
SEC. 205. INSURED SAVINGS ASSOCIATIONS. 
Section 4 of the Federal Deposit Insurance Act (12 U.S.C. 1814) is 
amended— 
(1) in subsection (a)— 
(A) by striking out "(a) Every bank" and inserting in lieu 
thereof the following: 
"(a) CONTINUATION OF INSURANCE.— 
"(1) BANKS.—Each bank"; and 
(B) by adding at the end thereof the following new 
paragraph: 
"(2) SAVINGS ASSOCIATIONS.—Each savings association the ac-
counts of which were insured by the Federal Savings and Loan 
Insurance Corporation on the day before the date of the enact-
ment of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, shall be, without application or ap-
proval, an insured depository institution."; 
(2) in subsection (b)— 
(A) by inserting after the 1st sentence the following new 
sentences: "Any application or notice for membership or to 
commence or resume business shall be promptly provided 
by the appropriate Federal banking agency to the Corpora-
tion and the Corporation shall have a reasonable period of 
time to provide comments on such application or notice. 
Any comments submitted by the Corporation to the appro-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 195 
priate Federal banking agency shall be considered by such 
agency."; 
(B) by striking out the penultimate and the last sen-
tences; and 
(C) by striking out "(b) Every national bank" and insert-
ing in lieu thereof "(b) CERTIFICATION BY OTHER BANKING 
AGENCIES.—Every national bank"; and 
(3) by striking out subsection (c) and inserting in lieu thereof 
the following new subsections: 
"(c) CONTINUATION OF INSURANCE AFTER CONVERSION.—Subject to 
section 5(d)— 
"(1) any State depository institution which results from the 
conversion of any insured Federal depository institution; and 
"(2) any Federal depository institution which results from the 
conversion of any insured State depository institution, 
shall continue as an insured depository institution. 
"(d) CONTINUATION OF INSURANCE AFTER MERGER OR CONSOUDA-
TiON.—^y State depository institution or any Federal depository 
institution which results from the merger or consolidation of in-
sured depository institutions, or from the merger or consolidation of 
a noninsured depository institution with an insured depositorv 
institution, shall continue as an insured depository institution.'. 
SEC. 206. APPLICATION PROCESS; INSURANCE FEES. 
(a) IN GENERAL.—Section 5 of the Federal Deposit Insurance Act 
(12 U.S.C. 1815) is amended— 
(1) by striking out "(a) Subject to the provisions of this Act, 
any" and inserting in lieu thereof the following: 
"(a) APPUCATION FOR INSURANCE.— 
"(1) NATIONAL AND STATE NONMEMBER BANKS; STATE SAVINGS 
ASSOCIATIONS.—Any"; 
(2) in the 1st sentence of subsection (aXD (as so redesignated 
by paragraph (1) of this subsection), by striking out the comma 
after "State nonmember bank" and inserting in lieu thereof 
"and State savings association,"; and 
(3) in the 2nd sentence of subsection (aXD (as so redesignated 
by paragraph (1) of this subsection)— 
(A) by striking out the comma after "State nonmember 
bank" and inserting in lieu thereof "and State savings 
association,"; 
(B) by striking out the comma after "such bank" and 
inserting in lieu thereof "or savings association,"; and 
(C) by inserting "or savings association, and, in the case of 
an application by a State savings association, the Corpora-
tion shall notify the Director of the Office of Thrift Super-
vision of the Corporation's approval of such application" 
before the period at the end; 
(4) by adding at the end of subsection (a) the following new 
paragraphs: 
"(2) FEDERAL SAVINGS ASSOCIATIONS.—Any Federal savings 
association shall become an insured depository institution 
upon— 
"(A) application to the Corporation; and 
"(B) receipt by the (Corporation of a certificate issued to 
the Corporation by the Director which meets the require-
ments of paragrapn (4), 
unless insurance is denied by the Board of Directors. 
103 STAT. 196 
PUBLIC LAW 101-73—AUG. 9, 1989 
'- 
"(3) INTERIM FEDERAL SAVINGS ASSOCIATIONS.—In the case of 
any interim Federal savings association which is chartered by 
• 
the Director of the Office of Thrift Supervision and will not 
open for business, such association shall be an insured deposi-
tory institution upon the issuance of such association's charter 
by the Director. 
"(4) CERTIFICATE REQUIREMENTS.—Any certificate issued to the 
Corporation under paragraph (2) shall state that the Federal 
savings association is authorized to transact business as a sav-
ings association and that consideration has been given to the 
factors enumerated in section 6. 
"(5) REVIEW REQUIREMENTS.—In reviewing any certificate and 
application referred to in paragraph (2), the Board of Directors 
shall consider the factors described in paragraphs (1), (2), (3), (4), 
and (5) of section 6 in determining whether to deny insurance. 
"(6) NOTICE OF DENIAL OF APPUCATION.—If the Board of Direc-
tors, after giving due deference to the determination of the 
Director of the Office of Thrift Supervision with respect to such 
factors, does not concur in the determination of the Director, 
the Board of Directors shall promptly notify the Director that 
insurance has been denied, giving specific reasons in writing for 
the Corporation's determination with reference to the factors 
described in paragraphs (1), (2), (3), (4), and (5) of section 6, and 
no insurance shall be granted. 
"(7) VOTING REQUIREMENTS.—The authority of the Board of 
Directors to make any determination to deny insurance under 
' 
this subsection may not be delegated by the Board of Directors 
and any such determination may be made only upon a vote of % 
of all members of the Board of Directors (excluding the Director 
of the Office of Thrift Supervision)."; 
(5) in subsection (bX4), by inserting "and fitness" after char-
acter; 
(6) in subsection (b)— 
(A) by redesignating paragraphs (5), (6), and (7) as para-
graphs (6), (7), and (8), respectively; and 
(B) by inserting after paragraph (4) the following: 
"(5) the risk presented to the Bank Insurance Fund or the 
Savings Association Insurance Fund;"; and 
(7) by adding at the end thereof the following new subsections: 
'(d) INSURANCE FEES.— 
"(1) UNINSURED INSTITUTIONS.— 
"(A) IN GENERAL.—Any institution that becomes insured 
by the Corporation, and any noninsured branch that be-
comes insured by the Corporation, shall pay the Corpora-
tion any fee which the Corporation may by regulation 
prescribe, after giving due consideration to the need to 
establish and maintain reserve ratios in the Bank Insur-
ance Fund and the Savings Association Insurance Fund as 
^ 
required by section 7. 
>• 
"(B) FEE CREDITED TO APPROPRIATE FUND.—The fee paid by 
the depository institution shall be credited to the Bank 
Insurance Fund if the depository institution becomes a 
Bank Insurance Fund member, and to the Savings Associa-
^ K' • tion Insurance Fund if the depository institution becomes a 
- • '• Savings Association Insurance Fund member. 
"(C) EXCEPTION FOR CERTAIN DEPOSITORY INSTITUTIONS.— 
Any depository institution that becomes an insured deposi-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 197 
tory institution by operation of section 4(a) shall not pay 
any fee. 
*(2) CONVERSIONS.— 
"(A) I N GENERAL.— 
"(i) PRIOR APPROVAL REQUIRED.—No insured deposi-
tory institution may participate in a conversion trans-
action without the prior approval of the Corporation. 
"(ii) 5-YEAR MORATORIUM ON CONVERSIONS.—Except as 
^ 
provided in subparagraph (C), the Corporation may not 
approve any conversion transaction before the end of 
the 5-year period beginning on the date of the enact-
ment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989. 
"(B) CONVERSION DEFINED.—For purposes of this para-
graph, the term 'conversion transaction' means— 
"(i) the change of status of an insured depository 
institution from a Bank Insurance Fund member to a 
Savings Association Insurance Fund member or from a 
Savings Association Insurance Fund member to a Bank 
Insurance Fund member; 
"(ii) the merger or consolidation of a Bank Insurance 
Fund member with a Savings Association Insurance 
Fund member; 
"(iii) the assumption of any liability by— 
"(I) any Bank Insurance Fund member to pay 
any deposits of a Savings Association Insurance 
Fund member; or 
"(II) any Savings Association Insurance Fund 
member to pay any deposits of a Bank Insurance 
Fund member; 
"(iv) the transfer of assets of— 
"(I) any Bank Insurance Fund member to any 
Savings Association Insurance Fund member in 
consideration of the assumption of liabilities for 
any portion of the deposits of such Bank Insurance 
Fund member; or 
"(II) any Savings Association Insurance Fund 
member to any Bank Insurance Fund member in 
consideration of the assumption of liabilities for 
any portion of the deposits of such Savings Associa-
tion Insurance Fund member. 
"(C) APPROVAL DURING MORATORIUM.—The Corporation 
may approve a conversion transaction at any time if— 
"(i) the conversion transaction affects an insubstan-
tial portion, as determined by the Corporation, of the 
total deposits of each depository institution participat-
ing in the conversion transaction; 
"(ii) the conversion occurs in connection with the 
acquisition of a Savings Association Insurance Fund 
member in default or in danger of default, and the 
Corporation determines that the estimated financial 
benefits to the Savings Association Insurance Fund or 
Resolution Trust Corporation equal or exceed the Cor-
poration's estimate of loss of assessment income to such 
insurance fund over the remaining balance of the 5-
year period referred to in subparagraph (A), and the 
103 STAT. 198 
PUBLIC LAW 101-73—AUG. 9, 1989 
ill 
Resolution Trust Corporation concurs in the Corpora-
tion's determination; or 
"(iii) the conversion occurs in connection with the 
acquisition of a Bank Insurance Fund member in de-
t 
' • 
fault or in danger of default and the Corporation deter-
mines that the estimated financial benefits to the Bank 
- - 
Insurance Fund equal or exceed the Corporation's esti-
mate of the loss of assessment income to the insurance 
fund over the remaining balance of the 5-year period 
referred to in subparagraph (A). 
"(D) 
CERTAIN TRANSFERS DEEMED TO AFFECT INSUBSTAN-
TIAL PORTION OF TOTAL DEPOSITS.—For purposes of subpara-
graph (CXi), any conversion transaction shall be deemed to 
affect an insubstantial portion of the total deposits of an 
insured depository institution, to the extent the aggregate 
amount of the total deposits transferred in such transaction 
and in all conversion transactions occurring after the date 
of the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 does not exceed 35 
percent of the lesser of— 
"(i) the amount which is equal to the sum of— 
"(I) the total deposits of such insured depository 
institution on May 1,1989; and 
"(II) the total amount of net interest credited to 
the depository institution's deposits during the 
period beginning on May 1, 1989, and ending on 
the date of the transfer of deposits in connection 
with such transaction; or 
"(ii) the amount which is equal to the total deposits 
of such insured depository institution on the date of the 
transfer of deposits in connection with such trans-
action. 
"(E) EXIT AND ENTRANCE FEES.—Each insured depository 
institution participating in a conversion transaction shall 
pay— 
"(i) in the case of a conversion transaction in which 
the resulting or acquiring depository institution is not 
,r» 
. 
a Savings Association Insurance Fund member, an exit 
} 
.. . 
fee (in an amount to be determined and assessed in 
accordance with subparagraph (F)) which— 
"(I) shall be deposited in the Savings Association 
Insurance Fund; or 
V 
"(II) shall be paid to the Financing Corporation, 
if the Secretary of the Tresisury determines that 
the Financing Corporation has exhausted all other 
sources of funding for interest pajnnents on the 
obligations of the Financing Corporation and 
orders that such fees be paid to the Financing 
Corporation; 
"(ii) in the case of a conversion transaction in which 
_ 
. * ., 
the resulting or acquiring depository institution is not 
a Bank Insurance Fund member, an exit fee in an 
amount to be determined by the Corporation (and as-
sessed in accordance with subparagraph (FXii)) which 
shall be deposited in the Bank Insurance Fund; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 199 
"(iii) an entrance fee in an amount to be determined 
by the Corporation (and eussessed in accordance with 
subparagraph (FXii)), except that— 
"(I) in the case of a conversion transaction in 
which the resulting or acquiring depository institu-
tion is a Bank Insurance Fund member, the fee 
shall be the approximate amount which the Cor-
poration calculates as necessary to prevent dilu-
tion of the Bank Insurance Fund, and shall be paid 
to the Bank Insureince Fund; and 
"(II) in the case of a conversion transaction in 
which the resulting or acquiring depository institu-
tion is a Savings Association Insurance Fund 
member, the fee shall be the approximate amount 
which the Corporation calculates as necessary to 
prevent dilution of the Savings Association Insur-
ance Fund, and shall be paid to the Savings 
Association Insurance Fund. 
"(F) ASSESSMENT OF EXIT AND ENTRANCE FEES.— 
"(i) DETERMINATION OF AMOUNT OF EXIT FEES.— 
"(I) CONVERSIONS BEFORE JANUARY i, 1997.—In 
the case of any exit fee assessed under subpara-
graph (EXi) for any conversion transaction con-
summated before January 1, 1997, the amount of 
such fee shall be determined jointly by the Cor-
poration and the Secretary of the Treasury. 
"(II) ASSESSMENTS AFTER DECEMBER, 31, 1996.—In 
the case of any exit fee assessed under subpara-
graph (EXi) for any conversion transaction con-
summated after December 31, 1996, the amount of 
such fee shall be determined by the Corporation, 
"(ii) PROCEDURES.—The Corporation shall prescribe. 
Regulations. 
by regulation, procedures for assessing any exit or 
entrance fee under subparagraph (E). 
"(G) 
CHARTER 
CONVERSION OF SAIF 
MEMBERS.—This 
subsection shall not be construed as prohibiting any savings 
association which is a Savings Association Insurance Fund 
member from converting to a bank charter during the 
period described in subparagraph (AXii) if the resulting 
bank remains a Savings Association Insurance Fund 
member. 
"(3) OPTIONAL CONVERSION THROUGH MERGER.— 
"(A) IN GENERAL.—Notwithstanding paragraph (2XA), 
any bank holding company that controls any savings 
association may merge or consolidate the assets and liabil-
ities of such savings association with, or transfer such 
assets and liabilities to, any subsidiary bank which is a 
Bank Insurance Fund member with the approval of the 
appropriate Federal banking agency and the Board of Gov-
ernors of the Federal Reserve System. 
"(B) ASSESSMENTS BY SAIF ON DEPOSITS ATTRIBUTABLE TO 
FORMER SAVINGS ASSOCIATION.—That portion of the average 
assessment base of any subsidiary bank referred to in 
subparagraph (A) for any semiannual period which is equal 
to the adjusted attributable deposit amount (determined 
under subparagraph (C) with respect to the transaction 
described in subparagraph (A)) shall— 
103 STAT. 200 
PUBLIC LAW 101-73—AUG. 9, 1989 
* • v
^ 
;: 
"(i) be subject to assessment at the assessment rate 
i' 
applicable under section 7 for Savings Association 
Insurance Fund members; 
"(ii) shall not be taken into account for purposes of 
any assessment under section 7 for Bank Insurance 
Fund members; and 
f 
"(iii) shall be treated as deposits which are insured by 
the Savings Association Insurance Fund. 
< tc •'.. 
"(C) DETERMINATION OF ADJUSTED ATTRIBUTABLE DEPOSIT 
AMOUNT.—The adjusted attributable deposit amount which 
shall be taken into account by any bank subsidiary referred 
, : 
,. to in subparagraph (A) for purposes of determining the 
«•; J • 
amount of the assessment under subparagraph (BXi) for any 
}f I i? semiannual period is the amount which is equal to the sum 
j^.. of— 
"(i) the amount of any deposits acquired by such 
i, 
bank subsidiary in connection with any transaction 
described in subparagraph (A) (as determined 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 
. " J , V 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 greater of— 
s 
"(I) an annual rate of 7 percent; or 
"(II) the annual rate of growth of deposits of such 
. -.. ' 
. 
^ 
% subsidiary bank minus the amount of any deposits 
•
J V * g. acquired through the acquisition, in whole or in 
part, of a Bank Insurance Fund member during 
such semiannual period. 
'~iip' 
"(D) DEPOSIT OF ASSESSMENT.—The amount of the assess-
ment referred to in subparsigraph (BXi) shall be deposited in 
the Savings Association Insurance Fund. 
"(E) CONDITIONS FOR FEDERAL RESERVE BOARD APPROVAL.— 
The Board of Governors of the Federal Reserve System may 
not approve any application by any bank holding company 
to engage in any transaction described in subparagraph (A) 
t K' unless such Board determines that— 
,, 
"(i) the amount which is equal to the aggregate 
. . amount of the total assets of all depository institution 
.t subsidiaries of such bank holding company is not less 
than the amount which is equal to 200 percent of the 
total assets of the savings association (at the time of the 
proposed transaction); 
"(ii) the bank holding company and all bank subsidi-
f - T
- aries of such holding company will meet all applicable 
^c 
capital standards upon consummation of the proposed 
transaction; 
"(iii) the transaction is not in substance the acquisi-
i 
tion of any Bank Insurance Fund member bank by any 
Savings A^ociation Insurance Fund member; 
"(iv) in the case of any transaction which occurs— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 201 
"(I) during the 1-year period beginning on the 
date of the enactment of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, 
the savings association had tangible capital of less 
than 4 percent during the preceding quarter; and 
"(II) during the 1-year period beginning after the 
end of the 1-year period referred to in subclause (I), 
the savings association had tangible capital of less 
-^^- 
than 5 percent during the preceding quarter; and 
"(v) the transaction would comply with the require-
ments of section 3(d) of the Bank Holding Company Act 
of 1956 if, at the time of such transaction, the savings 
association were a State bank which the bank holding 
company was applying to acquire. 
"(F) ALLOCATION OF COSTS IN EVENT OF DEFAULT.—If any 
subsidiary bank referred to in subparagraph (A) is in de-
fault or danger of default at any time before this paragraph 
ceases to apply, any loss incurred by the Corporation shall 
be allocated between the Bank Insurance Fund and the 
Savings Association Insurance Fund, in amounts reflecting 
the amount of insured deposits of such bank subsidiary 
(other than the adjusted attributable deposit amount) 
which is insured by the Bank Insurance Fund and the 
adjusted attributable deposit amount which is insured by 
the Savings Association Insurance Fund pursuant to 
subparagraph (BXiii). 
"(G) 
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 (2XA), the Corporation approves an applica-
tion by the bank described in subparagraph (A) to treat 
the transaction described in subparagraph (A) as a 
conversion transaction; and 
"(ii) such hank pays the amount of any exit and 
entrance fee assessed by the Corporation under para-
graph (2)(E) with respect to such transaction. 
"(e) 
LLABILTTY OF COMMONLY CONTROLLED DEPOSITORY INSTITU-
TIONS.— 
"(1) I N GENERAL.— 
"(A) LIABILITY ESTABUSHED.—Any insured depository 
institution shall be liable for any loss incurred by the 
I 
Corporation, or any loss which the Corporation reasonably 
anticipates incurring, after the date of the enactment of the 
Financisd Institutions Reform, Recovery, and Enforcement 
Act of 1989 in connection with— 
"(i) the default of a commonly controlled insured 
depository institution; or 
'(ii) any assistance provided by the Corporation to 
any commonly controlled insured depository institution 
in danger of default. 
"(B) PAYMENT UPON NOTICE.—An insured depository 
institution shall pay the amount of any liability to the 
Corporation under subparagraph (A) upon receipt of writ-
ten notice by the (Corporation in accordance with this 
subsection. 
"(C) NOTICE REQUIRED TO BE PROVIDED WITHIN 2 YEARS OF 
LOSS.—No insured depository institution shall be liable to 
103 STAT. 202 
PUBLIC LAW 101-73—AUG. 9, 1989 
the Corporation under subparagraph (A) if written notice 
with respect to such liability is not received by such institu-
tion before the end of the 2-year period beginning on the 
date the Corporation incurred the loss. 
"(2) AMOUNT OF COMPENSATION; PROCEDURES.— 
"(A) USE OF ESTIMATES.—When an insured depository 
institution is in default or requires assistance to prevent 
default, the Corporation shall— 
"(i) in good faith, estimate the amount of the loss the 
Corporation will incur from such default or assistance; 
"(ii) if, with respect to such insured depository 
institution, there is more than 1 commonly controlled 
insured depository institution, estimate the amount of 
each such commonly controlled depository institution's 
share of such liability; and 
"(iii) advise each commonly controlled depository 
^ 
institution of the Corporation's estimate of the amount 
of such institution's liability for such losses. 
"(B) PROCEDURES; IMMEDIATE PAYMENT.—The Corpora-
tion, after consultation with the appropriate Federal bank-
ing agency and the appropriate State chartering agency, 
shall— 
"(i) on a case-by-case basis, establish the procedures 
and schedule under which any insured depository 
institution shall reimburse the Corporation for such 
institution's liability under paragraph (1) in connection 
' 
with any commonly controlled insured depository 
institution; or 
"(ii) require any insured depository institution to 
make immediate payment of the amount of such 
institution's liability under paragraph (1) in connection 
with any commonly controlled insured depository 
institution. 
"(C) PRIORITY.—The liability of any insured depository 
institution under this subsection shall have priority with 
respect to other obligations and liabilities as follows: 
"(i) SUPERIORITY.—The liability shall be superior to 
the following obligations and liabilities of the deposi-
tory institution: 
"(I) Any obligation to shareholders arising as a 
result of their status as shareholders (including 
any depository institution holding company or any 
shareholder or creditor of such company). 
"(II) Any obligation or liability owed to any affili-
ate of the depository institution (including any 
' ' 
other insured depository institution), other than 
any secured obligation which was secured as of 
; 
; 
May 1,1989. 
"' ' 
"(ii) SUBORDINATION.—The liability shall be subordi-
nate in right and payment to the following obligations 
and liabilities of the depository institution: 
"(I) Any deposit liability (which is not a liability 
described in clause (iXID). 
"(II) Any secured obligation, other than any 
obligation owed to any affiliate of the depository 
institution (including any other insured depository 
institution) which was secured after May 1, 1989. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 203 
;:, ; , 
"(III) Any other general or senior liability (which 
is not a liability described in clause (i)). 
"(IV) Any obligation subordinated to depositors 
or other general creditors (which is not an obliga-
tion described in clause (i)). 
"(D) ADJUSTMENT OF ESTIMATED PAYMENT.— 
"(i) OVERPAYMENT.—If the amount of compensation 
estimated by and paid to the Corporation by 1 or more 
such commonly controlled depository institutions is 
greater than the actual loss incurred by the (Dorpora-
tion, the Corporation shall reimburse each such com-
monly controlled depository institution its pro rata 
share of any overpajonent. 
"(ii) UNDERPAYMENT.—If the amount of compensa-
tion estimated by and paid to the Corporation by 1 or 
more such commonly controlled depository institutions 
is less than the actual loss incurred by the Corporation, 
the Corporation shall redetermine in its discretion the 
liability of each such commonly controlled depository 
institution to the Corporation and shall require each 
such commonly controlled depository institution to 
make payment of any additional liability to the 
Corporation. 
"(3) REVIEW.— 
"(A) JUDICIAL.—Actions of the Corporation shall be 
reviewable pursuant to chapter 7 of title 5, United States 
Code. 
"(B) ADMINISTRATIVE.—The Corporation shall prescribe 
Regulations. 
regulations and establish administrative procedures which 
provide for a hearing on the record for the review of— 
"(i) the amount of any loss incurred by the Corpora-
tion in connection with any insured depository institu-
tion; 
( 
"(ii) the liability of individual commonly controlled 
depository institutions for the amount of such loss; and 
"(iii) the schedule of pajmients to be made by such 
commonly controlled depository institutions. 
"(4) LIMITATION ON RIGHTS OF PRIVATE PARTIES.—To the extent 
the exercise of any right or power of any person would impair 
the ability of any insured depository institution to perform such 
institution's obligations under this subsection— 
"(i) the obligations of such insured depository institu-
tion shall supersede such right or power; and 
"(ii) no court may give effect to such right or power 
with respect to such insured depository institution. 
"(5) WAIVER AUTHORITY.— 
"(A) IN GENERAL.—The Corporation, in its discretion, may 
exempt any insured depository institution from the provi-
sions of this subsection if the Corporation determines that 
such exemption is in the best interests of the Bank Insur-
ance Fund or the Savings Association Insurance Fund. 
"(B) CONDITION.—During the period any exemption 
granted to any insured depository institution 
under 
subparagraph (A) or (C) is in effect, such insured depository 
institution and all other insured depository institution 
afniiates of such depository institution shall comply fully 
103 STAT. 204 
PUBLIC LAW 101-73—AUG. 9, 1989 
' '-'••'^ with the restrictions of sections 23A and 23B of the Federal 
Reserve Act without regard to section 23A(dXl). 
. 'fyK., 
"(C) LIMITED PARTNERSHIPS.— 
' ' ' 
"(i) IN GENERAL.—The Corporation may, in its discre-
tion, exempt any limited partnership and any affiliate 
of any limited partnership (other than any insured 
' '^ 
depository institution which is a majority owned 
subsidiary of such partnership) from the provisions of 
this subsection if such limited partnership or affiliate 
has filed a registration statement with the Securities 
and Exchange Commission on or before April 10, 1989, 
indicating that as of the date of such filing such part-
nership intended to acquire 1 or more insured deposi-
' 
^' 
tory institutions. 
"(ii) REVIEW AND NOTICE.—Within 10 business days 
^ 
after the date of submission of any request for an 
exemption under this subparagraph together with such 
information as shall be reasonably requested by the 
Corporation, the Corporation shall make a determina-
tion on the request and shall so advise the applicant. 
"(6) 5-YEAR TRANSITION RULE.—During the 5-year period begin-
ning on the date of the enactment of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989— 
"(A) no Savings Association Insurance Fund member 
» 
shall have any liability to the Corporation under this 
subsection arising out of assistance provided by the Cor-
poration or any loss incurred by the C!orporation as a result 
of the default of a Bank Insurance Fund member which was 
acquired by such Savings Association Insurance Fund 
member or any affiliate of such member before the date of 
the enactment of such Act; and 
"(B) no Bank Insurance Fund member shall have such 
liability with respect to assistance provided by or loss in-
curred by the Corporation as a result of the default of a 
Savings Association Insurance Fund member which was 
acquired by such Bank Insurance Fund member or any 
affiliate of such member before the date of the enactment of 
such Act. 
"(7) EXCLUSION FOR INSTFTUTIONS ACQUIRED IN DEBT COLLEC-
TIONS.—Any depository institution shall not be treated as 
commonly controlled, for purposes of this subsection, during the 
5-year period beginning on the date of an acquisition described 
in subparagraph (A) or such longer period as the Corporation 
may determine after written application by the acquirer, if— 
"(A) 1 depository institution controls another by virtue of 
ownership of voting shares acquired in securing or collect-
ing a debt previously contracted in good faith; and 
"(B) during the period beginning on the date of the 
enactment of the Financial Institutions Reform, Recovery, 
£md Enforcement Act of 1989 and ending upon the expira-
tion of the exclusion, the controlling bank and all other 
insured depository institution affiliates of such controlling 
bank comply fully with the restrictions of sections 23A and 
23B of the Federal Reserve Act, without regard to section 
23A(dXl) of such Act, in transactions with the acquired 
insured depository institution. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 205 
"(8) EXCEPTION FOR CERTAIN FSUC ASSISTED INSTITUTIONS.—No 
;- 
depository institution shall have any liability to the Corporation 
under this subsection as the result of the default of, or assist-
ance provided with respect to, an insured depository institution 
which is an affiliate of such depository institution i
f
— 
"(A) such affiliate was receiving cash payments from the 
Federal Savings and Loan Insurance Corporation under an 
assistance agreement or note entered into before the date of 
the enactment of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989; 
"(B) the Federal Savings and Loan Insurance Corpora-
tion, or such other entity which has succeeded to the pay-
ment obligations of such Corporation with respect to such 
assistance agreement or note, is unable to continue such 
' 
payments; and 
V 
"(C) such affiliate— 
"(i) is in default or in need of assistance solely as a 
result of the failure to meet the payment obligations 
referred to in subparagraph (B); and 
"(ii) is not otherwise in breach of the terms of any 
assistance agreement or note which would authorize 
the Federal Savings and Loan Insurance Corporation 
or such other successor entity, pursuant to the terms of 
such assistance agreement or note, to refuse to make 
such pajrments. 
"(9) COMMONLY CONTROLLED DEFINED.—For purposes of this 
,, 
subsection, depository institutions are commonly controlled if— 
"(A) such institutions are controlled by the same deposi-
tory institution holding company (including any company 
required to file reports pursuant to section 4(fX6) of the 
Bank Holding Company Act of 1956); or 
"(B) 1 depository institution is controlled by another 
depository institution.", 
(b) NEWLY INSURED THRIFT PROVISION.—Any insured depository 
12 use 1815 
institution (as defined in section 3(cX2) of the Federal Deposit Insur- note, 
ance Act, as added by section 204(c) of this Act)— 
(1) which was an insured institution {as detined in section 
401(a) of the National Housing Act, as in effect before the date 
of the enactment of this Act) on the day before the date of the 
enactment of this Act; 
(2) the board of directors of which determined, before April 1, 
1987, to terminate such association's status as an insured 
institution (as so defined) as evidenced in sworn minutes of the 
board of directors meeting held before such date; 
(3) had insured deposits of less than $11,000,000 on April 1, 
1987; and 
(4) was an insured institution (as so defined) for less than 1 
year as of April 1,1987, 
may cease to be a Savings Association Insurance Fund member and 
become a Bank Insurance Fund member at any time during the 2-
year period beginning on the date of the enactment of this Act 
without the approval of the Federal Deposit Insurance (Corporation 
under section 5(dX2) of the Federal Deposit Insurance Act (as added 
by subsection (a) of this section) and without incurring any liability 
• . 
for any exit or entrance fee imposed under such section 5(dX2). 
103 STAT. 206 
PUBLIC LAW 101-73—AUG. 9, 1989 
SEC. 207. INSURABILITY FACTORS. 
Section 6 of the Federal Deposit Insurance Act (12 U.S.C. 1816) is 
amended to read as follows: 
"SEC. 6. FACTORS TO BE CONSIDERED. 
' 
"The factors that are required, under section 4, to be considered in 
connection with, and enumerated in, any certificate issued pursuant 
to section 4 and that are required, under section 5, to be considered 
by the Board of Directors in connection with any determination by 
such Board pursuant to section 5 are the following: 
"(1) The financial history and condition of the depository 
institution. 
"(2) The adequacy of the depository institution's capital struc-
ture. 
"(3) The future earnings prospects of the depository institur 
tion. 
"(4) The general character and fitness of the management of 
the depository institution. 
^ 
"(5) The risk presented by such depository institution to the 
Bank Insurance Fund or the Savings Association Insurance 
' 
Fund. 
"(6) The convenience and needs of the community to be served 
by such depository institution. 
"(7) Whether the depository institution's corporate powers are 
( 
"'^ consistent with the purposes of this Act.". 
SEC. 208. ASSESSMENTS. 
..;.: 
: ^ 
r 
-
Section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817) is 
amended— 
(1) in subsection (a)(2)— 
(A) by inserting ", the Director of the Office of Thrift 
Supervision, the Federal Housing Finance Board, any 
Federal home loan bank," after "Comptroller of the 
Currency" each place such term appears (except after 
' 
. 
' "Comptroller of the Currency,"); 
(B) by inserting "the Director of the Office of Thrift 
Supervision, the Federal Housing Finance Board, any Fed-
eral home loan bank," after "Comptroller of the Cur-
' i- rency,"; 
" 
: 
(C) by striking out "either" in the 1st sentence and 
inserting in lieu thereof "any"; 
'••- 
(D) in the last sentence of subparagraph (A), by inserting 
5
; 
- 
"or savings associations" after "banks"; 
*..• 
(E) by striking out "State nonmember hank (except a 
District bank)" and inserting in lieu thereof "depository 
institution"; and 
(F) by striking out subparagraph (B) and inserting the 
following: 
"(B) ADDITIONAL REPORTS.—The Board of Directors may from 
time to time require any insured depository institution to file 
such additional reports as the Corporation, after Eigreement 
with the (DomptroUer of the Currency, the Board of Governors of 
the Federal Reserve System, and the Director of the Office of 
, Thrift Supervision, as appropriate, may deem advisable for 
insurance purposes."; 
(2) in subsection (a)(3)— 
. 
»« 
. 
. « ^
.
^
^ 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 207 
(A) by striking out "Each insured State nonmember 
bank" and all that follows through "four reports" and 
inserting the following: "Each insured depository institu-
tion shall make to the appropriate Federal banking agency 
4 reports"; 
(B) by striking out "bank" each place such term appears 
in the 2nd, 5th, and 6th sentences and inserting in lieu 
thereof "depository institution"; 
(C) by striking out "insured national, District" and all 
that follows through "member bank" in the 7th sentence 
and inserting in lieu thereof "insured depository institu-
tion"; and 
(D) by inserting "or savings associations" after "banks" 
in the last sentence; 
(3) in subsection (aX4), by striking out "bank", "bank's", and 
"banks" each place such terms appear (except in "foreign 
bank") and inserting in lieu thereof "depository institution", 
"depository institution's", and "depository institutions", respec- 
t? * »; « 
tively; 
(4) by striking out paragraphs (1) and (2) of subsection (b) and 
inserting the following: 
"(1) ASSESSMENT RATES.— 
"(A) ANNUAL ASSESSMENT RATES PRESCRIBED.— 
"(i) The Corporation shall set assessment rates for 
insured depository institutions annually. 
"(ii) The Corporation shall fix the annual assessment 
rate of Bank Insurance Fund members independently 
from the annual assessment rate for Savings Associa-
tion Insurance Fund members. 
"(iii) The Corporation shall, by September 30 of each 
year, announce the assessment rates for the succeeding 
calendar year. 
"(B) DESIGNATED RESERVE RATIO DEFINED.— 
"(i) The designated reserve ratio of the Bank Insur-
ance Fund for each year shall be— 
"(I) 1.25 percent of estimated insured deposits; or 
"(II) such higher percentage of estimated insured 
deposits, not exceeding 1.50 percent, as the Board 
of Directors determines for that year to be justified 
-^ 
by circumstances that raise a significant risk of 
substantial future losses to the Bank Insurance 
Fund, 
"(ii) The designated reserve ratio of the Savings 
Association Insurance Fund for each year shall be— 
"(I) 1.25 percent of estimated insured deposits; or 
"(II) such higher percentage of estimated insured 
deposits, not exceeding 1.50 percent, as the Board 
of Directors determines for that year to be justified 
' 
by circumstances that raise a significant risk of 
substantial future losses to the Savings Association 
Insurance Fund, 
"(iii) The Board of Directors shall— 
"(I) maintain reserves in the Bank Insurance 
Fund received pursuant to clause (iXII) as Supple-
mental Reserves in the Bank Insurance Fund; 
"(II) allocate each calendar quarter to an Earn- Securities, 
ings Participation Account in the Bank Insurance 
103 STAT. 208 
PUBLIC LAW 101-73—AUG. 9, 1989 
. 
^\ 
Fund the investment income earned by the Bank 
^ 
-.,1 
. Insurance Fund on such Supplemental Reserves in 
t,, 
^|«' 
the preceding calendar quarter; 
,,^ 
"(III) distribute such Earnings Participation Ac-
count at the conclusion of each calendar year to 
Bank Insurance Fund members; and 
j.j^jj- 
"(IV) distribute such Supplemental Reserves to 
Bank Insurance Fund members if and to the extent 
, ' 
. 
£ 
., » 
the C!orporation determines that such Supple-
r. 
^ 
mental Reserves are not needed to satisfy the pro-
jected designated reserve ratio for the 
next 
succeeding calendar year. 
.,, 
"(iv) The Board of Directors shall— 
"(I) maintain reserves in the Savings Association 
Insurance Fund received pursuant to clause (iiXH) 
C ., 
,. as Supplemental Reserves in the Savings Associa-
. ; K 
tion Insurance Fund; 
Securities. 
_ 
,1^ 
"(II) allocate each calendar quarter to an Earn-
ings Participation Account in the Savings Associa-
, J 
, r tion Insurance Fund the investment income earned 
by the Savings Association Insurance Fund on such 
Supplemental Reserves in the preceding calendar 
quarter; 
"(III) distribute such Earnings Participation Ac-
count at the conclusion of each calendar year to 
. , -; 
Savings Association Insurance Fund members; and 
.^J 
"(IV) distribute such Supplemental Reserves to 
'""- .,; 'l~. 
Savings Association Insurance Fund members if 
and to the extent the Corporation determines that 
such Supplemental Reserves are not needed to 
satisfy the projected designated reserve ratio for 
the next succeeding calendar year. 
"(C) ASSESSMENT RATE FOR BANK INSURANCE FUND MEM-
,,,, 
BERS.—The annual assessment rate for Bank Insurance 
Fund members shall be— 
., 
"(i) until December 31,1989, Viz of 1 percent; 
"(ii) from January 1, 199(), through December 31, 
,. 
. . 1990, 0.12 percent; 
"(iii) on and after January 1, 1991, 0.15 percent; 
^ . 
"(iv) on January 1 of a calendar year in which the 
reserve ratio of the Bank Insurance Fund is expected to 
be less than the designated reserve ratio by determina-
,, 
tion of the Board of Directors, such rate determined by 
' J ,. 
the Board of Directors to be appropriate to restore the 
. ^ 
reserve ratio to the designated reserve ratio within a 
^^ 
reasonable period of time, after taking into consider-
ation the expected operating expenses, C£ise resolution 
j ^ . " 
^ 
expenditures, and investment income of the Bank 
-
s •. r 
Insurance Fund, and the impact on insured bank earn-
ings and capitalization, except that— 
"(I) from the date of the enactment of the Finan-
cial Institutions Reform, Recovery, and Enforce-
- 
,, 
ment Act of 1989 until the earlier of January 1, 
: '?,•: 
1995, or January 1 of the calendar year in which 
. .7 , 
the Bank Insurance Fund reserve ratio is expected 
^,,- ,,,. 
^ .r 
to first attain the designated reserve ratio, the rate 
;., 
shall be as specified in clauses (i), (ii), and (iii) of 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 209 
this subparagraph so long as the Bank Insurance 
Fund reserve ratio is increasing on a calendar year 
basis; 
"(II) the rate shall not exceed 0.325 percent; and 
; 
"(III) the increase in the rate in any 1 year shall 
not exceed 0.075 percent; and 
"(v) sufficient to ensure that for each member in each 
year the assessment shall not be less than $1,000. 
"(D) 
ASSESSMENT RATE FOR SAVINGS ASSOCIATION INSUR-
ANCE FUND MEMBERS.—The annual sissessment rate for Sav-
ings Association Insurance Fund members shall be— 
"(i) until December 31,1990, 0.208 percent; 
"(ii) from January 1, 1991, through December 31, 
1993, 0.23 percent; 
"(iii) from January 1, 1994, through December 31, 
1997, 0.18 percent; 
"(iv) on and after January 1, 1998, 0.15 percent; 
"(v) on January 1 of a calendar year in which the 
reserve ratio of the Savings Association Insurance 
Fund is expected to be less than the designated reserve 
ratio by determination of the Board of Directors, such 
rate determined by the Board of Directors to be appro-
priate to restore the reserve ratio to the designated 
reserve ratio within a regisonable period of time, after 
taking into consideration the expected expenses and 
income of the Savings Association Insurance Fund, and 
the effect on insured savings association earnings and 
capitalization, except that— 
"(I) from the date of the enactment of the Finan-
cial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 through December 31, 1994, the 
rate shall be as specified in clauses (i), (ii), and (iii) 
above; 
"(II) the rate shall not exceed 0.325 percent; and 
"(III) the increase in the rate in any one year 
shall not exceed 0.075 percent; £ind 
"(vi) sufficient to ensure that for each member in each 
year the assessment shall not be less than $1,000. 
"(E) FINANCING CORPORATION AND FUNDING CORPORATION 
ASSESSMENTS.—Notwithstanding any other provision of this 
paragraph, amounts assessed by the Financing Corporation 
and the Funding Corporation under sections 21 and 21B, 
respectively, of the Federal Home Loan Bank Act against 
Savings Association Insurance Fund members, shall be sub-
tracted from the amounts authorized to be assessed by the 
Corporation under this paragraph. 
"(F) SPECIAL RULE TO ALLOW CONTINUING ASSESSMENTS BY 
THE FINANCING CORPORATION AND THE FUNDING CORPORA-
TION DURING PREMIUM YEAR ADJUSTMENTS.—In Order tO 
ensure that the Financing Corporation and the Resolution 
Funding Corporation obtain sufficient funds for interest 
payments on obligations of such corporations, the Corpora-
tion, in coordination with the Financing Corporation and 
the Secretary of the Treasury, may prescribe such 
regulations as may be necessary to allow the Financing 
Corporation and the Resolution Funding Corporation to 
impose assessments against Savings Association Insurance 
103 STAT. 210 
PUBLIC LAW 101-73—AUG. 9, 1989 
Fund members pursuant to sections 21 and 21B, respec-
tively, of the Federal Home Loan Bank Act during the 
period required to change such members' premium year 
from the 1-year period applicable under section 404(b) of the 
National Housing Act (as in effect before the date of the 
enactment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989) to a calendar year basis, 
"(2) ASSESSMENT PROCEDURES.— 
"(A) 
SEMIANNUAL ASSESSMENTS.—Except 
as 
provided 
in 
subsection (c)(2)— 
"(i) the semiannual assessment due from any Bank Insur-
ance Fund member for any semiannual period shall be 
equal to the product of— 
"(I) V
2 the annual assessment rate applicable to such 
Bank Insurance Fund member; and 
"(II) such Bank Insurance Fund member's average 
r 
assessment base for the immediately preceding semi-
annual period; and 
"(ii) the semiannual assessment due from any Savings 
Association Insurance Fund member for any semiannual 
period shall be equal to the product of— 
"(I) V
a the annual assessment rate applicable to such 
Savings Association Insurance Fund member; and 
"(II) such Savings Association Insurance Fund mem-
ber's average assessment base for the immediately 
preceding semiannual period. 
"(B) DEFINITION.—For purposes of this section, the term 'semi-
annual 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) by amending subsection (d) to read as follows: 
"(d) ASSESSMENT CREDITS.— 
"(1) I N GENERAL.— 
"(A) By September 30 of each calendar year, the (Dorpora-
tion shall prescribe and publish the aggregate amount to be 
*' 
credited to insured depository institutions in the succeeding 
calendar year. 
"(B) Each insured depository institution shall be notified 
by the Corporation of the percentage by which the assess-
ment rate should be reduced in computing its net premium. 
"(C) Any outstanding obligations owed to the (Dorporation 
by an individuEil insured depository institution shall be 
deducted from any assessment credit to be credited to such 
depository institution. 
"(2) ASSESSMENT CREDIT FOR INSURED BANKS.— 
"(A) CREDIT BARRED.—The Board of Directors shall not 
prescribe an assessment credit to Bank Insurance Fund 
members if the Board of Directors determines that the 
Bank Insurance Fund reserve ratio is expected to be equal 
to or less than the designated reserve ratio in the coming 
year after taking into consideration such Fund's expected 
expenses and income. 
(B) CREDIT AUTHORIZED.—If the Board of Directors deter-
mines, after taking into consideration the Bank Insurance 
Fund's 
expected 
operating 
expenses, case 
resolution 
. expenditures, investment income, and assessment income. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 211 
that the Bank Insurance Fund reserve ratio is expected to 
exceed the designated reserve ratio in the succeeding year, 
the Board of Directors shall prescribe an assessment credit 
to Bank Insurance Fund members in such succeeding cal-
endar year equal to the lesser of^ 
"(i) the amount necessary to reduce the Bank Insur- 
c 
ance Fund reserve ratio to the designated reserve ratio; 
or 
"(ii) 100 percent of the net assessment income to be 
received from Bank Insurance Fund members in such 
succeeding year. 
"(3) ASSESSMENT CREDIT FOR INSURED SAVINGS ASSOCIATIONS.— 
"(A) CREDIT BARRED.—The Board of Directors shall not 
prescribe an assessment credit to Savings Association 
Insurance Fund members if the Board of Directors deter-
mines that the Savings Association Insurance Fund reserve 
ratio is expected to be equal to or less than the designated 
reserve ratio in the coming year after taking into consider-
ation such Fund's expected expenses and income. 
"(B) CREDIT AUTHORIZED.—If the Board of Directors deter-
mines, after taking into consideration the Savings Associa-
tion Insurance Fund's expected expenses and income, that 
the Savings Association Insurance Fund reserve ratio is 
expected to exceed the designated reserve ratio in the 
succeeding year, the Board of Directors shall prescribe an 
assessment credit to Savings Association Insurance Fund 
members in such succeeding calendar year equal to the 
lesser of^ 
"(i) the amount necessary to reduce the Savings 
Association Insurance Fund reserve ratio to the des-
ignated reserve ratio; or 
"(ii) 100 percent of the net assessment income to be 
received from Savings Association Insurance Fund 
members in such succeeding year. 
"(4) NET ASSESSMENT INCOME DEFINED.—For purposes of this 
subsection— 
"(A) IN GENERAL.—The term 'net assessment income' 
means— 
"(i) with respect to the Bank Insurance Fund, the 
Bank Insurance Fund net assessment income (as de-
fined in subparagraph (B)); and 
"(ii) with respect to the Savings Association Insur-
ance Fund, the Savings Association Insurance Fund net 
assessment income (as defined in subparagraph (C)). 
"(B) BANK INSURANCE FUND NET ASSESSMENT INCOME.— 
"(i) IN GENERAL.—The term 'Bank Insurance Fund 
net assessment income' means— 
"(I) the total assessments which become due 
during the calendar year with respect to members 
of such Fund, minus 
"(II) the sum of the amount of the operating 
costs and expenses described in clause (ii) and the 
amount by which the Bank Insurance Fund's 
insurance costs described in clause (iii) exceed its 
investment income for the calendar year, 
"(ii) OPERATING COST AND EXPENSES.—For the pur-
poses of this subparagraph, the operating costs and 
103 STAT. 212 
PUBLIC LAW 101-73—AUG. 9, 1989 
expenses to be deducted from assessments include the 
operating costs and expenses of— 
"(I) the Corporation for the calendar year di-
rectly attributable to the Bank Insurance Fund; 
and 
"(II) the Bank Insurance Fund, 
"(iii) 
INSURANCE 
COSTS.—For 
purposes 
of 
this 
^ 
subparagraph, the insurance costs include— 
"(I) additions to the Bank Insurance Fund's re-
serve to provide for insurance losses during the 
calendar year, excluding any adjustments to such 
reserve which result in a reduction of such reserve; 
and 
"(II) the insurance losses sustained in such cal-
endar year. 
"(C) SAVINGS ASSOCIATION INSURANCE FUND NET ASSESS-
MENT INCOME.— 
"(i) IN GENERAL.—The term 'Savings Association 
Insurance Fund net assessment income' means— 
"(I) the total assessments which become due 
during the calendar year with respect to members 
of such Fund, minus 
"(II) the sum of the amount of the operating 
costs and expenses described in clause (ii) and the 
amount by which the Savings Association Insur-
ance Fund's insurance costs described in clause (iii) 
exceed its investment income for the calendar 
year, 
"(ii) OPERATING COST AND EXPENSES.^For purposes of 
this subparagraph, the operating costs and expenses to 
be deducted from assessments include the operating 
costs and expenses of— 
"(I) the Corporation for the calendar year di-
rectly attributable to the Savings Association 
Insurance Fund; and 
"(II) the Savings Association Insurance Fund, 
"(iii) INSURANCE COSTS.—For the purposes of this 
subparagraph, the insurance costs include— 
"(I) additions to the Savings Association Insur-
ance Fund's reserve to provide for insurance losses 
during the calendar year, excluding any adjust-
ments to such reserve which result in a reduction 
of such reserve; and 
"(II) the insurance losses sustained in such cal-
endar year. 
"(5) INVESTMENT INCOME DEFINED.—For purposes of this 
subsection, the term 'investment income' means— 
"(A) for the Bank Insurance Fund, interest, dividends, 
and net market gains earned on investments of the Bank 
Insurance Fund; and 
"(B) for the Savings Association Insurance Fund, interest, 
dividends, and net market gains earned on investments of 
the Savings Association Insurance Fund.". 
(6) in paragraphs (3), (4), (5), (6), (7), and (8) of subsection (b), by 
striking out "bank", "bank's", and "banks" each place such 
term appears (except where "foreign" precedes any of such 
terms) and inserting in lieu thereof "depository institution", 
PUBLIC LAW 101-73—AUG. 9,1989 
103 STAT. 213 
"depository institution's", and "depository institutions", respec-
tively; 
(7) in subsections (c), (e), (f), (g), and (i), by striking out "bank" 
each place such term appears and inserting in lieu thereof 
"depository institution"; 
(8) in subsection (jXl), by striking out the last sentence; 
(9) in subsection 0X2XA)— 
(A) by striking out "failure" and inserting in lieu thereof 
"default"; and 
(B) by striking out "bank" each place such term appears 
and inserting in lieu thereof "depository institution"; 
(10) in subsection (jX2XD), by inserting unless such agency 
determines that an emergency exists," after "shall,"; 
(11) in subsection 0X7)-— 
(A) by striking out "or" at the end of subparagraph (D); 
(B) by striking out the period at the end of subparagraph 
(E) and inserting in lieu thereof "; or"; and 
(C) by adding at the end thereof the following new 
subparagraph: 
"(F) the appropriate Federal banking agency determines 
that the proposed transaction would result in an adverse 
effect on the Bank Insurance Fund or the Savings Associa-
tion Insurance Fund."; 
(12) by amending subsection (jX17) to read as follows: 
"(17) EXCEPTIONS.—This subsection shall not apply with re-
spect to a transaction which is subject to— 
"(A) section 3 of the Bank Holding Company Act of 1956; 
"(B) section 18(c) of this Act; or 
"(C) section 10 of the Home Owners' Loan Act."; 
(13) by adding at the end of subsection (j) the following new 
paragraph: 
"(18) 
APPUCABILITY OF CHANGE IN CONTROL PROVISIONS TO 
OTHER INSTITUTIONS.—For purposes of this subsection, the term 
'insured depository institution includes— 
"(A) any depository institution holding company; and 
"(B) any other company which controls an insured deposi-
tory institution and is not a depository institution holding 
company,"; 
' 
(14) by adding at the end thereof the following new subsec-
tion: 
"(1) DESIGNATION OF FUND MEMBERSHIP FOR NEWLY INSURED 
DEPOSITORY INSTITUTIONS; DEFINITIONS.—For purposes of this sec-
tion: 
"(1) BANK INSURANCE FUND.—Any institution which— 
"(A) becomes sm insured depository institution; and 
"(B) does not become a Savings Association Insurance 
, 
-
Fund member pursuant to paragraph (2), 
^ 
shall be a Bank Insurance Fund member. 
"(2) SAVINGS ASSOCIATION INSURANCE FUND.—Any savings 
association, other than any Federal savings bank chartered 
pursuant to section 5(o) of the Home Owners' Loan Act, which 
becomes an insured depository institution shall be a Savings 
Association Insurance Fund member. 
"(3) TRANSITION PROVISION.— 
"(A) BANK INSURANCE FUND.—Any depository institution 
the deposits of which were insured by the Federal Deposit 
^ 
Insurance Corporation on the day before the date of the 
103 STAT. 214 
PUBLIC LAW 101-73—AUG. 9, 1989 
enactment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989, including— 
'if 
"(i) any Federal savings bank chartered pursuant to 
'.;.'••' 
section 5(o) of the Home Owners'Loan Act; and 
^
r
> 
"(ii) any cooperative bank, 
•"'' 
shall be a Bank Insurance Fund member as of such date of 
enactment. 
Hi. 
"(B) SAVINGS ASSOCIATION INSURANCE FUND.—Any savings 
association which is an insured depository institution by 
t^ > 
operation of section 4(aX2) shall be a Savings Association 
Insurance Fund member as of the date of the enactment of 
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989. 
"(4) BANK INSURANCE FUND MEMBER.—The term 'Bank Insur-
ance Fund member' means any depository institution the de-
posits of which are insured by the Bank Insurance Fund. 
"(5) 
SAVINGS ASSOCIATION INSURANCE FUND MEMBER.—The 
term 'Savings Association Insurance Fund member' means any 
depository institution the deposits of which are insured by the 
Savings Association Insurance Fund. 
"(6) BANK INSURANCE FUND RESERVE RATIO.—The term 'Bank 
Insurance Fund reserve ratio' means the ratio of the net worth 
of the Bank Insurance Fund to the value of the aggregate 
estimated insured deposits held in all Bank Insurance Fund 
members. 
"(7) SAVINGS ASSOCIATION INSURANCE FUND RESERVE RATIO.— 
The term 'Savings Association Insurance Fund reserve ratio' 
means the ratio of the value of the net worth of the Savings 
- 
Association Insurance Fund to the value of the aggregate esti-
mated insured deposits held in all Savings Association Insur-
ance Fund members."; 
(15) by adding after the subsection added by paragraph (14) of 
this section the following new subsections: 
"(m) SECONDARY RESERVE OFFSETS AGAINST PREMIUMS.— 
"(1) OFFSETS IN CALENDAR YEARS BEGINNING BEFORE I993.— 
Subject to the maximum amount limitation contained in para-
graph (2) and notwithstanding any other provision of law, any 
insured savings association may offset such association's pro 
rata share of the statutorily prescribed amount against any 
premium assessed against such association under subsection (b) 
of this section for any calendar year beginning before 1993. 
"(2) ANNUAL MAXIMUM AMOUNT UMITATION.—"The amount of 
any offset allowed for any savings association under paragraph 
(1) for any calendar year beginning before 1993 shall not exceed 
an amount which is equal to 20 percent of such association's pro 
rata share of the statutorily prescribed amount (as computed for 
such calendar year). 
"(3) OFFSETS IN CALENDAR YEARS BEGINNING AFTER I992.— 
Notwithstanding any other provision of law, a savings associa-
tion may offset such association's pro rata share of the statu-
torily prescribed amount against any premium assessed against 
such association under subsection (b) for any calendar year 
beginning after 1992. 
"(4) TRANSFERABILITY.—No right, title, or interest of any in-
sured depository institution in or with respect to its pro rata 
share of the secondary reserve shall be assignable or transfer-
able whether by operation of law or otherwise, except to the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 215 
extent that the Corporation may provide for transfer of such pro 
rata share in cases of merger or consolidation, transfer of bulk 
assets or assumption of liabilities, and similar transactions, as 
defined by the Corporation for purposes of this paragraph. 
"(5) PRO RATA DISTRIBUTION ON TERMINATION OF INSURED 
STATUS.—If^ 
"(A) the status of any savings association as an insured 
depository institution is terminated pursuant to any provi-
sion of section 8 or the insurance of accounts of any savings 
^ 
association institution is otherwise terminated; 
"(B) a receiver or other legal custodian is appointed for 
^ 
the purpose of liquidation or winding up the affairs of any 
savings association; or 
"(C) the Corporation makes a determination that for the 
purposes of this subsection any savings association has 
otherwise gone into liquidation, 
the Corporation shall pay in cash to such institution its pro rata 
share of the secondary reserve, in accordance with such terms 
and conditions as the Corporation may prescribe, or, at the 
option of the Corporation, the Corporation may apply the whole 
or any part of the amount which would otherwise be paid in 
cash toward the payment of any indebtedness or obligation, 
whether matured or not, of such institution to the Corporation, 
existing or arising before such pa3mient in CEish. Such pajnnent 
or such application need not be made to the extent that the 
provisions of the exception in paragraph (4) are applicable. 
"(6) STATUTORILY PRESCRIBED AMOUNT DEFINED.—For purposes 
of this subsection, the term 'statutorily prescribed amount' 
means, with respect to any calendar year which ends after the 
date of the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989— 
^ 
"(A) $823,705,000, minus 
"(B) the sum of— 
"(i) the Eiggregate amount of offsets made before such 
date of enactment by all insured institutions under 
section 404(eX2) of the National Housing Act (as in 
effect before such date of enactment); and 
"(ii) the aggregate amount of offsets made by all 
savings associations under this subsection before the 
beginning of such calendar year. 
"(7) SAVINGS ASSOCIATION'S PRO RATA AMOUNT.—For purposes 
of this subsection, any savings association's pro rata share of the 
statutorily prescribed amount is the percentage which is equal 
to such association's share of the secondary reserve as deter-
mined under section 404(e) of the National Housing Act on the 
day before the date on which Federal Savings and Loan Insur-
ance Corporation ceased to recognize the secondary reserve (as 
such Act was in effect on the day before such date). 
"(8) YEAR OF ENACTMENT RULE.—With respect to the calendar 
year in which the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 is enacted, the Corporation shall make 
such adjustments as may be necessary— 
"(A) in the computation of the statutorily prescribed 
amount which shall be applicable for the remainder of such 
calendar year after taking into account the aggregate 
amount of offsets by all insured institutions under section 
404(eX2) of the National Housing Act (as in effect before the 
103 STAT. 216 
PUBLIC LAW 101-73—AUG. 9, 1989 
date of the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989) after the beginning 
of such calendar year and before such date of enactment; 
and 
"(B) in the computation of the maximum amount of any 
savings association's offset for such calendar year under 
paragraph (1) after taking into account— 
"(i) the amount of any offset by such savings associa-
tion under section 404(eX2) of the National Housing Act 
(as in effect before such date of enactment) after the 
beginning of such calendar year and before such date of 
enactment; and 
"(ii) the change of such association's premium year 
from the 1-year period applicable under section 404(b) 
of the National Housing Act (as in effect before such 
date of enactment) to a calendar year basis. 
"(n) CoixECTioNS ON BEHALF OF THE DIRECTOR OF THE OFFICE OF 
THRIFT SUPERVISION.—When requested by the Director of the Office 
of Thrift Supervision, the Corporation shall collect on behalf of the 
Director assessments on savings associations levied by the Director 
under section 9 of the Home Owners' Loan Act. The Corporation 
shall be reimbursed for its actual costs for the collection of such 
assessments. Any such assessments by the Director shall be in 
addition to any amounts assessed by the Corporation, the Financing 
Corporation, and the Resolution Funding Corporation.". 
SEC. 209. CORPORATE POWERS OF THE FDIC. 
Section 9 of the Federal Deposit Insurance Act (12 U.S.C. 1819) is 
amended— 
(1) by striking out "bank" and "banks" each place such terms 
appear (except in the last sentence of the paragraph designated 
the "Fourth") and inserting in lieu thereof "depository institu-
tion" and "depository institutions", respectively; and 
(2) by striking out "Upon the date" and inserting the follow-
ing: 
"(a) IN GENERAL.—Upon the date"; 
(3) by amending the paragraph designated the "Fourth" to 
read as follows: 
"Fourth. To sue and be sued, and complain and defend, in any 
court of law or equity. State or Federal."; and 
(4) by adding at the end thereof the following new subsection: 
, "(b) AGENCY AUTHORITY.— 
"(1) STATUS.—The Corporation, in any capacity, shall be an 
agency of the United States for purposes of section 1345 of title 
28, United States Code, without regard to whether the Corpora-
/ 
tion commenced the action. 
"(2) FEDERAL COURT JURISDICTION.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(D), all suits of a civil nature at common law or in equity to 
which the Corporation, in any capacity, is a party shall be 
deemed to arise under the laws of the United States. 
"(B) REMOVAL.—Except as provided in subparagraph (D), 
the Corporation may, without bond or security, remove any 
action, suit, or proceeding from a State court to the appro-
priate United States district court. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 217 
"(C) APPEAL OF REMAND.—The Corporation may appeal 
any order of remand entered by any United States district 
court. 
\ 
"(D) STATE ACTIONS.—Except as provided in subparagraph 
(E), any action— 
"(i) to which the Corporation, in the (Dorporation's 
capacity as receiver of a State insured depository 
institution by the exclusive appointment by State 
authorities, is a party other than as a plaintiff; 
„^,; 
"(ii) which involves only the preclosing rights against 
* 
the State insured depository institution, or obligations 
f
^ 
owing to, depositors, creditors, or stocldiolders by the 
State insured depository institution; and 
"(iii) in which only the interpretation of the law of 
such State is necessary, 
shall not be deemed to arise under the laws of the United 
-
States. 
"(E) RULE OF CONSTRUCTION.—Subparagraph (D) shall not 
be construed as limiting the right of the Corporation to 
invoke the jurisdiction of any United States district court in 
any action described in such subparagraph if the institution 
of which the Corporation has been appointed receiver could 
have invoked the jurisdiction of such court. 
"(3) SERVICE OF PROCESS.—The Board of Directors shall des-
ignate agents upon whom service of process may be made in any 
State, territory, or jurisdiction in which any insured depository 
institution is located. 
"(4) BONDS OR FEES.—The Corporation shall not be required to 
--a---' 
post £iny bond to pursue any appeal and shall not be subject to 
payments of any filing fees in United States district courts or 
courts of appeal.". 
SEC. 210. ADMINISTRATION OF CORPORATION. 
(a) EXAMINATION AUTHORITY.—Section 10(b) of the Federal Deposit 
Insurance Act (12 U.S.C. 1820(b)) is amended to read as follows: 
"(b) EXAMINATIONS.— 
"(1) APPOINTMENT OF EXAMINERS AND CLAIMS AGENTS.—The 
Board of Directors shall appoint examiners and claim agents. 
"(2) 
REGULAR 
EXAMINATIONS.—Any 
examiner 
appointed 
under paragraph (1) shall have power, on behalf of the (Jorpora-
tion, to examine— 
"(A) any insured State nonmember bank (except a Dis-
trict bank) or insured State branch of any foreign bank; 
-.••£ 
"(B) any savings association, State nonmember bank, or 
State branch of a foreign bank, or other depository institu-
tion which files an application with the Corporation to 
become an insured depository institution; and 
"(C) any insured depository institution in default, 
whenever the Board of Directors determines an examination of 
any such depository institution is necessary. 
"(3) SPECIAL EXAMINATION OF ANY INSURED DEPOSITORY 
INSTITUTION.—In addition to the examinations authorized under 
paragraph (2), any examiner appointed under paragraph (1) 
shall have power, on behalf of the (Corporation, to make any 
special examination of any insured depository institution when-
ever the Board of Directors determines a special examination of 
103 STAT. 218 
PUBLIC LAW 101-73—AUG. 9, 1989 
any such depository institution is necessary to determine the 
condition of such depository institution for insurance purposes. 
^
^ 
"(4) EXAMINATION OF AFFIUATES.— 
'*'^**' 
"(A) IN GENERAL.—In making any examination under 
paragraph (2) or (3), any examiner appointed under para-
^
^ 
graph (1) shall have power, on behalf of the Corporation, to 
'* 
make such examinations of the affairs of any affiliate of 
any insured depository institution as may be necessary to 
disclose fully— 
"(i) the relationship between such insured depository 
institution and any such affiliate; and 
"(ii) the effect of such relationship on the insured 
depository institution. 
"(B) COMMITMENT B
Y FOREIGN BANKS TO ALLOW EXAMINA-
TIONS OF AFFIUATES.—No branch or depository institution 
subsidiary of a foreign bank may become an insured deposi-
tory institution unless such foreign bank submits a written 
binding commitment to the Board of Directors to permit 
^' 
any examination of any affiliate of such branch or deposi-
tory institution subsidiary pursuant to subparagraph (A) to 
the extent determined by the Board of Directors to be 
necessary to carry out the purposes of this Act. 
"(5) POWER AND DUTY OF EXAMINERS.—Each examiner ap-
pointed under paragraph (1) shall— 
"(A) have power to make a thorough examination of any 
insured depository institution or affiliate under paragraph 
(2), (3), or (4); and 
Reports. 
f ' 
"(B) shall make a full and detailed report of condition of 
any insured depository institution or affiliate examined to 
the Corporation. 
"(6) POWER OF CLAIM AGENTS.—Each claim agent appointed 
under paragraph (1) shall have power to investigate and exam-
ine all claims for insured deposits.", 
(b) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Section 10(c) of the Federal Deposit Insurance Act (12 
U.S.C. 1820(c)) is amended by striking out ", State nonmember 
banks or other institutions" and inserting in lieu thereof "and 
any State nonmember bank, savings association, or other 
institution". 
(2) Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 
1820) is amended by striking out subsection (d). 
SEC. 211. INSURANCE FUNDS. 
,* . 
Section 11(a) of the Federal Deposit Insurance Act (12 U.S.C. 
/ 
1821(a)) is amended— 
(1) by striking out paragraph (1) and inserting the following: 
"(1) The Corporation shall insure the deposits of all insured 
depository institutions as provided in this Act. The maximum 
amount of the insured deposit of any depositor shall be $100,000."; 
(2) in paragraph (2XB), by striking out "time and savings"; 
and 
(3) by adding at the end the following new paragraphs: 
"(4) GENERAL PROVISION RELATING TO FUNDS.—The Bank 
Insurance Fund established under paragraph (5) and the Sav-
ings Association Insurance Fund established under paragraph 
(6) shall each be— 
"(A) maintained and administered by the Corporation; 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 219 
"(B) maintained separately and not commingled; and 
"(C) used by the Corporation to carry out its insurance 
purposes in the manner provided in this subsection. 
'(5) BANK INSURANCE FUND.— 
"(A) EsTABUSHMENT.—There is established a fund to be 
known as the Bank Insurance Fund. 
"(B) TRANSFER TO FUND.—On the date of the enactment of 
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989, the Permanent Insurance Fund shall be 
dissolved and all assets and liabilities of the Permanent 
Insurance Fund shall be transferred to the Bank Insurance 
Fund. 
"(C) USES.—The Bank Insurance Fund shall be available 
to the Corporation for use with respect to Bank Insurance 
Fund members. 
"(D) DEPOSITS.—All amounts assessed against Bank Insur-
ance Fund members by the Corporation shall be deposited 
into the Bank Insurance Fund. 
'(6) SAVINGS ASSOCIATION INSURANCE FUND.— 
"(A) ESTABLISHMENT.—There is established a fund to be 
known as the Savings Association Insurance Fund. 
"(B) USES.—The Savings Association Insurance Fund 
shall be available to the Corporation for use with respect to 
Savings Association Insurance Fund members. 
"(C) DEPOSITS.—All amounts assessed against Savings 
Association Insurance Fund members which are not re-
quired for the Financing Corporation, the Resolution Fund-
ing Corporation, or the FSLIC Resolution Fund shall be 
deposited in the Savings Association Insurance Fund. 
"(D) 
AVAILABIUTY 
OF 
FUNDS 
FOR 
ADMINISTRATIVE 
EXPENSES.— 
"(i) IN GENERAL.—The FSLIC Resolution Fund shall 
deposit in the Savings Association Insurance Fund such 
amounts as the Corporation determines are needed 
during the period beginning on the date of the enact-
ment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 and ending on September 
30, 1991, to pay the administrative and supervisory 
expenses of such Fund. 
(ii) PRIORITY.—The Savings Association Insurance 
Fund shall have priority over other obligations of the 
FSLIC Resolution Fund with respect to such amounts. 
"(E) TREASURY PAYMENTS TO FUND.—TO provide sufficient 
funding for the Savings Association Insurance Fund to 
carry out the purposes of this Act, the Secretary of the 
Treasury shall pay to such Fund, for each of the fiscal years 
1992 through 
1999, the amount, if any, by which 
$2,000,000,000 exceeds the amount deposited in such Fund 
(during such fiscal year) pursuant to subparagraph (C). 
"(F) 
TREASURY PAYMENTS TO MAINTAIN NET WORTH OP 
FUND.—The Secretary of the Tresisury shall pay to the 
Savings Association Insurance Fund, for each fiscal year 
described in the following table, any additional amount 
which may be necessary, as determined by the Corporation 
and the Secretary of the Treasury to ensure that such Fund 
has the minimum net worth referred to in such table 
throughout each such fiscal year: 
103 STAT. 220 
PUBLIC LAW 101-73—AUG. 9, 1989 
The amount of 
"For the fiscal year 
minimum net worth 
beginning October 1 of: 
(in billions): 
1991 
0
.
0 
1992 
1
.
0 
1993 
2
.
1 
1994 
3
.
2 
1995 
4
.
3 
1996 
5
.
4 
1997 
6
.
5 
1998 
7
.
6 
1999 
8
.
8 
"(G) EXCEPTION TO SUBPARAGRAPHS (E) AND (F).—Not-
withstanding subparagraphs (E) and (F), no payment may 
be made pursuant to such subparagraphs after the Savings 
Association Insurance Fund achieves a reserve ratio of 1.25 
percent. 
"(H) DISCRETIONARY RTC PAYMENTS.—If amounts available 
to the Savings Association Insurance Fund for purposes 
other than the payment of administrative expenses are 
insufficient for the Savings Association Insurance Fund to 
carry out the purposes of this Act, the Corporation may 
request the Resolution Trust Corporation to provide, and 
the Oversight Board of the Resolution Trust Corporation (in 
the discretion of the Oversight Board) may pay, such 
amount as may be needed for such purposes. 
"(I) BORROWING AUTHORITY.— 
"(i) IN GENERAL.—The Corporation may borrow from 
the Federal home loan banks, with the concurrence of 
the Federal Housing Finance Board, such funds as the 
Corporation considers necessary for the use of the Sav-
ings Association Insurance Fund. 
(ii) TERMS AND CONDITIONS.—Any loan from any 
Federal home loan bank under clause (i) to the Savings 
Association Insurance Fund shall— 
"(I) bear a rate of interest of not less than such 
bank's current marginal cost of funds, taking into 
account the maturities involved; 
,. 
"(II) be adequately secured, as determined by the 
' 
Federal Housing Finance Board; 
"(III) be a direct liability of such Fund; and 
"(IV) be subject to the limitations of section 15(c). 
"(J) AUTHORIZATION OF APPROPRIATIONS.—There are au-
thorized to be appropriated to the Secretary of the Treas-
ury, such sums as may be necessary to carry out the 
provisions of this paragraph, except that— 
. ' 
"(i) the annual amount appropriated under subpara-
graph (F) shall not exceed $2,000,000,000 in either fiscal 
,^ 
year 1991 or fiscal year 1992; and 
"(ii) the cumulative amount appropriated under 
subparagraph (F) for fiscal years 1991 through 1999 
shall not exceed $16,000,000,000. 
"(7) PROVISIONS APPUCABLE TO MAINTENANCE OF ACCOUNTS.— 
"(A) CORPORATION'S AUTHORITY.—Any provision of this 
Act forbidding the commingling of the Bank Insurance 
Fund with the Savings Association Insurance Fund, or 
requiring the separate maintenance of the Bank Insurance 
Fund and the Savings Association Insurance Fund, is not 
intended— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 221 
"(i) to limit or impair the authority of the Corpora-
tion to use the same facilities and resources in the 
course 
of 
conducting 
supervisory, 
regulatory, 
conservatorship, receivership, or liquidation functions 
with respect to banks and savings associations, or to 
— 
integrate such functions; or 
"(ii) to limit or impair the Corporation's power to 
combine assets or liabilities belonging to banks and 
savings associations in conservatorship or receivership 
for managerial purposes, or to limit or impair the 
Corporation's power to dispose of such assets or liabil-
ities on an aggregate basis. 
"(B) ACCOUNTING REQUIREMENTS.— 
"(i) 
ACCOUNTING FOR USE OF FACILITIES AND RE- 
^ 
SOURCES.—The Corporation shall keep a full and com-
plete accounting of all costs and expenses associated 
with the use of any facility or resource used in the 
course of any function specified in subpargigraph (AXi) 
and shall allocate, in the manner provided in subpara-
graph (C), any such costs and expenses incurred by the 
Corporation— 
"(I) with respect to Bank Insurance Fund mem-
bers to the Bank Insurance Fund; and 
"(II) with respect to Savings Association Insur-
ance Fund members to the Savings Association 
Insurance Fund, 
"(ii) ACCOUNTING FOR HOLDING AND MANAGING ASSETS 
AND LIABILITIES.—The Corporation shall keep a full and 
complete accounting of all costs and expenses associat-
ed with the holding management of any asset or liabil-
ity specified in subparagraph (AXii). 
"(iii) ACCOUNTING FOR DISPOSITION OF ASSETS AND 
UABiLiTiES.—The Corporation shall keep a full and 
complete accounting of all expenses and receipts 
associated with the disposition of any asset or 
liability specified in subparagraph (AXii). 
"(iv) ALLOCATION OF COST, EXPENSES AND RECEIPTS.— 
The Corporation shall allocate any cost, expense, and 
receipt described in clause (ii) or clause (iii) which is 
associated with any asset or liability belonging to— 
"(I) any Bank Insurance Fund member to the 
Bank Insurance Fund; and 
"(II) any Savings Association Insurance Fund 
member to the Savings Association Insurance 
Fund. 
"(C) 
ALLOCATION OF ADMINISTRATIVE EXPENSES.—Any 
personnel, administrative, or other overhead expense of the 
Corporation shall be allocated— 
"(i) fully to the Bank Insurance Fund, if the expense 
was incurred directly as a result of the Corporation's 
responsibilities solely with respect to Bank Insurance 
Fund members; 
"(ii) fully to the Savings Association Insurance Fund, 
if the expense was incurred directly as a result of the 
Corporation's responsibilities solely with respect to 
Savings Association Insurance Fund members; 
103 STAT. 222 
PUBLIC LAW 101-73—AUG. 9, 1989 
fc: »vi~. 
"(iii) between the Bank Insurance Fund and the 
Savings Association Insurance Fund, in 
amounts 
-".I 
reflecting the relative degree to which the expense was 
incurred as a result of the activities of Bank Insurance 
;/ 
Fund and Savings Association Insurance Fund mem-
bers; or 
"(iv) between the Bank Insurance Fund and the Sav-
ings Association Insurance Fund, in amounts reflecting 
the relative total assets as of the end of the preceding 
^ ; 
calendar year of Bank Insurance Fund members and 
ll-^if.- • 
Savings Association Insurance Fund members, to the 
extent that the Board of Directors is unable to make a 
determination under clause (i), (ii), or (iii).". 
SEC. 212. CONSERVATORSHIP AND RECEIVERSHIP POWERS OF THE 
CORPORATION, 
(a) BASIC AUTHORITIES.—Section 11 of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821) is amended by striking out subsections (c) 
through (j) and inserting the following new subsections: 
"(c) 
APPOINTMENT 
OF 
CORPORATION 
AS 
CONSERVATOR 
OR 
RECEIVER.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
Federal law, the law of any State, or the constitution of any 
State, the Corporation may accept appointment and act as 
conservator or receiver for any insured depository institution 
upon appointment in the manner provided in paragraph (2) or 
(3). 
, 
. 
"(2) FEDERAL DEPOSITORY INSTITUTIONS.— 
"(A) APPOINTMENT.— 
"(i) CONSERVATOR.—The Corporation may, at the 
discretion of the supervisory authority, be appointed 
conservator of any insured Federal depository institu-
; 
tion or District bank and the Corporation may accept 
such appointment. 
"(ii) RECEIVER.—The Corporation shall be appointed 
receiver, and shall accept such appointment, whenever 
,^.. 
a receiver is appointed for the purpose of liquidation or 
winding up the affairs of an insured Federal depository 
institution or District bank by the appropriate Federal 
banking agency, notwithstanding any other provision 
/ .,- 
of Federal law (other than section 21A of the Federal 
^
^ ^ 
Home Loan Bank Act) or the code of law for the 
District of Columbia. 
"(B) ADDITIONAL POWERS.—In addition to and not in dero-
gation of the powers conferred and the duties imposed by 
this section on the Corporation as conservator or receiver, 
the Corporation, to the extent not inconsistent with such 
powers and duties, shall have any other power conferred on 
or any duty (which is related to the exercise of such power) 
imposed on a conservator or receiver for any Federal 
depository institution under any other provision of law. 
"(C) CORPORATION NOT SUBJECT TO ANY OTHER AGENCY.— 
When acting as conservator or receiver pursuant to an 
appointment described in subparagraph (A), the Corpora-
tion shall not be subject to the direction or supervision of 
any other agency or department of the United States or any 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 223 
State in the exercise of the Corporation's rights, powers, 
and privileges. 
"(D) DEPOSITORY INSTITUTION IN CONSERVATORSHIP SUB-
JECT T
O BANKING AGENCY SUPERVISION.—Notwithstanding 
subparagraph (C), any Federal depository institution for 
which the Corporation has been appointed conservator 
shall remain subject to the supervision of the appropriate 
Federal banking agency. 
"(3) INSURED STATE DEPOSITORY INSTITUTIONS— 
"(A) APPOINTMENT BY APPROPRIATE STATE SUPERVISOR.— 
Whenever the authority having supervision of any insured 
. 
State depository institution (other than a District deposi-
tory institution) appoints a conservator or receiver for such 
institution and tenders appointment to the Corporation, the 
Corporation may accept such appointment. 
"(B) ADDITIONAL POWERS.—In addition to the powers con- 
/ 
ferred and the duties related to the exercise of such powers 
imposed by State law on any conservator or receiver ap-
pointed under the law of such State for an insured State 
depository institution, the Corporation, as conservator or 
receiver pursuant to an appointment described in subpara-
graph (A), shall have the powers conferred and the duties 
imposed by this section on the Corporation as conservator 
or receiver. 
"(C) CORPORATION NOT SUBJECT TO ANY OTHER AGENCY.— 
When acting as conservator or receiver pursuant to an 
appointment described in subparagraph (A), the (Corpora-
tion shall not be subject to the direction or supervision of 
any other agency or department of the United States or any 
State in the exercise of its rights, powers, and privileges. 
"(D) DEPOSITORY INSTITUTION IN CONSERVATORSHIP SUB-
JECT T
O BANKING AGENCY SUPERVISION.—Notwithstanding 
subparagraph (C), any insured State depository institution 
for which the Corporation heis been appointed conservator 
shall remain subject to the supervision of the appropriate 
State bank or savings association supervisor. 
"(4) APPOINTMENT OF CORPORATION BY THE CORPORATION.— 
Except as otherwise provided in section 21A of the Federal 
Home Loan Bank Act and notwithstanding any other provision 
of Federal law, the law of any State, or the constitution of any 
State, the Corporation may appoint itself as sole conservator or 
receiver of any insured State depository institution if— 
"(A) the (Corporation determines— 
"(i)that— 
"(I) a conservator, receiver, or other legal custo-
dian has been appointed for such institution; 
"(II) such institution has been subject to the 
appointment of any such conservator, receiver, or 
custodian for a period of at least 15 consecutive 
davs; and 
'(III) 1 or more of the depositors in such institu-
tion is unable to withdraw any amount of any 
— 
insured deposit; or 
"(ii) that such institution has been closed by or under 
the laws of any State; and 
"(B) the Corporation determines that 1 or more of the 
grounds specified in paragraph (5)— 
103 STAT. 224 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(i) existed with respect to such institution at the 
time— 
"(I) the conservator, receiver, or other legal 
custodian was appointed; or 
"(II) such institution was closed; or 
"(ii) exist at any time— 
- 
' 
"(I) during the appointment of the conservator, 
receiver, or other legal custodian; or 
^ 
"(II) while such institution is closed. 
"(5) 
GROUNDS 
FOR 
PARAGRAPH 
(4) 
APPOINTMENT.—The 
grounds referred to in paragraph (4XB) for the appointment of 
the Corporation as conservator or receiver for any insured State 
depository institution are as follows: 
"(A) Insolvency in that the assets of the institution are 
less than the institution's obligations to its creditors and 
others, including members of the institution. 
^ 
"(B) Substantial dissipation of assets or earnings due to— 
"(i) any violation of any law or regulation; or 
' 
"(ii) any unsafe or unsound practice. 
"(C) An unsafe or unsound condition to transact business, 
' 
including substantially insufficient capital or otherwise. 
"(D) Any willful violation of a cease-and-desist order 
which has become final. 
"(E) Any concealment of books, papers, records, or assets 
of the institution or any refusal to submit books, papers, 
records, or affairs of the institution for inspection to any 
/ 
examiner or to any lawful agent of the appropriate Federal 
banking agency or State bank or savings association super-
visor. 
"(F) The likelihood that the institution will not be able to 
' 
meet the demands of its depositors or pay its obligations in 
the normal course of business. 
< 
"(G) The incurrence or likely incurrence of losses by the 
institution that will deplete all or substantially all of its 
* 
capital with no reasonable prospect for the replenishment 
of the capital of the institution without Federal assistance. 
"(H) Any violation of any law or regulation, or an unsafe 
or unsound practice or condition which is likely to cause 
insolvency or substantial dissipation of assets or earnings, 
or is likely to weaken the condition of the institution or 
otherwise seriously prejudice the interests of its depositors. 
"(6) 
APPOINTMENT BY DIRECTOR OF THE OFFICE OF THRIFT 
SUPERVISION.— 
"(A) CONSERVATOR.—The Corporation or the Resolution 
Trust Corporation may, at the discretion of the Director of 
the Office of Thrift Supervision, be appointed conservator 
and the Clorporation may accept any such appointment. 
"(B) RECEIVER.—Whenever the Director of the Office of 
Thrift Supervision appoints a receiver under the provisions 
^ 
of section 5(dX2XC) of the Home Owner's Loan Act for the 
purpose of liquidation or winding up any savings associa-
tion's affairs— 
"(i) during the 3-year period beginning on the date of 
the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, the Resolution 
Trust Corporation shall be appointed; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 225 
"(ii) after the end of the 3-year period referred to in 
clause (i), the Corporation shall be appointed. 
"(7) JUDICIAL REVIEW.—If the Corporation appoints itself as 
conservator or receiver under paragraph (4), the insured State 
depository institution may, within 30 days thereafter, bring an 
action in the United States district court for the judicial district 
in which the home office of such institution is located, or in the 
United States District Court for the District of Columbia, for an 
order requiring the Corporation to remove itself as such con-
servator or receiver, and the court shall, upon the merits, 
dismiss such action or direct the Corporation to remove itself as 
such conservator or receiver. 
"(8) 
REPLACEMENT OF CONSERVATOR OF STATE DEPOSITORY 
• 
INSTITUTION.— 
"(A) IN GENERAL.—In the case of any insured State 
depository institution for which the Corporation appointed 
itself as conservator pursuant to paragraph (4), the Cor-
poration may, without any requirement of notice, hearing, 
or other action, replace itself as conservator with itself as 
receiver of such institution. 
J- 
"(B) REPLACEMENT TREATED AS REMOVAL OF INCUMBENT.— 
The replacement of a conservator with a receiver under 
,«;* 
subparagraph (A) shall be treated as the removal of the 
Corporation as conservator. 
"(C) 
RIGHT OF REVIEW OF ORIGINAL APPOINTMENT NOT 
AFFECTED.—The replacement of a conservator with a re-
ceiver under subparagraph (A) shall not affect any right of 
the insured State depository institution to obtain review, 
iyj 
pursuant to paragraph (7), of the original appointment of 
the conservator. 
"(9) ADDITIONAL POWERS.—In any case in which the Corpora-
tion is appointed conservator or receiver pursuant to paragraph 
(4)or(6)-
"(A) the provisions of this section shall be applicable to 
the Corporation, as conservator or receiver of any insured 
State depository institution in the same manner and to the 
same extent as if such institution were a Federal depository 
institution for which the Corporation had been appointed 
conservator or receiver; and 
"(B) the Corporation as receiver of any insured State 
depository institution may— 
"(i) liquidate such institution in an orderly manner; 
and 
"(ii) make such other disposition of any matter 
concerning such institution as the Corporation deter-
mines is in the best interests of the institution, the 
depositors of such institution, and the Corporation. 
"(d) POWERS AND DUTIES OF CORPORATION AS CONSERVATOR OR 
RECEIVER.— 
"(1) RULEMAKING AUTHORITY OF CORPORATION.—The (Corpo-
ration may prescribe such regulations as the (Corporation 
determines to be appropriate regarding the conduct of 
conservatorships or receiverships. 
"(2) GENERAL POWERS.— 
"(A) SUCCESSOR TO INSTFTUTION.—The Corporation shall, 
as conservator or receiver, and by operation of law, succeed 
to— 
103 STAT. 226 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(i) all rights, titles, powers, and privileges of the 
insured depository institution, and of any stockholder, 
member, accountholder, depositor, officer, or director of 
such institution with respect to the institution and the 
assets of the institution; and 
"(ii) title to the books, records, and assets of any 
^ 
' 
previous conservator or other legal custodian of such 
institution. 
-: 
"(B) OPERATE THE INSTITUTION.—The Corporation may, as 
conservator or receiver— 
"(i) take over the assets of and operate the insured 
depository institution with all the powers of the mem-
,''"'-' 
bers or shareholders, the directors, and the officers of 
the institution and conduct all business of the institu-
tion; 
»«•; 
"(ii) collect all obligations and money due the 
institution; 
"(iii) perform all functions of the institution in the 
- I ^.. 
name of the institution which is consistent with the 
appointment as conservator or receiver; and 
"(iv) preserve £md conserve the assets and property of 
such institution. 
"(C) FUNCTIONS OF INSTITUTION'S OFFICERS, DIRECTORS, AND 
SHAREHOLDERS.—The Corporation may, by regulation or 
order, provide for the exercise of any function by any 
member or stockholder, director, or officer of any insured 
depository institution for which the Corporation has been 
appointed conservator or receiver. 
(D) POWERS AS CONSERVATOR.—The Corporation may, as 
conservator, take such action as may be— 
"(i) necessary to put the insured depository institu-
tion in a sound and solvent condition; and 
"(ii) appropriate to carry on the business of the 
^ 
'«i 
institution and preserve and conserve the assets and 
property of the institution. 
"(E) ADDITIONAL POWERS AS RECEIVER.—The Corporation 
may, as receiver, place the insured depository institution in 
>' 
liquidation and proceed to realize upon the assets of the 
institution, having due regard to the conditions of credit in 
the locality. 
"(F) ORGANIZATION OF NEW INSTITUTIONS.—The Corpora-
tion may, as receiver— 
"(i) with respect to savings associations and by ap-
plication to the Director of the Office of Thrift Super-
•'!' 
vision, organize a new Federal savings association to 
take over such assets or such liabilities as the Corpora-
tion may determine to be appropriate; and 
"(ii) with respect to any insured bank, organize a new 
national bank under subsection (m) or a bridge bank 
under subsection (n). 
"(G) MERGER; TRANSFER OF ASSETS AND LIABILITIES.^ 
"(i) IN GENERAL.—The Corporation may, as conserva-
tor or receiver— 
"(I) merge the insured depository institution 
with another insured depository institution; or 
. 
. 
"(II) subject to clause (ii), transfer any asset or 
liability of the institution in default (including 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 227 
assets and liabilities £issociated with any trust busi-
ness) without any approval, assignment, or consent 
with respect to such transfer, 
"(ii) APPROVAL BY APPROPRIATE FEDERAL BANKING 
AGENCY.—No transfer described in clause (iXII) may be 
made to another depository institution (other than a 
new bank or a bridge bank established pursuant to 
subsection (m) or (n)) without the approval of the appro-
priate Federal banking agency for such institution. 
"(H) PAYMENT OF VAUD OBUGATiONS.—The Corporation, 
as conservator or receiver, shall pay all valid obligations of 
the insured depository institution in accordance with the 
prescriptions and limitations of this Act. 
"(I) INCIDENTAL POWERS.—The Corporation may, as con-
servator or receiver— 
"(i) exercise all powers and authorities specifically 
granted to conservators or receivers, respectively, 
under this Act and such incidental powers as shall be 
necessary to carry out such powers; and 
"(ii) take any action authorized by this Act, 
which the Corporation determines is in the best interests of 
the depository institution, its depositors, or the Corporation. 
"(3) AUTHORITY OF RECEIVER TO DETERMINE CLAIMS.— 
"(A) IN GENERAL.—The Corporation may, as receiver, 
, 
determine claims in accordance with the requirements of 
this subsection and regulations prescribed under paragraph 
(4XA). 
"(B) NOTICE REQUIREMENTS.—The receiver, in any case 
involving the liquidation or winding up of the affairs of a . 
closed depository institution, shall— 
"(i) promptly publish a notice to the depository 
institution's creditors to present their claims, together 
with proof, to the receiver by a date specified in the 
notice which shall be not less than 90 days after the 
publication of such notice; and 
"(ii) republish such notice approximately 1 month 
and 2 months, respectively, after the publication under 
clause (i). 
"(C) MAIUNG REQUIRED.—The receiver shall mail a notice 
similar to the notice published under subparagraph (BXi) at 
the time of such publication to any creditor shown on the 
institution's books— 
"(i) at the creditor's last address appearing in such 
books; or 
"(ii) upon discovery of the name and address of a 
claimant not appearing on the institution's books 
within 30 days after the discovery of such name and 
address. 
"(4) RULEMAKING AUTHORITY RELATING TO DETERMINATION OF 
CLAIMS.—The Corporation may prescribe regulations regarding 
the allowance or disallowance of claims by the receiver and 
providing for administrative determination of claims and 
review of such determination. 
"(5) PROCEDURES FOR DETERMINATION OF CLAIMS.— 
"(A) DETERMINATION PERIOD.— 
"(i) IN GENERAL.—Before the end of the 180-day 
period beginning on the date any claim against a 
103 STAT. 228 
PUBLIC LAW 101-73—AUG. 9, 1989 
depository institution is filed with the Corporation as 
receiver, the Corporation shall determine whether to 
allow or disallow the claim and shall notify the claim-
ant of any determination with respect to such claim, 
"(ii) EXTENSION OF TIME.—The period described in 
clause (i) may be extended by a written agreement 
' 
between the claimant and the Corporation. 
"(iii) MAIUNG OF NOTICE SUFFICIENT.—The require-
ments of clause (i) shall be deemed to be satisfied if the 
notice of any determination with respect to any claim 
is mailed to the last address of the claimant which 
appears— 
"(I) on the depository institution's books; 
"(II) in the claim filed by the claimant; or 
"(III) in documents submitted in proof of the 
/ . 
claim. 
"(iv) CONTENTS OF NOTICE OF E^SALLOWANCE.—If any 
claim filed under clause (i) is disallowed, the notice to 
the claimant shall contain— 
"(I) a statement of each reason for the disallow-
ance; and 
"(II) the procedures available for obtaining 
agency review of the determination to disallow the 
claim or judicial determination of the claim. 
"(B) ALLOWANCE OF PROVEN CLAIMS.—The receiver shall 
allow any claim received on or before the date specified in 
the notice published under paragraph (BXBXi) by the re-
ceiver from any claimant which is proved to the satisfaction 
of the receiver. 
"(C) DISALLOWANCE OF CLAIMS FILED AFTER END OF FIUNG 
PERIOD.— 
"(i) IN GENERAL.—Except as provided in clause (ii), 
claims filed after the date specified in the notice pub-
lished under paragraph (BXBXi) shall be disallowed and 
such disallowance shall be final. 
"(ii) CERTAIN EXCEPTIONS.—Clause (i) shall not apply 
with respect to any claim filed by any claimant after 
the date specified in the notice published under para-
graph (BXBXi) and such claim may be considered by the 
receiver if— 
"(I) the claimant did not receive notice of the 
appointment of the receiver in time to file such 
claim before such date; and 
"(II) such claim is filed in time to permit pay-
ment of such claim. 
"(D) AUTHORITY TO DISALLOW CLAIMS.—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 
satisfaction of the receiver. 
"(E) No JUDICIAL REVIEW OF DETERMINATION PURSUANT TO 
SUBPARAGRAPH (D).—No court may review the Corporation's 
determination pursuant to subparagraph (D) to disallow a 
claim. 
"(F) LEGAL EFFECT OP FIUNG.— 
"(i) STATUTE OF UMITATION TOLLED.—For purposes of 
^ 
any applicable statute of limitations, the filing of a 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 229 
claim with the receiver shall constitute a commence-
ment of an action. 
"(ii) N o PREJUDICE T
O OTHER ACTIONS.—Subject tO 
paragraph (12), the filing of a claim with the receiver 
shall not prejudice any right of the claimant to con-
tinue any action which was filed before the appoint-
ment of the receiver. 
"(6) PROVISION FOR AGENCY REVIEW OR JUDICIAL DETERMINA-
TION OF CLAIMS.— 
"(A) IN GENERAL.—Before the end of the 60-day period 
beginning on the earlier of^ 
"(i) the end of the period described in paragraph 
(5XA)(i) with respect to any claim against a depository 
institution for which the Corporation is receiver; or 
"(ii) the date of any notice of disallowance of such 
claim pursuant to paragraph (5)(A)(i), 
the claimant may request administrative review of the 
claim in accordance with subparagraph (A) or (B) of para-
graph (7) or file suit on such claim (or continue an action 
commenced before the appointment of the receiver) in the 
district or territorial court of the United States for the 
district within which the depository institution's principal 
place of business is located or the United States District 
Court for the District of Columbia (and such court shall 
have jurisdiction to hear such claim). 
"(B) STATUTE OF UMiTATiONS.—If any claimant fails to— 
"(i) request administrative review of any claim in 
accordance with subparagraph (A) or (B) of paragraph 
(7); or 
"(ii) file suit on such claim (or continue an action 
commenced before the appointment of the receiver), 
before the end of the 60-day period described in subpara-
graph (A), the claim shall be deemed to be disallowed (other 
than any portion of such claim which was allowed by the 
receiver) as of the end of such period, such disallowance 
shall be final, and the claimant shall have no further rights 
or remedies with respect to such claim. 
"(7) REVIEW OF CLAIMS.— 
"(A) ADMINISTRATIVE HEARING.—If any claimant requests 
review under this subparagraph in lieu of filing or continu-
ing £iny action under paragraph (6) and the Corporation 
agrees to such request, the Corporation shall consider the 
claim after opportunity for a hearing on the record. The 
final determination of the Corporation with respect to such 
claim shall be subject to judicial review under chapter 7 of 
title 5, United States Code. 
"(B) OTHER REVIEW PROCEDURES.— 
"(i) IN GENERAL.—The Corporation shall also estab-
lish such alternative dispute resolution processes as 
may be appropriate for the resolution of claims filed 
under paragraph (5XAXi). 
"(ii) CRITERIA.—In establishing alternative dispute 
resolution processes, the Corporation shall strive for 
/ 
procedures which are expeditious, fair, independent, 
and low cost. 
"(iii) VOLUNTARY BINDING OR NONBINDING PROCE-
DURES.—The Corporation may establish both binding 
103 STAT. 230 
PUBLIC LAW 101-73—AUG. 9, 1989 
and nonbinding processes, which may be conducted by 
any government or private party, but all parties, 
including the claimant and the Corporation, must 
^ 
agree to the use of the process in a particular case. 
, 
"(iv) CONSIDERATION OP INCENTIVES.—The Corpo-
' 
ration shall seek to develop incentives for claimants to 
participate in the alternative dispute 
resolution 
process. 
"(8) EXPEDITED DETERMINATION OF CLAIMS.— 
"(A) ESTABLISHMENT REQUIRED.—The Corporation shall 
establish a procedure for expedited relief outside of the 
routine claims process established under paragraph (5) for 
claimants who— 
"(i) allege the existence of l^ally valid and enforce-
able or perfected security interests in assets of any 
depository institution for which the Corporation has 
been appointed receiver; and 
"(ii) sdl^e that irreparable injury will occur if the 
' 
routine claims procedure is followed. 
"(B) DETERMINATION PERIOD.—Before the end of the 90-
day period beginning on the date any claim is filed in 
accordance with the procedures established pursuant to 
subparagraph (A), the Corporation shall— 
"(i) determine— 
"(I) whether to allow or disallow such claim; or 
"(II) whether such claim should be determined 
pursuant to the procedures established pursuant to 
paragraph (5); and 
^ 
"(ii) notify the claimant of the determination, and if 
the claim is disallowed, a statement of each reason for 
; \ 
the disallowance and the procedure for obtaining 
/, 
agency review or judicial determination. 
"(C) PERIOD F
O
R FiuNG O
R RENEWING SUIT.—Any claimant 
who files a request for expedited relief shall be permitted to 
^
.
^ • 
file 
a suit, or to continue a suit filed before the appointment 
of the receiver, seeking a determination of the claimant's 
rights with respect to such security interest after the ear-
lier of— 
"(i) the end of the 90-day period b^inning on the 
.' 1 . 
date of the filing of a request for expedited relief; or 
"(ii) the date the Corporation denies the claim. 
"(D) STATUTE OF UMFTATIONS.—If an action described in 
>
c 
subparagraph (C) is not filed, or the motion to renew a 
previously filed suit is not made, before the end of the 30-
day period b^inning on the date on which such action or 
motion may be filed in accordance with subparagraph (B), 
the claim shall be deemed to be disallowed as of the end of 
such period (other than any portion of such claim which 
Hi" 
was allowed by the receiver), such disallowance shall be 
final, and the claimant shall have no further rights or 
remedies with respect to such claim. 
"(E) LEGAL EFFECT O
F FiuNG.— 
1 1 
> 
"(i) STATUTE OF UMITATION TOLLED.—For purposes of 
any applicable statute of limitations, the filing of a 
i' 
claim with the receiver shall constitute a commence-
u * t- 
i 
ment of an action. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 231 
"(ii) N o PREJUDICE T
O OTHER ACTIONS.—Subject tO 
paragraph (12), the filing of a claim with the receiver 
shall not prejudice any right of the claimant to con-
tinue any action which was filed before the appoint-
ment of the receiver. 
"(9) AGREEMENT AS BASIS OF CLAIM.— 
"(A) REQUIREMENTS.—Except as provided in subpara-
graph (B), any agreement which does not meet the require-
ments set forth in section 13(e) shall not form the basis of, 
or substantially comprise, a claim against the receiver or 
the C!orporation. 
"(B) 
EXCEPTION 
TO 
CONTEMPORANEOUS 
EXECUTION 
REQUIREMENT.—Notwithstanding section 13(eX2), any agree-
ment relating to an extension of credit between a Federal 
home loan bank or Federal Reserve bank and any insured 
depository institution which was executed before the exten-
sion of credit by such bank to such institution shall be 
treated as having been executed contemporaneously with 
such extension of credit for purposes of subparagraph (A). 
"(10) PAYMENT OF CLAIMS.— 
"(A) IN GENERAL.—The receiver may, in the receiver's 
discretion and to the extent funds are available, pay credi-
tor claims which are allowed by the receiver, approved by 
the Corporation pursuant to a final determination pursuant 
to paragraph (7) or (8), or determined by the final judgment 
of any court of competent jurisdiction in such manner and 
amounts as are authorized under this Act. 
"(B) PAYMENT OF DIVIDENDS ON CLAIMS.—The receiver 
may, in the receiver's sole discretion, pay dividends on 
proved claims at any time, and no liability shall attach to 
the Corporation (in such Corporation's corporate capacity 
or as receiver), by reason of any such payment, for failure 
to pay dividends to a claimant whose claim is not proved at 
the time of any such payment. 
"(11) DISTRIBUTION OF ASSETS.— 
"(A) SUBROGATED CLAIMS; CLAIMS OF UNINSURED DEPOSI-
TORS AND OTHER CREDITORS.—The receiver shall— 
"(i) retain for the account of the Corporation such 
portion of the amounts realized from any liquidation as 
the Corporation may be entitled to receive in connec-
tion with the subrogation of the claims of depositors; 
and 
"(ii) pay to depositors and other creditors the net 
amounts available for distribution to them. 
"(B) DISTRIBUTION TO SHAREHOLDERS OP AMOUNTS REMAIN-
ING AFTER PAYMENT OF ALL OTHER CLAIMS AND EXPENSES.— 
In any case in which funds remain after all depositors, 
creditors, other claimants, and administrative expenses are 
paid, the receiver shall distribute such funds to the deposi-
tory institution's shareholders or members together with 
the accounting report required under paragraph (14XC). 
"(12) SUSPENSION OF LEGAL ACTIONS.— 
"(A) IN GENERAL.—After the appointment of a conserva-
tor or receiver for an insured depository institution, the 
conservator or receiver may request a stay for a period not 
^ 
to exceed— 
"(i) 45 days, in the case of any conservator; and 
103 STAT. 232 
PUBLIC LAW 101-73—AUG. 9, 1989 
\ $ i ^' 
"(ii) 90 days, in the case of any receiver, 
I f . 
in any judicial action or proceeding to which such institu-
V-. 
tion is or becomes a party. 
ifis.... 
"(B) 
GRANT OF STAY BY ALL COURTS REQUIRED.—Upon 
receipt of a request by any conservator or receiver pursuant 
to subparagraph (A) for a stay of any judicial action or 
proceeding in any court with jurisdiction of such action or 
proceeding, the court shall grant such stay as to all parties. 
"(13) ADDITIONAL RIGHTS AND DUTIES.— 
-li 
"(A) PRIOR FINAL ADJUDICATION.—The CJorporation shall 
abide by any final unappealable judgment of any court of 
ii 
competent jurisdiction which was rendered before the 
'-r 
appointment of the Corporation as conservator or receiver. 
"(B) 
RIGHTS AND REMEDIES OF CONSERVATOR OR RE-
CEIVER.—In the event of any appealable judgment, the (Cor-
poration as conservator or receiver shall— 
t 
"(i) have all the rights and remedies available to the 
insured depository institution (before the appointment 
,' 
r, 
of such conservator or receiver) and the CJorporation in 
its corporate capacity, including removal to Federal 
. .; 
court and all appellate rights; and 
t , 
"(ii) not be required to post any bond in order to 
pursue such remedies. 
: . 
"(C) No ATTACHMENT OR EXECUTION.—No attachment or 
execution may issue by any court upon assets in the posses-
'i.^i 
sion of the receiver. 
"(D) LIMITATION ON JUDICIAL REVIEW.—Except as other-
-. / ' 
wise provided in this subsection, no court shall have juris-
diction over— 
"(i) any claim or action for payment from, or any 
action seeking a determination of rights with respect 
to, the assets of any depository institution for which the 
• f, , 
CJorporation has been appointed receiver, including 
assets which the CJorporation may acquire from itself as 
such receiver; or 
_ 
"(ii) any claim relating to any act or omission of such 
institution or the CJorporation as receiver, 
t 
"(14) STATUTE OF UMITATIONS FOR ACTIONS BROUGHT BY CON-
SERVATOR O
R RECEIVER.— 
"(A) IN GENERAL.—Notwithstanding any provision of any 
contract, the applicable statute of limitations with regard to 
any action brought by the CJorporation as conservator or 
*i^/ 
receiver shall be— 
"(i) in the case of any contract claim, the longer of— 
"(I) the 6-year period beginning on the date the 
claim accrues; or 
"(II) the period applicable under State law; and 
^ 
"(ii) in the case of any tort claim, the longer of— 
"(I) the 3-year period beginning on the date the 
claim accrues; or 
"(II) the period applicable under State law. 
"(B) 
DETERMINATION OF THE DATE ON WHICH A CLAIM 
ACCRUES.—For purposes of subparagraph (A), the date on 
which the statute of limitation begins to run on any claim 
^ 
described in such subparagraph shall be the later of— 
"(i) the date of the appointment of the CJorporation as 
i 
conservator or receiver; or 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 233 
"(ii) the date on which the cause of action accrues. 
"(15) ACCOUNTING AND RECORDKEEPING REQUIREMENTS.— 
"(A) IN GENERAL.—The Corporation as conservator or 
receiver shall, consistent with the accounting and reporting 
practices and procedures established by the Corporation, 
maintain a full accounting of each conservatorship and 
receivership or other disposition of institutions in default. 
"(B) ANNUAL ACCOUNTING OR REPORT.—With respect to 
each conservatorship or receivership to which the Corpora-
tion was appointed, the Corporation shall make an annual 
accounting or report, as appropriate, available to the Sec-
retary of the Treasury, the Comptroller General of the 
'. \ _ • -
United States, and the authority which appointed the 
Corporation as conservator or receiver. 
"(C) AVAILABILITY OF REPORTS.—Any report prepared 
pursuant to subparagraph (B) shall be made available by 
the Corporation upon request to any shareholder of the 
depository institution for which the Corporation was ap-
pointed conservator or receiver or any other member of the 
public. 
"(D) RECORDKEEPING REQUIREMENT.—After the end of the 
6-year period beginning on the date the Corporation is 
' 
appointed as receiver of an insured depository institution, 
the Corporation may destroy any records of such institution 
which the Corporation, in the Corporation's discretion, 
determines to be unnecessary unless directed not to do so by 
a court of competent jurisdiction or governmental agency, 
or prohibited by law. 
"(16) CONTRACTS WITH STATE HOUSING FINANCE AUTHORITIES.— 
"(A) IN GENERAL.—The Corporation may enter into con-
tracts with any State housing finance authority for the sale 
of mortgage-related assets (as such terms are defined in 
section 1301 of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989) of any depository institution 
in default (including assets and liabilities associated with 
any trust business), such contracts to be effective in accord-
ance with their terms without any further approval, assign-
ment, or consent with respect thereto. 
"(B) FACTORS TO CONSIDER.—In evaluating the disposition 
of mortgage related assets to any State housing finance 
authority the Corporation shall consider— 
"(i) the State housing finance authority's ability to 
acquire and service current, delinquent, and defaulted 
mortgage related assets; 
"(ii) the State housing finance authority's ability to 
further national housing policies; 
"(iii) the State housing finance authority's sensitivity 
to the impact of the sale of mortgage related assets 
upon the State and local communities; 
"(iv) the costs to the Federal Government associated 
with alternative ownership or dispositions of the mort-
gage related assets; 
: 
"(v) the minimization of future guaranties which 
may be required of the Federal Government; 
"(vi) the maximization of mortgage related asset 
values; and 
103 STAT. 234 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(vii) the utilization of institutions currently estab-
lished in mortgage related asset market activities. 
"(e) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE 
APPOINTMENT OF CONSERVATOR O
R RECEIVER,— 
"(1) AUTHORITY TO REPUDIATE CONTRACTS.—In addition to any 
other rights a conservator or receiver may have, the conservator 
or receiver for any insured depository institution may disaffirm 
or repudiate any contract or lease— 
"(A) to which such institution is a party; 
"(B) the performance of which the conservator or re-
ceiver, in the conservator's or receiver's discretion, deter-
mines to be burdensome; and 
" 
"(C) the disaffirmance or repudiation of which the con-
\ 
servator or receiver determines, in the conservator's or 
receiver's discretion, will promote the orderly administra-
tion of the institution's affairs. 
"(2) TIMING OF REPUDIATION.—The conservator or receiver 
/ 
appointed for any insured depository institution in accordance 
with subsection (c) shall determine whether or not to exercise 
the rights of repudiation under this subsection within a reason-
able period following such appointment. 
"(3) CLAIMS FOR DAMAGES FOR REPUDIATION.— 
"(A) IN GENERAL.—Except as otherwise provided in 
subparagraph (C) and paragraphs (4), (5), and (6), the liabil-
ity of the conservator or receiver for the disaffirmance or 
repudiation of any contract pursuant to paragraph (1) shall 
b e -
"(i) limited to actual direct compensatory damages; 
and 
"(ii) determined as of— 
"(I) the date of the appointment of the conserva-
tor or receiver; or 
"(II) in the case of any contract or agreement 
referred to in paragraph (8), the date of the 
disaffirmance or repudiation of such contract or 
. - . 
agreement. 
"(B) No UABiuTY FOR OTHER DAMAGES.—For purposes of 
subparagraph (A), the term 'actual direct compensatory 
damages' does not include— 
"(i) punitive or exemplary damages; 
"(ii) damages for lost profits or opportunity; or 
"(iii) damages for pain and suffering. 
,.. 
, 
"(C) MEASURE OP DAMAGES FOR REPUDIATION OF FINANCIAL 
CONTRACTS.—In the case of any qualified financial contract 
. 
or agreement to which paragraph (8) applies, compensatory 
dam£iges shall be— 
"(i) deemed to include normal and reasonable costs of 
cover or other reasonable measures of damages utilized 
in the industries for such contract and agreement 
claims; and 
"(ii) paid in accordance with this subsection and 
subsection (k) except as otherwise specifically provided 
in this section. 
"(4) LEASES UNDER WHICH THE INSTITUTION IS THE LESSEE.— 
.... , 
"(A) IN GENERAL.—If the conservator or receiver dis-
affirms or repudiates a lease under which the insured 
depository institution was the lessee, the conservator or 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 235 
receiver shall not be liable for any damages (other than 
damages determined pursuant to subparagraph (B)) for the 
disaffirmance or repudiation of such lease. 
"(B) PAYMENTS OF RENT.—Notwithstanding subparagraph 
(A), the lessor under a lease to which such subparagraph 
applies shall— 
"(i) be entitled to the contractual rent accruing 
before the later of the date— 
"(I) the notice of disaffirmance or repudiation is 
mailed; or 
"(II) the disaffirmance or repudiation becomes 
effective, 
unless the lessor is in default or breach of the terms of 
the lease; 
"(ii) have no claim for damages under any accelera- Claims. 
tion clause or other penalty provision in the lease; and 
"(iii) have a claim for any unpaid rent, subject to all Claims, 
appropriate offsets and defenses, due as of the date of 
the appointment which shall be paid in accordance 
with this subsection and subsection (k). 
"(5) LEASES UNDER WHICH THE INSTITUTION IS THE LESSOR.— 
"(A) IN GENERAL.—If the conservator or receiver repudi-
ates an unexpired written lease of real property of the 
insured depository institution under which the institution 
is the lessor and the lessee is not, as of the date of such 
repudiation, in default, the lessee under such lease may 
either— 
"(i) treat the lease as terminated by such repudi-
ation; or 
"(ii) remain in possession of the leasehold interest for 
the balance of the tiBrm of the lease unless the lessee 
defaults under the terms of the lease after the date of 
such repudiation. 
"(B) 
PROVISIONS APPUCABLE TO LESSEE REMAINING IN 
POSSESSION.—If any lessee under a lease described in 
subparagraph (A) remains in possession of a leasehold in-
terest pursuant to clause (ii) of such subparagraph— 
"(i) the lessee— 
"(I) shall continue to pay the contractual rent 
pursuant to the terms of the lease after the date of 
the repudiation of such lease; 
"(II) may offset against any rent payment which 
accrues after the date of the repudiation of the 
lease, any damages which accrue after such date 
due to the nonperformance of any obligation of the 
insured depository institution under the lease after 
such date; and 
"(ii) the conservator or receiver shall not be liable to 
the lessee for any damages arising after such date as a 
result of the repudiation other than the amount of any 
offset allowed under clause (iXID-
"(6) CONTRACTS FOR THE SALE OF REAL PROPERTY.— 
"(A) IN GENERAL.—If the conservator or receiver repudi-
ates any contract (which meets the requirements of each 
paragraph of section 13(e)) for the sale of real property and 
the purchaser of such real property under such contract is 
103 STAT. 236 
PUBLIC LAW 101-73—AUG. 9, 1989 
in possession and is not, as of the date of such repudiation, 
in default, such purchaser may either— 
"(i) treat the contract as terminated by such repudi-
ation; or 
"(ii) remain in possession of such real property. 
"(B) PROVISIONS APPUCABLE TO PURCHASER REMAINING IN 
POSSESSION.—If any purchaser of real property under any 
contract described in subparagraph (A) remains in posses-
sion of such property pursuant to clause (ii) of such 
subparagraph— 
"(i) the purchaser— 
"(I) shall continue to make all pa3mients due 
* 
under the contract after the date of the repudi-
ation of the contract; and 
s' 
"(II) may offset against any such payments any 
i 
damages which accrue after such date due to the 
nonperformance (after such date) of any obligation 
of the depository institution under the contract; 
' 
,» 
. 
and 
"(ii) the conservator or receiver shall— 
"(I) not be liable to the purchaser for any dam-
ages arising after such date as a result of the 
.;; 
repudiation other than the amount of any offset 
allowed under clause (iXH); 
"(II) deliver title to the purchaser in accordance 
with the provisions of the contract; and 
"(III) have no. obligation under the contract other 
' ".' 
- 
than the performance required under subclause 
(II). 
v •' 
"(C) ASSIGNMENT AND SALE ALLOWED.— 
"(i) IN GENERAL.—No provision of this paragraph 
shall be construed as limiting the right of the conserva-
tor or receiver to assign the contract described in 
, 
subparagraph (A) and sell the property subject to the 
contract and the provisions of this paragraph. 
* , 
"(ii) N o UABIUTY AFTER ASSIGNMENT AND SALE.—If a n 
assignment and sale described in clause (i) is con-
summated, the conservator or receiver shall have no 
further 
liability under the contract described in 
subparagraph (A) or with respect to the real property 
which was the subject of such contract. 
. „:, "(7) PROVISIONS APPUCABLE TO SERVICE CONTRACTS.— 
Claims. 
' 
"(A) SERVICES PERFORMED BEFORE APPOINTMENT.—In t h e 
case of any contract for services between any person and 
any insured depository institution for which the Corpora-
tion has been appointed conservator or receiver, any claim 
of such person for services performed before the appoint-
ment of the conservator or the receiver shall be— 
"(i) a claim to be paid in accordance with subsections 
(d) and (i); and 
"(ii) deemed to have arisen as of the date the con-
servator or receiver was appointed. 
"(B) SERVICES PERFORMED AFTER APPOINTMENT AND PRIOR 
TO REPUDIATION.—If, in the case of any contract for services 
described in subparagraph (A), the conservator or receiver 
accepts performance by the other person before the con-
servator or receiver makes any determination to exercise 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 237 
the right of repudiation of such contract under this 
section— 
"(i) the other party shall be paid under the terms of 
the contract for the services performed; and 
"(ii) the amount of such pajmient shall be treated as 
an administrative expense of the conservatorship or 
receivership. 
"(C) ACCEPTANCE OF PERFORMANCE NO BAR TO SUBSEQUENT 
REPUDIATION.—The acceptance by any conservator or re-
ceiver of services referred to in subparagraph (B) in connec-
tion with a contract described in such subparagraph shall 
not affect the right of the conservator or receiver to repudi-
ate such contract under this section at any time after such 
performance. 
*(8) CERTAIN QUAUFiED FINANCIAL CONTRACTS.— 
"(A) RIGHTS OF PARTIES TO CONTRACTS.—Subject to para-
graph (10) of this subsection and notwithstanding any other 
provision of this Act (other than subsections (dX9) and 
(iX4XI) of this section and section 13(e)), any other Federal 
law, or the law of any State, no person shall be stayed or 
prohibited from exercising— 
"(i) any right to cause the termination or liquidation 
of any qualified financial contract with an insured 
depository institution which arises upon the appoint-
ment of the Corporation as receiver for such institution 
at any time after such appointment; 
"(ii) any right under any security arrangement relat-
ing to any contract or agreement described in clause (i); 
or 
"(iii) any right to offset or net out any termination 
value, payment amount, or other transfer obligation 
arising under or in connection with 1 or more contracts 
and agreements described in clause (i), including any 
master agreement for such contracts or agreements. 
"(B) 
APPUCABILITY OF OTHER PROVISIONS.—Subsection 
(dX12) shall apply in the case of any judicial action or 
proceeding brought against any receiver referred to in 
subparagraph (A), or the insured depository institution for 
which such receiver w£is appointed, by any party to a 
contract or agreement described in subparagraph (AXi) with 
such institution. 
"(C) CERTAIN TRANSFERS NOT AVOIDABLE.— 
"(i) IN GENERAL.—Notwithstanding paragraph (11), 
the Corporation, whether acting as such or as conserva-
tor or receiver of an insured depository institution, may 
not avoid any transfer of money or other property in 
connection with any qualified financial contract with 
jin insured depository institution. 
"(ii) EXCEPTION FOR CERTAIN TRANSFERS.—Clause (i) 
'Shall not apply to any transfer of money or other 
property in connection with any qualified financial 
contract with an insured depository institution if the 
Corporation determines that the transferee had actual 
intent to hinder, delay, or defraud such institution, the 
creditors of such institution, or any conservator or 
receiver appointed for such institution. 
w 
103 STAT. 238 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED.—For 
purposes of this subsection— 
"(i) QuAUFiED FINANCIAL CONTRACT.—The term 
'qualified financial contract' means any securities con-
tract, commodity 
contract, 
forward 
contract, 
re-
: 
purchase agreement, swap agreement, and any similar 
agreement that the Corporation determines by regula-
tion to be a qualified financial contract for purposes of 
this paragraph. 
"(ii) SECURITIES CONTRACT.—The term 'securities 
contract'— 
.' 
, 
"(I) has the meaning given to such term in sec-
, , 
tion 741(7) of title 11, United States (Dode, except 
that the term 'security' (as used in such section) 
shall be deemed to include any mortgage loan, any 
mortgage-related security (as defined in section 
3(aX41) of the Securities Exchange Act of 1934), 
, 
and any interest in any mortgage loan or mort-
gage-related security; and 
"(II) does not include any participation in a 
commercial mortgage loan unless the CJorporation 
determines by regulation, resolution, or order to 
include any such participation within the meaning 
J, 
of such term. 
"(iii) COMMODITY CONTRACT.—The term 'commodity 
contract' has the meaning given to such term in section 
761(4) of title 11, United States Code. 
"(iv) FORWARD CONTRACT.—The term 'forward con-
tract' has the meaning given to such term in section 
101(24) of title 11, United States Code. 
"(v) REPURCHASE AGREEMENT.—The term 'repurchase 
agreement'— 
"(I) has the meaning given to such term in sec-
tion 101(41) of title 11, the United States Code, 
except that the items (as described in such section) 
which may be subject to any such agreement shall 
be deemed to include mortgage-related securities 
(as such term is defined in section 3(aX41) of the 
Securities Exchange Act of 1934, any mortgage 
loan, and any interest in any mortgage loan; and 
"(II) does not include any participation in a 
commercial mortg£^e loan unless the dlorporation 
determines by r^ulation, resolution, or order to 
include any such participation within the meaning 
of such term. 
"(vi) SWAP AGREEMENT.—The term 'swap agree-
ment'— 
"(I) means any agreement, including the terms 
and conditions incorporated by reference in any 
such agreement, which is a rate swap agreement, 
basis swap, commodity swap, forward rate agree-
ment, interest rate future, interest rate option pur-
j. 
chased, forward foreign exchange agreement, rate 
!^! 
cap agreement, rate floor agreement, rate collar 
agreement, currency swap agreement, cross-cur-
rency rate swap agreement, currency future, or 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 239 
currency option purchased or any other similar 
agreement, and 
"(II) includes any combination of such agree-
ments and any option to enter into any such agree-
ment, 
"(vii) TREATMENT OF MASTER AGREEMENT AS i SWAP 
AGREEMENT.—Any master agreement for any agree-
ments described in clause (viXD together with all 
supplements to such master agreement shall be treated 
as 1 swap agreement. 
"(viii) TRANSFER.—The term 'transfer' has the mean-
ing given to such term in section 101(50) of title 11, 
United States Code. 
"(E) CERTAIN PROTECTIONS IN EVENT OF APPOINTMENT OF 
CONSERVATOR.—Notwithstanding any other provision of this 
Act (other than paragraph (12) of this subsection, subsec- 
• \. 
tions (d)(9) and (iX4XI) of this section, and section 13(e) of 
this Act), any other Federal law, or the law of any State, no 
person shall be stayed or prohibited from exercising— 
"(i) any right such person has to cause the termi-
nation, liquidation, or acceleration of any qualified 
financial contract with a depository institution in a 
conservatorship based upon a default under such finan-
cial contract which is enforceable under applicable 
noninsolvency law; 
"(ii) any right under any security arrangement relat-
ing to such qualified financial contracts; or 
*(iii) any right to offset or net out any termination 
values, payment amounts, or other transfer obligations 
j . 
arising under or in connection with such qualified 
financial contracts. 
"(9) 
TRANSFER 
OF 
QUAUFIED 
FINANCIAL 
CONTRACTS.—In 
making any transfer of assets or liabilities of a depository 
institution in default which includes any qualified 
financial 
^
^ 
contract, the conservator or receiver for such depository institu-
tion shall either— 
"(A) transfer to 1 depository institution (other than a Claims, 
depository institution in default)— 
"(i) all qualified financial contracts between— 
"(I) any person or any affiliate of such person; 
and 
"(II) the depository institution in default; 
"(ii) all claims of such person or any affiliate of such 
person against such depository institution under any 
such contract (other than any claim which, under the 
terms of any such contract, is subordinated to the 
claims of general unsecured creditors of such institu-
tion); 
"(iii) all claims of such depository institution against 
such person or any affiliate of such person under any 
such contract; and 
"(iv) all property securing any claim described in 
clause (ii) or (iii) under any such contract; or 
"(B) transfer none of the financial contracts, claims, or 
property referred to in subparagraph (A) (with respect to 
such person and any affiliate of such person). 
"(10) NOTIFICATION OF TRANSFER.— 
103 STAT. 240 
PUBLIC LAW 101-73—AUG. 9, 1989 
^, 
"(A) IN GENERAL.—If— 
"(i) the conservator or receiver for an insured deposi-
tory institution in default makes any transfer of the 
assets and liabilities of such institution; and 
"(ii) the transfer includes any qualified financial con-
tract, 
the conservator or receiver shall use such conservator's or 
receiver's best efforts to notify any person who is a party to 
any such contract of such transfer by 12:00, noon (local 
^ 
. 
time) on the business day following such transfer. 
"(B) BUSINESS DAY DEFINED.—For purposes of this para-
graph, the term 'business day' means any day other than 
any Saturday, Sunday, or any day on which either the New 
York Stock Exchange or the Federal Reserve Bank of New 
York is closed. 
"(11) CERTAIN SECURITY INTERESTS NOT AVOIDABLE.—No provi-
sion of this subsection shall be construed as permitting the 
avoidance of any legally enforceable or perfected security in-
terest in any of the assets of any depository institution except 
where such an interest is taken in contemplation of the institu-
tion's insolvency or with the intent to hinder, delay, or defraud 
the institution or the creditors of such institution. 
"(12) AUTHORITY TO ENFORCE CONTRACTS.— 
"(A) IN GENERAL.—The conservator or receiver may en-
force any contract, other than a director's or officer's liabil-
ity insurance contract or a depository institution bond, 
entered into by the depository institution notwithstanding 
any provision of the contract providing for termination, 
default, acceleration, or exercise of rights upon, or solely by 
." ,. 
reason of, insolvency or the appointment of a conservator or 
receiver. 
, 
"(B) CERTAIN RIGHTS NOT AFFECTED.—No provision of this 
. . 
paragraph may be construed as impairing or affecting any 
right of the conservator or receiver to enforce or recover 
under a directors or officers liability insurance contract or 
depository institution bond under other applicable law. 
"(13) 
EXCEPTION FOR FEDERAL RESERVE AND FEDERAL HOME 
- 
LOAN BANKS.—No provision of this subsection shall apply with 
respect to— 
,^, 
"(A) any extension of credit from any Federal home loan 
bank or Federal Reserve bank to any insured depository 
institution; or 
"(B) any security interest in the assets of the institution 
securing any such extension of credit. 
, 
"(f) PAYMENT OF INSURED DEPOSITS.— 
"(1) IN GENERAL.—In case of the liquidation of, or other 
closing or winding up of the affairs of, any insured depository 
institution, payment of the insured deposits in such institution 
shall be made by the (Corporation as soon as possible, subject to 
^
^ 
the provisions of subsection (g), either by cash or by making 
available to each depositor a transferred deposit in a new 
insured depository institution in the same community or in 
another insured depository institution in an amount equal to 
the insured deposit of such depositor, except that— 
^ ; 
, 
"(A) all payments made pursuant to this section on ac-
count of a closed Bank Insurance Fund member shall be 
» 
made only from the Bank Insurance Fund, and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 241 
"(B) all payments made pursuant to this section on ac-
count of a closed Savings Association Insurance Fund 
member shall be made only from the Savings Association 
Insurance Fund. 
"(2) PROOF OF CLAIMS.—The Corporation, in its discretion, may 
require proof of claims to be filed and may approve or reject 
such claims for insured deposits. 
"(3) RESOLUTION OF DISPUTES.— 
"(A) RESOLUTIONS IN ACCORDANCE TO CORPORATION REGU- 
Claims. 
LATiONS.—In the case of any disputed claim relating to any 
insured deposit or any determination of insurance coverage 
with respect to any deposit, the Corporation may resolve 
such disputed claim in accordance with regulations pre-
scribed by the Corporation establishing procedures for 
resolving such claims. 
"(B) ADJUDICATION OF CLAIMS.—If the Corporation has not 
prescribed regulations establishing procedures for resolving 
disputed claims, the Corporation may require the final 
determination of a court of competent jurisdiction before 
paying any such claim. 
"(4) REVIEW OF CORPORATION'S DETERMINATION.—Final deter- 
Courts, U.S. 
mination made by the Corporation shall be reviewable in 
accordance with chapter 7 of title 5, United States Code, by the 
United States Court of Appeals for the District of Columbia or 
the court of appeals for the Federal judicial circuit where the 
principal place of business of the depository institution is 
located. 
"(5) STATUTE OF LIMITATIONS.—Any request for review of a 
final determination by the Corporation shall be filed with the 
appropriate circuit court of appeals not later than 60 days after 
such determination is ordered. 
"(g) SUBROGATION OF CORPORATION.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
Federal law, the law of any State, or the constitution of any 
State, the Corporation, upon the payment to any depositor as 
provided in subsection (f) in connection with any insured deposi-
tory institution or insured branch described in such subsection 
or the assumption of any deposit in such institution or branch 
by another insured depository institution pursuant to this sec-
tion or section 13, shall be subrogated to all rights of the 
depositor against such institution or branch to the extent of 
such payment or assumption. 
"(2) DIVIDENDS ON SUBROGATED AMOUNTS.—The subrogation of Claims. 
the Corporation under paragraph (1) with respect to any insured 
depository institution shall include the right on the part of the 
Corporation to receive the same dividends from the proceeds of 
the assets of such institution and recoveries on account of 
stockholders' liability as would have been payable to the deposi-
tor on a claim for the insured deposit, but such depositor shall 
retain such claim for any uninsured or unassumed portion of 
the deposit. 
"(3) WAIVER OF CERTAIN CLAIMS.—With respect to any bank 
which closes after May 25, 1938, the Corporation shall waive, in 
favor only of any person against whom stockholders' individual 
liability may be asserted, any claim on account of such liability 
in excess of the liability, if any, to the bank or its creditors, for 
the amount unpaid upon such stock in such bank; but any such 
103 STAT. 242 
PUBLIC LAW 101-73—AUG. 9, 1989 
waiver shall be effected in such manner and on such terms and 
conditions as will not increase recoveries or dividends on ac-
^ 
count of claims to which the Corporation is not subrogated. 
"(4) APPUCABIUTY OF STATE LAW.—If the Corporation is ap-
pointed pursuant to subsection (cX3), or determines not to 
invoke the authority conferred in subsection (cX4), the rights of 
depositors and other creditors of any State depository institu-
tion shall be determined in accordance with the applicable 
provisions of State law. 
"(W CONDITIONS APPUCABLE To LIQUIDATION PROCEEDINGS.— 
"(1) CONSIDERATION OF LOCAL ECONOMIC IMPACT REQUIRED.— 
The Corporation shall fully consider the adverse economic 
impact on local communities, including businesses and farms, of 
actions to be taken by it during the administration and liquida-
tion of loans of a depository institution in default. 
"(2) ACTIONS TO ALLEVIATE ADVERSE ECONOMIC IMPACT TO BE 
CONSIDERED.—The actions which the Corporation shall consider 
include the release of proceeds from the sale of products and 
services for family living and business expenses and shortening 
the undue length of the decisionmaking process for the accept-
• '- 
ance of offers of settlement contingent upon third party financ-
ing. 
(3) GUIDELINES REQUIRED.—The Corporation shall adopt and 
publish procedures and guidelines to minimize adverse eco-
nomic effects caused by ite actions on individual debtors in the 
community, 
"(i) VALUATION OF CLAIMS IN DEFAULT.— 
/ 
"(1) IN GENERAL.—Notwithstanding any other provision of 
Federal law or the law of any State and regardless of the 
- method which the Corporation determines to utilize with re-
spect to an insured depository institution in default or in danger 
of default, including transactions authorized under subsection 
(n) and section 13(c), this subsection shall govern the rights of 
the creditors (other than insured depositors) of such institution. 
\^ 
"(2) MAXIMUM UABILTTY.—The maximum liability of the Cor-
poration, acting as receiver or in any other capacity, to any 
person having a claim against the recfeiver or the insured 
depository institution for which such receivier is appointed shall 
equal the amount such claimant would have received if the 
Corporation had liquidated the assets and liabilities of such 
institution without exercising the Corporation's authority 
under subsection (n) of this section or section 13. 
"(3) ADDITIONAL PAYMENTS AUTHORIZED.— 
"(A) IN GENERAL.—The Corporation may, in its discretion 
and in the interests of minimizing its losses, use its own 
resources to make additional payments or credit additional 
amounts to or with respect to or for the account of any 
claimant or category of claimants. The Corporation shall 
not be obligated, as a result of having made any such 
payment or credited any such amount to or with respect to 
or for the account of any claimant or category of claimants, 
to make payments to any other claimant or category or 
claimants. 
"(B) SOURCE OF FUNDS.—If the depository institution in 
default is a Bank Insurance Fund member, the Corporation 
may only make such payments out of funds held in the 
'' 
Bank Insurance Fund. If the depository institution in de-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 243 
trt - J 
fault is a Savings Association Insurance Fund member, the 
Corporation may only make such payments out of funds 
held in the Savings Association Insurance Fund, 
"(C) MANNER OF PAYMENT.—The Corporation may make 
the payments or credit the amounts specified in subpara-
graphs (A) and (B) directly to the claimants or may make 
-^ 
such payments or credit such amounts to an open insured 
depository institution to induce such institution to accept 
' 
liability for such claims. 
"0) LIMITATION ON COURT ACTION.—Except as provided in this 
section, no court may take any action, except at the request of the 
Board of Directors by regulation or order, to restrain or affect the 
exercise of powers or functions of the Corporation as a conservator 
or a receiver. 
"(k) LIABILITY OF DIRECTORS AND OFFICERS.—A director or officer of 
an insured depository institution may be held personally liable for 
monetary damages in any civil action by, on behalf of, or at the 
i 
request or direction of the Corporation, which action is prosecuted 
wholly or partially for the benefit of the Corporation— 
"(1) acting as conservator or receiver of such institution, 
"(2) acting based upon a suit, claim, or cause of action pur-
chased from, assigned by, or otherwise conveyed by such re-
ceiver or conservator, or 
"(3) acting based upon a suit, claim, or cause of action pur-
chased from, assigned by, or otherwise conveyed in whole or in 
part by an insured depository institution or its affiliate in 
connection with assistance provided under section 13, 
for gross negligence, including any similar conduct or conduct that 
demonstrates a greater disregard of a duty of care (than gross 
negligence) including intentional tortious conduct, as such terms are 
defined and determined under applicable State law. Nothing in this 
paragraph shall impair or affect any right of the Corporation under 
other applicable law. 
"(1) DAMAGES.—In any proceeding related to any claim against an 
insured depository institution's director, officer, employee, agent, 
attorney, accountant, appraiser, or any other party employed by or 
providing services to an insured depository institution, recoverable 
damages determined to result from the improvident or otherwise 
improper use or investment of any insured depository institution's 
assets shall include principal losses and appropriate interest.". 
SEC. 213. NEW BANKS. 
Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is 
amended by inserting after subsection (1) (as added by section 212) 
the following new subsection: 
"(m) NEW BANKS.— 
"(1) ORGANIZATION AUTHORIZED.—As soon as possible after the 
default of an insured bank, the (Dorporation, if it finds that it is 
" 
advisable and in the interest of the depositors of the insured 
bank in default or the public shall organize a new national bank 
in the same community as the bank in default to assume the 
insured deposits of such bank in default and otherwise to 
perform temporarily the functions hereinafter provided for. 
"(2) ARTICLES OF ASSOCIATION.—The articles of association and 
the organization certificate of the new bank shall be executed 
by representatives designated by the Corporation. 
103 STAT. 244 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(3) CAPITAL STOCK.—No capital stock need be paid in by the 
Corporation. 
"(4) EXECUTIVE OFFICER.—The new bank shall not have a 
board of directors, but shall be managed by an executive officer 
appointed by the Board of Directors of the Corporation who 
shall be subject to its directions. 
"(5) SUBJECT TO LAWS RELATING TO NATIONAL BANKS.—In all 
'^ other respects the new bank shall be organized in accordance 
with the then existing provisions of law relating to the organiza-
tion of national banking associations. 
"(6) NEW DEPOSITS.—The new bank may, with the approval of 
the Corporation, accept new deposits which shall be subject to 
withdrawal on demand and which, except where the new bank 
, 
is the only bank in the community, shall not exceed $100,000 
from any depositor. 
"(7) INSURED STATUS.—The new bank, without application to 
or approval by the Corporation, shall be an insured depository 
institution and shall maintain on deposit with the Federal 
' 
' 
Reserve bank of its district reserves in the amount required by 
1 law for member banks, but it shall not be required to subscribe 
for stock of the Federal Reserve bank. 
"(8) INVESTMENTS.—Funds of the new bank shall be kept on 
hand in c£ish, invested in obligations of the United States or 
,j obligations guaranteed £is to principal and interest by the 
United States, or deposited with the Corporation, any Federal 
Reserve bank, or, to the extent of the insurance coverage on any 
such deposit, an insured depository institution. 
"(9) CONDUCT OF BUSINESS.—The new bank, unless otherwise 
authorized by the Comptroller of the Currency, shall transact 
business only as authorized by this Act and as may be incidental 
to its organization. 
Taxes. 
"(10) ExEMPT STATUS.—Notwithstanding any other provision 
of Federal or State law, the new bank, its franchise, property, 
and income shall be exempt from all taxation now or hereafter 
,
} imposed by the United States, by any territory, dependency, or 
i 
possession thereof, or by any State, county, municipality, or 
* local taxing authority. 
-£ 
"(11) TRANSFER OF DEPOSITS.—(A) Upon the organization of a 
new bank, the Corporation shall promptly make available to it 
an amount equal to the estimated insured deposits of such bank 
in default plus the estimated amount of the expenses of operat-
ing the new bank, and shall determine as soon as possible the 
amount due each depositor for the depositor's insured deposit in 
the bank in default, and the total expenses of operation of the 
new bank. 
"(B) Upon such determination, the amounts so estimated and 
made available shall be adjusted to conform to the amounts so 
determined. 
"(12) EARNINGS.—Earnings of the new bank shall be paid over 
or credited to the (Corporation in such adjustment. 
"(13) LOSSES.—If any new bank, during the period it continues 
its status as such, sustains any losses with respect to which it is 
t 
not effectively protected except by reason of being an insured 
i 
bank, the C!orporation shall furnish to it additional funds in the 
amount of such losses. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 245 
"(14) PAYMENT OF INSURED DEPOSITS.—(A) The new bank shall 
assume as transferred deposits the payment of the insured 
deposits of such bank in default to each of its depositors. 
"(B) Of the amounts so made available, the Corporation shall 
transfer to the new bank, in cash, such sums as may be nec-
essary to enable it to meet its expenses of operation and imme-
diate cash demands on such transferred deposits, and the 
remainder of such amounts shall be subject to withdrawal by 
the new bank on demand. 
"(15) ISSUANCE OF STOCK.—(A) Whenever in the judgment of 
the Board of Directors it is desirable to do so, the Corporation 
shall cause capital stock of the new bank to be offered for sale 
on such terms and conditions as the Board of Directors shall 
deem advisable in an amount sufficient, in the opinion of the 
Board of Directors, to make possible the conduct of the business 
of the new bank on a sound basis, but in no event less than that 
required by section 5138 of the Revised Statutes for the 
organization of a national bank in the place where such new 
bank is located. 
"(B) The stockholders of the insured bank in default shall be 
given the first opportunity to purchase any shares of common 
stock so offered. 
"(16) ISSUANCE OF CERTIFICATE.—Upon proof that an adequate 
amount of capital stock in the new bank has been subscribed 
and paid for in cash, the Comptroller of the Currency shall 
require the articles of association and the organization certifi-
cate to be amended to conform to the requirements for the 
organization of a national bank, and thereafter, when the 
requirements of law with respect to the organization of a na-
tional bank have been complied with, the CJomptroUer of the 
Currency shall issue to the bank a certificate of authority to 
commence business, and thereupon the bank shall cease to have 
the status of a new bank, shall be managed by directors elected 
by its own shareholders, may exercise all the powers granted by 
law, and shall be subject to all provisions of law relating to 
national banks. Such bank shall thereafter be an insured na-
tional bank, without certification to or approval by the (Corpora-
tion. 
"(17) TRANSFER TO OTHER INSTITUTION.—If the capital stock of 
the new bank is not offered for sale, or if an adequate amount of 
capital for such new bank is not subscribed and paid for, the 
Board of Directors may offer to transfer its business to any 
insured depository institution in the same community which 
will take over its assets, assume its liabilities, and pay to the 
Corporation for such business such amount as the Board of 
Directors may deem adequate; or the Board of Directors in its 
discretion may change the location of the new bank to the office 
of the Corporation or to some other place or may at any time 
wind up its affairs as herein provided. 
"(18) WINDING UP.—Unless the capital stock of the new bank 
is sold or its assets are taken over and its liabilities are assumed 
by an insured depository institution £is above provided within 2 
years after the date of its organization, the Corporation shall 
wind up the affairs of such bank, after giving such notice, if any, 
as the Comptroller of the Currency may require, and shall 
certify to the (Comptroller of the Currency the termination of 
Securities. 
Securities. 
Securities. 
103 STAT. 246 
PUBLIC LAW 101-73—AUG. 9, 1989 
the new bank. Thereafter the Corporation shall be liable for the 
obligations of such bank and shall be the owner of its assets. 
"(19) APPUCABIUTY OF CERTAIN LAWS.—The provisions of sec-
r tions 5220 and 5221 of the Revised Statutes shall not apply to a 
new bank under this subsection.". 
SEC. 214. BRIDGE BANKS. 
Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is 
amended by inserting after subsection (m) (as added by section 213) 
the following new subsection: 
>
, . 
"(n) BRIDGE BANKS.— 
"(1) ORGANIZATION.— 
"(A) PURPOSE.—When 1 or more insured banks are in 
default, or when the Corporation anticipates that 1 or more 
insured banks may become in default, the Corporation may, 
in its discretion, organize, and the Office of the Comptroller 
of the Currency shall charter, 1 or more national banks 
with respect thereto with the powers and attributes of 
national banking associations, subject to the provisions of 
this subsection, to be referred to as bridge banks. 
"(B) AUTHORITIES.—Upon the granting of a charter to a 
bridge bank, the bridge bank may— 
"(i) assume such deposits of such insured bank or 
banks that is or are in default or in danger of default as 
the Corporation may, in its discretion, determine to be 
appropriate, except that if any insured deposits of a 
bank are assumed, all insured deposits of that bank 
shall be eissumed by the bridge bank or another insured 
• 
depository institution; 
(ii) £issume such other liabilities (including liabil-
ities associated with any trust business) of such insured 
bank or banks that is or are in default or in danger of 
default as the (Corporation may, in its discretion, deter-
mine to be appropriate; 
"(iii) purchase such assets (including assets associ-
ated with any trust business) of such insured bank or 
banks that is or are in default or in danger of default as 
' 
the Corporation may, in its discretion, determine to be 
appropriate; and 
(iv) perform any other temporary function which 
- 
the (Corporation may, in its discretion, prescribe in 
accordance with this Act. 
"(C) ARTICLES OF ASSOCIATION.—The articles of association 
and organization certificate of a bridge bank as approved by 
the CJorporation shall be executed by 3 representatives 
designated by the (Corporation. 
"(D) INTERIM DIRECTORS.—A bridge bank shall have an 
interim board of directors consisting of not fewer than 5 nor 
more than 10 members appointed by the (Corporation. 
"(E) NATIONAL BANK.—A bridge bank shsJl be oi^anized 
- 
as a national bank. 
"(2) (CHARTERING.— 
"(A) (CONDITIONS.—A national bank may be chartered by 
the (Comptroller of the Currency £is a bridge bank only if 
the Board of Directors determines that— 
"(i) the amount which is reasonably necessary to 
operate such bridge bank will not exceed the amount 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 247 
which is reasonably necessary to save the cost of liq-
uidating, including paying the insured accounts of, 1 or 
more insured banks in default or in danger of default 
with respect to which the bridge bank is chartered; 
"(ii) the continued operation of such insured bank or 
banks in default or in danger of default with respect to 
which the bridge bank is chartered is essential to pro-
vide adequate banking services in the community 
where each such bank in default or in danger of default 
is located; or 
"(iii) the continued operation of such insured bank or 
banks in default or in danger of default with respect to 
which the bridge bank is chartered is in the best in-
terest of the depositors of such bank or banks in default 
or in danger of default or the public. 
"(B) INSURED NATIONAL BANK.—A bridge bank shall be an 
insured bank from the time it is chartered as a national 
bank. 
"(C) 
BRIDGE BANK TREATED AS BEING IN DEFAULT FOR 
CERTAIN PURPOSES.—A bridge bank shall be treated as an 
insured bank in default at such times and for such purposes 
as the Corporation may, in its discretion, determine. 
"(D) MANAGEMENT.—A bridge bank, upon the granting of 
its charter, shall be under the management of a board of 
directors consisting of not fewer than 5 nor more than 10 
. 
members appointed by the Corporation. 
"(E) BYLAWS.—The board of directors of a bridge bank 
shall adopt such bylaws as may be approved by the Corpora-
tion. 
'(3) TRANSFER OF ASSETS AND UABILITIES.— 
"(A) IN GENERAL.— 
"(i) TRANSFER UPON GRANT OF CHARTER.—Upon the 
granting of a charter to a bridge bank pursuant to this 
subsection, the Corporation, as receiver, or any other 
receiver appointed with respect to any insured bank in 
default with respect to which the bridge bank is char-
tered may transfer any assets and liabilities of such 
bank in default to the bridge bank in accordance with 
< 
paragraph (1). 
"(ii) SUBSEQUENT TRANSFERS.—At any time after a 
charter is granted to a bridge bank, the Corporation, as 
receiver, or any other receiver appointed with respect 
to an insured bank in default may transfer any assets 
and liabilities of such insured bank in default as the 
Corporation may, in its discretion, determine to be 
appropriate in accordance with paragraph (1). 
"(iii) TREATMENT OF TRUST BUSINESS.—For purposes of 
this paragraph, the trust business, including fiduciary 
appointments, of any insured bank in default is in-
cluded among its assets and liabilities. 
"(iv) EFFECTIVE WITHOUT APPROVAL.—The transfer of 
any assets or liabilities, including those associated with 
any trust business, of an insured bank in default trans-
ferred to a bridge bank shall be effective without any 
further approval under Federal or State law, assign- 
^ 
ment, or consent with respect thereto. 
103 STAT. 248 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) INTENT OF CONGRESS REGARDING CONTINUING OPER-
' ? 
ATiONS.—It is the intent of the Congress that, in order to 
prevent unnecessary hardship or losses to the customers of 
any insured bank in default with respect to which a bridge 
bank is chartered, especially creditworthy farmers, small 
businesses, and households, the Corporation should— 
, * 
* 
"(i) continue to honor commitments made by the 
; 
bank in default to creditworthy customers, and 
"(ii) not interrupt or terminate adequately secured 
loans which are transferred under subparagraph (A) 
< 
and are being repaid by the debtor in accordance with 
the terms of the loan instrument. 
"(4) POWERS OF BRIDGE BANKS.—Each bridge bank chartered 
under this subsection shall have all corporate powers of, and be 
subject to the same provisions of law as, a national bank, except 
that— 
"(A) the Corporation may— 
"(i) remove the interim directors and directors of a 
bridge bank; 
"(ii) fix the compensation of members of the interim 
board of directors and the board of directors and senior 
management, £is determined by the Corporation in its 
discretion, of a bridge bank; and 
"(iii) waive any requirement established under sec-
tion 5145, 5146, 5147, 5148, or 5149 of the Revised 
Statutes (relating to directors of national banks) or 
section 31 of the Banking Act of 1933 which would 
otherwise be applicable with respect to directors of a 
bridge bank by operation of paragraph (2)(B); 
"(B) the Corporation may indemnify the representatives 
for purposes of paragraph (1)(B) and the interim directors, 
directors, officers, employees, and agents of a bridge bank 
on such terms as the Corporation determines to be appro-
priate; 
"(C) no requirement under section 5138 of the Revised 
Statutes or any other provision of law relating to the 
capital of a national bank shall apply with respect to a 
bridge bank; 
"(D) the Comptroller of the Currency may establish a 
f 
limitation on the extent to which any person may become 
indebted to a bridge bank without regard to the amount of 
the bridge bank's capital or surplus; 
"(E)(i) the board of directors of a bridge bank shall elect a 
chairperson who may also serve in the position of chief 
executive officer, except that such person shall not serve 
either as chairperson or as chief executive officer without 
the prior approval of the Corporation; 
"(ii) the board of directors of a bridge bank may appoint a 
chief executive officer who is not also the chairperson, 
except that such person shall not serve as chief executive 
officer without the prior approval of the Corporation; 
"(F) a bridge bank shgill not be required to purchase stock 
of any Federal Reserve bank; 
"(G) the Comptroller of the Currency shall waive any 
i 
requirement for a fidelity bond with respect to a bridge 
bank at the request of the Corporation; 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 249 
"(H) any judicial action to which a bridge bank becomes a 
party by virtue of its acquisition of any assets or assump-
tion of any liabilities of a bank in default shall be stayed 
from further proceedings for a period of up to 45 days at the 
request of the bridge bank; 
"(I) no agreement which tends to diminish or defeat the 
right, title or interest of a bridge bank in any asset of an 
insured bank in default acquired by it shall be valid against 
the bridge bank unless such agreement— 
^ 
"(i) is in writing, 
"(ii) was executed by such insured bank in default 
and the person or persons claiming an adverse interest 
thereunder, including the obligor, contemporaneously 
with the acquisition of the asset by such insured bank 
in default, 
"(iii) was approved by the board of directors of such 
insured bank in default or its loan committee, which 
approval shall be reflected in the minutes of said board 
or committee, and 
"(iv) has been, continuously from the time of its 
execution, an official record of such insured bank in 
default; 
/ -
"(J) notwithstanding section 13(eX2), any agreement 
relating to an extension of credit between a Federal home 
loan bank or Federal Reserve bank and any insured deposi-
tory institution which was executed before the extension of 
credit by such bank to such depository institution shall be 
treated as having been executed contemporaneously with 
such extension of credit for purposes of subparagraph (I); 
and 
"(K) except with the prior approval of the Corporation, a 
bridge bank may not, in any transaction or series of trans-
actions, issue capital stock or be a party to any merger, 
consolidation, disposition of eissets or liabilities, sale or 
. 
exchange of capital stock, or similar transaction, or change 
its charter. 
'(5) CAPITAL.— 
"(A) No CAPITAL REQUIRED.—The Corporation shall not be Securities. 
required to— 
"(i) issue any capital stock on behalf of a bridge bank 
chartered under this subsection; or 
"(ii) purchase any capital stock of a bridge bank, 
except that notwithstanding any other provision of 
Federal or State law, the Corporation may purchase 
and retain capital stock of a bridge bank in such 
amounts and on such terms as the Corporation, in its 
discretion, determines to be appropriate. 
"(B) OPERATING FUNDS IN UEU OF CAPITAL.—Upon the 
organization of a bridge bank, and thereafter, as the Board 
of Directors may, in its discretion, determine to be nec-
essary or advisable, the Corporation may make available to 
the bridge bank, upon such terms and conditions and in 
such form and amounts as the Corporation may in its 
, 
discretion determine, funds for the operation of the bridge 
bank in lieu of capital. 
"(C) AUTHORITY TO ISSUE CAPITAL STOCK.—Whenever the 
Board of Directors determines it is advisable to do so, the 
-
103 STAT. 250 
PUBLIC LAW 101-73—AUG. 9,1989 
Wages. 
Securities. 
Corporation shall cause capital stock of a bridge bank to be 
issued and offered for sale in such amounts and on such 
terms and conditions as the Corporation may, in its discre-
tion, determine. 
"(6) N o FEDERAL STATUS.— 
"(A) AGENCY STATUS.—A bridge bank is not an agency, 
establishment, or instrumentality of the United States. 
"(B) EMPLOYEE STATUS.—Representatives for purposes of 
paragraph (IXB), interim directors, directors, officers, 
employees, or agents of a bridge bank are jiot, solely by 
virtue of service in any such capacity, officers or employees 
of the United States. Any employee of the Corporation or of 
; 
any Federal instrumentality who serves at the request of 
the Corporation as a representative for purposes of para-
graph (IXB), interim director, director, officer, employee, or 
agent of a bridge bank shall not— 
ri; 
"(i) solely by virtue of service in any such capacity 
lose any existing status as an officer or employee of the 
. . 
United States for purposes of title 5, United States 
Code, or any other provision of law, or 
"(ii) receive any salary or benefits for service in any 
such capacity with respect to a bridge bank in addition 
to such salary or benefits as are obtained through 
employment with the Corporation or such Federal 
instrumentality. 
"(7) ASSISTANCE AUTHORIZED.—The Corporation may, in its 
discretion, provide assistance under section 13(c) to facilitate 
any transaction described in clause (i), (ii), or (iii) of paragraph 
(lOXA) with respect to any bridge bank in the same manner and 
to the same extent as such assistance may be provided under 
such section with respect to an insured bank in default, or to 
facilitate a bridge bank's acquisition of any assets or the 
assumption of any liabilities of an insured bank in default. 
. 
"(8) ACQUISITION.— 
"(A) IN GENERAL.—The responsible agency shall notify 
the Attorney General of any transaction involving the 
. 
merger or sale of a bridge bank requiring approval under 
section 18(c) and if a report on competitive factors is re-
quested within 10 days, such transaction may not be con-
summated before the 5th calendar day after the date of 
approval by the responsible agency with respect thereto. If 
the responsible agency has found that it must act imme-
diately to prevent the probable failure of 1 of the banks 
involved, the preceding sentence does not apply and the 
transaction may be consummated immediately upon ap-
proval by the agency. 
"(B) BY OUT-OF-STATE HOLDING COMPANY.—Any depository 
institution, including an out-of-State depository institution, 
or any out-of-State depository institution holding company 
may acquire and retain the capital stock or assets of, or 
otherwise acquire and retain a bridge bank if the bridge 
bank at any time had assets aggregating $500,000,000 or 
more, as determined by the Corporation on the basis of the 
bridge bank's reports of condition or on the basis of the last 
available reports of condition of any insured bank in de-
fault, which institution has been acquired, or whose assets 
have been acquired, by the bridge bank. The acquiring 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 251 
entity may acquire the bridge bank only in the same 
manner and to the same extent as such entity may acquire 
an insured bank in default under section 13(fX2). 
"(9) DURATION OF BRIDGE BANK.—Subject to paragraphs (11) 
and (13), the status of a bridge bank as such shall terminate at 
the end of the 2-year period following the date it was granted a 
charter. The Board of Directors may, in its discretion, extend 
the status of the bridge bank as such for 3 additional 1-year 
periods. 
"(10) TERMINATION OF BRIDGE BANK STATUS.—The status of 
any bridge bank as such shall terminate upon the earliest of— 
"(A) the merger or consolidation of the bridge bank with 
a depository institution that is not a bridge bank; 
"(B) at the election of the Corporation, the sale of a 
majority of the capital stock of the bridge bank to an entity 
other than the Corporation and other than another bridge 
bank; 
"(C) the sale of 80 percent, or more, of the capital stock of 
the bridge bank to an entity other than the Corporation and 
other than another bridge bank; 
"(D) at the election of the Corporation, either the assump-
tion of all or substantially all of the deposits and other 
liabilities of the bridge bank by a depository institution 
holding company or a depository institution that is not a 
bridge bank, or the acquisition of all or substantially all of 
the assets of the bridge bank by a depository institution 
holding company, a depository institution that is not a 
bridge bank, or other entity as permitted under applicable 
law; and 
"(E) the expiration of the period provided in paragraph 
(9), or the earlier dissolution of the bridge bank as provided 
in paragraph (12). 
"(11) EFFECT OF TERMINATION EVENTS.— 
"(A) MERGER OR CONSOUDATION.—A bridge bank that 
participates in a merger or consolidation £is provided in 
paragraph (lOXA) shall be for all purposes a national bank 
with all the rights, powers, and privileges thereof, and such 
merger or consolidation shall be conducted in accordance 
with, and shall have the effect provided in, the provisions of 
applicable law. 
(B) CHARTER CONVERSION.—Following the sale of a 
majority of the capital stock of the bridge bank as provided 
in paragraph (lOXB), the Corporation may amend the char-
ter of the bridge bank to reflect the termination of the 
status of the bridge bsuik as such, whereupon the bank shall 
remain a national hank, with all of the rights, powers, and 
privileges thereof, subject to all laws and regulations ap-
plicable thereto. 
"(C) SALE OF STOCK.—Following the sale of 80 percent or 
more of the capital stock of a bridge bank as provided in 
paragraph (lOXC), the bank shall remain a national bank, 
with all of the rights, powers, and privileges thereof, subject 
to all laws and regulations applicable thereto. 
"(D) 
ASSUMPTION OF UABIUTIES AND SALE OF ASSETS.— 
Following the assumption of all or substantially all of the 
liabilities of the bridge bank, or the sale of all or substan-
tially all of the assets of the bridge bank, as provided in 
103 STAT. 252 
PUBLIC LAW 101-73—AUG. 9,1989 
paragraph (lOXD), at the election of the Corporation the 
bridge bank may retain its status as such for the period 
;,. ' 
provided in paragraph (8). 
"(E) 
EFFECT 
ON 
HOLDING 
COMPANIES.—A depository 
institution holding company acquiring a bridge bank under 
section 13(f), paragraph (8XB) (or any predecessor provi-
sion), or both provisions, shall not be impaired or adversely 
affected by the termination of the status of a bridge bank as 
I, 
a result of subparagraph (A), (B), (C), or (D) of paragraph 
(10), and shall be entitled to the rights and privileges 
provided in section 13(f). 
"(F) 
AMENDMENTS TO CHARTER.—Following the con-
summation of a transaction described in subparagraph (A), 
(B), (C), or (D) of paragraph (10), the charter of the resulting 
institution shall be amended to reflect the termination of 
bridge bank status, if appropriate. 
"(12) DISSOLUTION OF BRIDGE BANK.— 
'' 
"(A) IN GENERAL.—Notwithstanding any other provision 
of State or Federal law, if the bridge bank's status as such 
has not previously been terminated by the occurrence of an 
event specified in subparagraphs (A), (B), (C), or (D) of 
paragraph (10)— 
"(i) the Board of Directors may, in its discretion, 
dissolve a bridge bank in accordance with this para-
^ 
graph at any time; and 
"(ii) the Board of Directors shall promptly commence 
dissolution proceedings in accordance with this para-
:r'\ 
graph upon the expiration of the 2-year period follow-
ing the date the bridge bank was chartered, or any 
extension thereof, as provided in paragraph (9). 
"(B) PROCEDURES.—The Comptroller of the Currency shall 
appoint the Corporation receiver for a bridge bank upon 
certification by the Board of Directors to the Comptroller of 
the Currency of its determination to dissolve the bridge 
bank. The Corporation as such receiver shall wind up the 
affairs of the bridge bank in conformity with the provisions 
of law relating to the liquidation of closed national banks. 
With respect to any such bridge bank, the Corporation as 
such receiver shall have all the rights, powers, and privi-
leges and shall perform the duties related to the exercise of 
such rights, powers, or privileges granted by law to a 
receiver of any insured depository institution and notwith-
standing any other provision of law in the exercise of such 
rights, powers, and privileges the Corporation shall not be 
subject to the direction or supervision of any State agency 
or other Federal agency. 
"(13) MULTIPLE BRIDGE BANKS.—Subject to paragraph (IXBXi), 
the Corporation may, in the Corporation's discretion, organize 2 
or more bridge banks under this subsection to assume any 
deposits of, assume any other liabilities of, and purchase any 
assets of a single b£Uik in default.". 
SEC. 215. FSLIC RESOLUTION FUND. 
The Federal Deposit Insurance Act is amended by inserting after 
section 11 the following: 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 253 
"SEC. 11 A. FSLIC RESOLUTION FUND. 
12 USC 1821a. 
"(a) ESTABLISHED.— 
"(1) IN GENERAL.—There is established a separate fund to be 
designated as the FSLIC Resolution Fund which shall be man-
aged by the Corporation and separately maintained and not 
commingled. 
"(2) TRANSFER OF FSLIC ASSETS AND LIABILITIES.— 
"(A) IN GENERAL.—Except as provided in section 21A of 
the Federal Home Loan Bank Act, all assets and liabilities 
of the Federal Savings and Loan Insurance Corporation on 
the day before the date of the enactment of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989 shall be transferred to the FSLIC Resolution Fund. 
"(B) ADDITIONAL CLAIMS ON ASSETS.—The FSLIC Resolu-
tion Fund shall pay to the Savings Association Insurance 
Fund such amounts as are needed for administrative and 
supervisory expenses from the date of enactment of the 
Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989 through September 30,1991. 
"(3) SEPARATE HOLDING.—Assets and liabilities transferred to 
the FSLIC Resolution Fund shall be the assets and liabilities of 
the Fund and not of the Corporation and shall not be consoli-
dated with the assets and liabilities of the Bank Insurance 
Fund, the Savings Association Insurance Fund, or the Corpora-
tion for accounting, reporting, or any other purpose. 
"(b) SOURCE OF FUNDS.—The FSLIC Resolution Fund shall be 
funded from the following sources to the extent funds are needed in 
the listed priority: 
"(1) Income earned on assets of the FSLIC Resolution Fund. 
"(2) Liquidating dividends and payments made on claims 
received by the FSLIC Resolution Fund from receiverships to 
the extent such funds are not required by the Resolution Fund-
ing Corporation pursuant to section 21B of the Federal Home 
Loan Bank Act or the Financing Corporation pursuant to sec-
tion 21 of such Act. 
"(3) Amounts borrowed by the Financing Corporation pursu-
ant to section 21 of the Federal Home Loan Bank Act. 
"(4) During the period beginning on the date of the enactment 
of the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 and ending on December 31, 1991, amounts 
Eissessed against Savings Association Insurance Fund members 
by the Corporation pursuant to section 7 which are not required 
by the Financing Corporation pursuant to section 21 of the 
Federal Home Loan Bank Act or by the Resolution Funding 
Corporation pursuant to section 21B of the Federal Home Loan 
Bank Act. 
^ 
"(c) TREASURY BACKUP.— 
"(1) IN GENERAL.—If the funds described in subsections (a) and 
(b) are insufficient to satisfy the liabilities of the FSLIC Resolu-
tion Fund, the Secretary of the Treasury shall pay to the Fund 
such amounts as may be necessary, as determined by the Cor-
poration and the Secretary, for FSLIC Resolution Fund pur-
poses. 
"(2) 
AUTHORIZATION OF APPROPRIATIONS.—There 
are 
au-
thorized to be appropriated to the Secretary of the Treasury, 
103 STAT. 254 
PUBLIC LAW 101-73—AUG. 9, 1989 
without fiscal year limitation, such sums as may be necessary to 
carry out this section. 
"(d) 
LEGAL PROCEEDINGS.—Any judgment resulting from 
a 
proceeding to which the Federal Savings and Loan Insurance Cor-
poration was a party prior to its dissolution or which is initiated 
against the Corporation with respect to the Federal Savings and 
Loan Insurance Corporation or with respect to the FSLIC Resolution 
Fund shall be limited to the assets of the FSLIC Resolution Fund. 
"(e) TRANSFER OF NET PROCEEDS FROM SALE OF R T C ASSETS.—The 
FSLIC Resolution Fund shall transfer to the Resolution Funding 
Corporation any net proceeds from the sale of assets acquired from 
the Resolution Trust Corporation upon the termination of such 
Corporation pursuant to section 21A of the Federal Home Loan 
Bank Act. 
"(f) DISSOLUTION.—The FSLIC Resolution Fund shall be dissolved 
upon satisfaction of all debts and liabilities and sale of all assets. 
Upon dissolution any remaining funds shall be paid into the Treas-
ury. Any administrative facilities and supplies, including offices and 
office supplies, shall be transferred to the Corporation for use by and 
to be held as assets of the Savings Association Insurance Fund.". 
SEC. 216. AMENDMENTS TO SECTION 12. 
? 
Section 12 of the Federal Deposit Insurance Act (12 U.S.C. 1822) is 
amended— 
(1) by striking out "closed bank" each place it appears and 
inserting in lieu thereof "depository institution in default"; 
(2) by striking out subsection (a) and inserting the following: 
"(a) BOND NOT REQUIRED; AGENTS; FEE.—The Corporation as re-
ceiver of an insured depository institution or branch of a foreign 
bank shall not be required to furnish bond and may appoint an 
agent or agents to assist it in its duties as such receiver. All fees, 
compensation, and expenses of liquidation and administration shall 
be fixed by the Corporation, and may be paid by it out of funds 
coming into its possession as such receiver."; and 
(3) in subsection (d)— 
(A) by striking out "as a stockholder of the depository 
institution in default, or of any liability of such depositor"; 
and 
(B) by striking out "such bank" and inserting in lieu 
thereof "such depository institution". 
SEC. 217. AMENDMENTS TO SECTION 13. 
Section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823) is 
amended— 
(1) by striking out subsection (a) and inserting the following: 
"(a) INVESTMENT OF CORPORATION'S FUNDS.— 
"(1) AUTHORITY.—Funds held in the Bank Insurance Fund, 
the Savings Association Insurance Fund, or the FSLIC Resolu-
tion Fund, that are not otherwise employed shall be invested in 
obligations of the United States or in obligations guaranteed as 
-, to principal and interest by the United States. 
"(2) LIMITATION.—The Corporation shall not sell or purchase 
any obligations described in paragraph (1) for its own account, 
at any one time aggregating in excess of $100,000, without the 
approval of the Secretary of the Treasury. The Secretary may 
approve a transaction or class of transactions subject to the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 255 
provisions of this paragraph under such conditions as the Sec-
retary may determine."; 
(2) in subsection (b)— 
(A) by striking out "banking and checking" and "banking 
or checking" each place such terms appear and inserting in 
lieu thereof "depository"; 
(B) by striking out "bank" (except "Federal Reserve 
bank") each place such term appears and inserting in lieu 
thereof "depository institution"; 
(3) in subsection (c)— 
(A) by striking out "closing" or "closed" each place sUch 
terms appear and inserting in lieu thereof "default" or "in 
default"; 
(B) by striking out "an" before "closed insured bank" 
each place such terms appear and inserting in lieu thereof 
"a"; 
(C) by striking out "in default insured depository institu-
tion" each place such term appears and inserting in lieu 
thereof "insured depository institution in default"; 
(D) in paragraph (2XA)— 
(i) by striking out "such insured institution" and "an 
insured depository institution" and inserting in lieu 
thereof "such other insured depository institution" and 
"another insured depository institution", respectively; 
(ii) by inserting "any or all of the" after "the sale of; 
and 
(iii) by striking out "and the assumption" and insert-
ing in lieu thereof "or the assumption of any or all"; 
(E) by adding at the end of paragraph (2) the following: 
"(C) Any action to which the Corporation is or becomes a 
party by acquiring any asset or exercising any other authority 
set forth in this section shall be stayed for a period of 60 days at 
the request of the Corporation."; 
(F) in paragraph (3), by striking out "section 13(0 of this 
Act" and inserting in lieu thereof "subsection (0 or (k) of 
this section"; 
(G) in paragraph (4)— 
(i) by striking out "banking" and inserting in lieu 
thereof "depository"; and 
(ii) by inserting at the end of subparagraph (A) the 
following: "In calculating the cost of assistance, the 
Corporation shall include (i) the immediate and long-
term obligations of the C]!orporation with respect to 
such assistance, including contingent liabilities, and (ii) 
the Federal tax revenues foregone by the Government, 
to the extent reasonably ascertainable."; and 
(H) by striking out paragraph (8); 
(I) by redesignating paragraphs (6) and (7) as paragraphs 
(7) and (8), respectively; and 
(J) by inserting after paragraph (5) the following: 
"(6) The transfer of any assets or liabilities associated with any 
trust business of an insured depository institution in default under 
subparagraph (2XA) shall be effective without any State or Federal 
approval, assignment, or consent with respect thereto."; and 
(K) by adding at the end the following: 
"(9) Payments made under this subsection shall be made— 
103 STAT. 256 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(A) from the Bank Insurance Fund in the case of payments 
to or on behalf of a member of such Fund; or 
"(B) from the Savings Association Insurance Fund or from 
funds made available by the Resolution Trust Corporation in 
the case of payments to or on behalf of any Savings Association 
Insurance Fund member."; 
(4) by striking out subsections (d) and (e) and inserting the 
following: 
"(d) SALE OF ASSETS TO CORPORATION.— 
Loans. 
"(1) IN GENERAL.-Any conservator, receiver, or liquidator ap-
pointed for any insured depository institution in default, includ-
ing the Corporation acting in such capacity, shall be entitled to 
offer the assets of such depository institutions for sale to the 
Corporation or as security for loans from the Corporation. 
"(2) PROCEEDS.—The proceeds of every sale or loan of assets to 
the Corporation shall be utilized for the same purposes and in 
the same manner as other funds realized from the liquidation of 
the assets of such depository institutions. 
"(3) RIGHTS AND POWERS OF CORPORATION.— 
"(A) IN GENERAL.—With respect to any asset acquired or 
liability assumed pursuant to this section, the Corporation 
shall have all of the rights, powers, privileges, and authori-
"
* 
ties of the Corporation afe receiver under sections 11 and 
• " 
15(b). 
"(B) RULE OF CONSTRUCTION.—Such rights, powers, privi-
leges, and authorities shall be in addition to and not in 
derogation of any rights, powers, privileges, and authorities 
otherwise applicable to the Corporation. 
"(C) FIDUCIARY RESPONSIBIUTY.—In exercising any right, 
power, privilege, or authority described in subparagraph 
(A), the Corporation shall continue to be subject to the 
fiduciary duties and obligations of the Corporation as re-
ceiver to claimants against the insured depository institu-
tion in receivership. 
"(4) LOANS.—The Corporation, in its discretion, may make 
loans on the security of or may purchase and liquidate or sell 
any part of the assets of an insured depository institution which 
is now or may hereafter be in default. 
"(e) AGREEMENTS AGAINST INTERESTS OF CORPORATION.—No agree-
ment which tends to diminish or defeat the interest of the Corpora-
tion in any asset acquired by it under this section or section 11, 
either as security for a loan or by purchase or as receiver of any 
insured depository institution, shall be valid against the Corporation 
unless such agreement— 
„. 
^ 
"(1) is in writing, 
"(2) was executed by the depository institution and any 
person claiming an adverse interest thereunder, including the 
obligor, contemporaneously with the acquisition of the asset by 
the depository institution, 
"(3) was approved by the board of directors of the depository 
institution or its loan committee, which approval shall be re-
flected in the minutes of said board or committee, and 
"(4) has been, continuously, from the time of its execution, an 
official record of the depository institution."; 
(5) in subsection (f)— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 257 
(A) by striking out "closed" and "closing" each place such 
terms appear (except in "closed bank") and inserting in lieu 
thereof "in default" or "default", respectively; 
(B) by striking out "closed bank" and inserting in lieu 
thereof "bank in default"; 
(C) in paragraph (1), by inserting "savings association" 
after "out-of-state bank"; 
(D) in paragraph (2XB)(iii), by striking out "a unanimous 
vote" and inserting in lieu thereof "a vote of 75 percent of; 
(E) by striking out "the constitution of any State,"; 
(F) in paragraph (6XA), by inserting "the offeror which 
made the initial lowest acceptable offer and" after "the 
C!orporation shall permit"; 
(G) by adding at the end of paragraph (7) the following: 
"(C) if in the opinion of the Corporation the acquisition 
threatens the safety and soundness of the acquirer or does not 
result in the future viability of the resulting depository institu- 
, 
tion."; 
(H) in paragraph (8), by striking out subparagraphs (A), 
(B), and (D) and redesignating paragraphs (C), (E), (F), and 
(G) as subparagraphs (A), (B), (C), and (D), respectively; 
(I) in paragraph (9)— 
(i) in the paragraph heading, by striking out 
"NONBANK" and inserting in lieu thereof "CER-
TAIN"; 
(ii) in paragraph (9XA), by inserting ", other than a 
subsidiary that is an insured depository institution," 
after "subsidiary" and by striking out "which is not an 
insured bank"; and 
(iii) in paragraph (9XB), by inserting "or an affiliate 
of an insured depository institution" after "intermedi-
ate holding company"; and 
(J) by adding at the end thereof the following new para-
graph: 
"(12) ACQUISITION OF MINORITY BANK BY MINORITY BANK HOUD-
ING COMPANY WITHOUT REGARD TO ASSET SIZE.— 
"(A) IN GENERAL.—For the purpose of ensuring continued 
minority control of a minority-controlled bank, paragraphs 
(2) and (3) shall apply with respect to the acquisition of a 
minority-controlled bank by an out-of-State minority-con-
trolled depository institution or depository institution hold-
ing company without regard to the fact that the total assets 
of such minority-controlled bank is less than $500,000,000. 
"(B) DEFINITIONS.—For purposes of this paragraph: 
, 
"(i) MINORITY BANK.—The term 'minority bank' 
means any depository institution described in clause (i), 
(ii), or (iii) of section 19(bXlXA) of the Federal Reserve 
Act— 
"(I) more than 50 percent of the ownership or 
control of which is held by one or more minority 
individuals; and 
"(II) more than 50 percent of the net profit or 
loss of which accrues to minority individuals, 
"(ii) MINORITY.—The term 'minority' means any 
Black American, Native American, Hispanic Amer-
ican, or Asian American."; 
103 STAT. 258 
PUBLIC LAW 101-73—AUG. 9, 1989 
"'" 
(6) in subsection (h), by striking out "a closed insured deposi-
tory institution", "closing", and "insurance fund" and inserting 
in lieu thereof "an insured depository institution in default', 
^ 
"default", and "Bank Insurance Fund , respectively; 
(7) in subsection (i)— 
(A) by inserting "depository" before "institution" each 
place such term appears; 
(B) in paragraph (IXC)— 
(i) by striking out "corporation" and inserting in lieu 
thereof "Corporation"; 
(ii) by striking out "chartered bank" and inserting in 
• 
lieu thereof "chartered depository institution"; 
(iii) by inserting ", a savings association," after 
r J 
"State member bank"; and 
(iv) by inserting "or the Director of the Office of 
H . 
Thrift Supervision" after "Federal Reserve System"; 
(C) in paragraph (2), by striking out "or insured or 
guaranteed under State law"; and 
(D) by striking out paragraphs (10) and (12); and 
(8) by adding at the end thereof the following: 
"(k) EMERGENCY ACQUISITIONS.— 
"(1) IN GENERAL.— 
"(A) ACQUISITIONS AUTHORIZED.— 
ii^. 
"(i) TRANSACTIONS DESCRIBED.—Notwithstanding any 
provision of State law, upon determining that severe 
{
. 
financial conditions threaten the stability of a signifi-
cant number of savings associations, or of savings 
associations possessing significant financial resources, 
V 
the Corporation, in its discretion and if it determines 
such authorization would lessen the risk to the Cor-
poration, may authorize— 
"(I) a savings association that is eligible for 
^ 
, 
. 
assistance pursuant to subsection (c) to merge or 
consolidate with, or to transfer its assets and liabil-
ities to, any other savings association or any in-
sured bank, 
"(II) any other savings association to acquire 
control of such savings association, or 
, 
"(III) any company to acquire control of such 
savings association or to acquire the assets or 
assume the liabilities thereof. 
The Corporation may not authorize any transaction 
under this subsection unless the Corporation deter-
mines that the authorization will not present a 
substantial risk to the safety or soundness of the sav-
ings association to be acquired or any acquiring entity, 
(ii) TERMS OF TRANSACTIONS.—Mergers, consolida-
tions, transfers, and acquisitions under this subsection 
shall be on such terms as the Corporation shall provide, 
"(iii) APPROVAL BY APPROPRIATE AGENCY.—Where 
otherwise required by law, transactions under this 
subsection must be approved by the appropriate Fed-
eral banking agency of every party thereto. 
"(iv) 
ACQUISITIONS BY SAVINGS ASSOCIATIONS.—Any 
Federal savings association that acquires another sav-
ings association pursuant to clause (i) may, with the 
concurrence of the Director of the Office of Thrift 
^ 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 259 
Supervision, hold that savings sissociation as a subsidi-
r, ; 
ary notwithstanding the percentage limitations of sec- . 
tion 5(cX4XB) of the Home Owners' Loan Act. 
"(v) DUAL SERVICE.—Dual service by a management 
official that would otherwise be prohibited under the 
Depository Institution Management Interlocks Act 
may, with the approval of the Corporation, continue for 
up to 10 years. 
"(vi) CONTINUED APPLICABILITY OF CERTAIN STATE 
RESTRICTIONS.—Nothing in this subsection overrides or 
supersedes State laws restricting or limiting the activi-
ties of a savings association on behalf of another entity. • 
"(B) CONSULTATION WITH STATE OFFICIAL.— 
"(i) 
CONSULTATION REQUIRED.—Before 
making 
a 
determination to take any action under subparagraph 
(A), the Corporation shall consult the State official 
having jurisdiction of the acquired institution. 
"(ii) PERIOD FOR STATE RESPONSE.—The official shall 
be given a reasonable opportunity, and in no event less 
than 48 hours, to object to the use of the provisions of 
this paragraph. Such notice may be provided by the 
Corporation prior to its appointment as receiver, but in 
anticipation of an impending appointment. 
"(iii) APPROVAL OVER OBJECTION OF STATE OFFICIAL.— 
If the official objects during such period, the Corpora- 
^ 
tion may use the authority of this paragraph only by a 
vote of 75 percent or more of the voting members of the 
^ 
Board of Directors. The Corporation shall provide to 
the official, as soon as practicable, a written certifi-
cation of its determination. 
"(2) SOUCITATION OF OFFERS.— 
"(A) IN GENERAL.—In considering authorizations under 
this subsection, the Corporation may solicit such offers or 
proposals as are practicable from any prospective pur-
chasers or merger partners it determines, in its sole discre-
tion, are both qualified and capable of acquiring the assets 
and liabilities of the savings association. 
"(B) MINORITY-CONTROLLED INSTITUTIONS.—In the case of 
a minority-controlled depository institution, the Corpora-
tion shall seek an offer from other minority-controlled 
depository institutions before seeking an offer from other 
persons or entities. 
"(3) DETERMINATION OF COSTS.—In determining the cost of 
offers under this subsection, the Corporation's calculations and 
estimations shall be determinative. The Corporation may set 
reasonable time limits on offers. 
"(4) BRANCHING PROVISIONS.— 
"(A) IN GENERAL.—If a merger, consolidation, transfer, or 
acquisition under this subsection involves a savings associa-
tion eligible for assistance and a bank or bank holding 
company, a savings association may retain and operate any 
existing branch or branches or any other existing facilities. 
If the savings association continues to exist as a separate 
entity, it may establish and operate new branches to the 
same extent £is any savings association that is not affiliated 
with a bank holding company and the home office of which 
is located in the same State. 
103 STAT. 260 
PUBLIC LAW 101-73—AUG. 9,1989 
. ^^^;.;. 
"(B) RESTRICTIONS.— 
••• ' • ^ 
"(i) IN GENERAL.—Notwithstanding 
subparagraph 
(A), if-
"(I) a savings association described in such 
subparagraph does not have its home office in the 
State of the bank holding company bank subsidi-
ary, and 
"(II) such association does not qualify as a domes-
tic building and loan association under section 
7701(aX19) of the Internal Revenue Code of 1986, or 
does not meet the asset composition test imposed 
by subparagraph (C) of that section on institutions 
seeking so to qualify, 
' 
^ 
.. 
gmjjj savings association shall be subject to the condi-
tions upon which a bank may retain, operate, and 
establish branches in the State in which the Savings 
Association Insurance Fund member is located. 
"(ii) TRANSITION PERIOD.—The Corporation, for good 
cause shown, may allow a savings association up to 2 
years to comply with the requirements of clause (i). 
"(5) ASSISTANCE BEFORE APPOINTMENT OF CONSERVATOR OR RE-
CEIVER.— 
"(A) ASSISTANCE PROPOSALS.—The Corporation shall con-
sider proposals by Savings Association Insurance Fund 
members for assistance pursuant to subsection (c) before 
grounds exist for appointment of a conservator or receiver 
for such member under the following circumstances: 
"(i) TROUBLED CONDITION CRITERIA.—The Corporation 
' 
determines— 
"(I) that grounds for appointment of a conserva-
tor or receiver exist or likely will exist in the 
future unless the member's tangible capital is in-
•' 
creased; 
"(II) that it is unlikely that the member can 
achieve positive tangible capital without assist-
ance; and 
"(III) that providing assistance pursuant to the 
member's proposal would be likely to lessen the 
risk to the Corporation. 
^ 
"(ii) OTHER CRITERIA.—The member meets the follow-
ing criteria: 
"(I) Before enactment of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
" 
1989, the member was solvent under applicable 
regulatory accounting principles but had negative 
tangible capital. 
"(II) The member's negative tangible capital 
' 
^ '' 
position is substantially attributable to its partici-
pation in acquisition and merger transactions that 
were instituted by the Federal Home Loan Bank 
Board or the Federal Savings and Loan Insurance 
Corporation for supervisory reasons. 
"(Ill) The member is a qualified thrift lender (as 
defined in section 10(m) of the Home Owners' Loan 
Act) or would be a qualified thrift lender if 
commercial real estate owned and nonperforming 
commercial loans acquired in acquisition and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 261 
merger transactions that were instituted by the 
Federal Home Loan Bank Board or the Federal 
Savings and Loan Insurance Corporation for super-
visory reasons were excluded from the member's 
total assets. 
"(IV) The appropriate Federal banking agency 
has determined that the member's management is 
competent and has complied with applicable laws, 
rules, and supervisory directives and orders. 
"(V) The member's management did not engage 
' 
in insider dealing or speculative practices or other 
activities that jeopardized the member's safety and 
soundness or contributed to its impaired capital 
position. 
"(VI) The member's offices are located in an 
^
f
' 
economically depressed region. 
"(B) 
CORPORATION CONSIDERATION OF ASSISTANCE PRO-
POSAL.—If a member meets the requirements of clauses (i) 
and (ii) of subparagraph (A), the Corporation shall consider 
providing direct financial assistance. 
"(C) ECONOMICALLY DEPRESSED REGION DEFINED.—For pur-
poses of this paragraph, the term 'economically depressed 
region' means any geographical region which the Corpora-
tion determines by regulation to be a region within which 
real estate values have suffered serious decline due to 
severe economic conditions, such as a decline in energy or 
agricultural values or prices.". 
SEC. 218. FDIC BORROWING AUTHORITY. 
Section 14 of the Federal Deposit Insurance Act (12 U.S.C. 1824) is 
amended— 
(1) by striking out "$3,000,000,000 outstanding at any one 
time" and inserting in lieu thereof "$5,000,000,000 outstanding 
at any one time, subject to the approval of the Secretary of the 
Treasury"; and 
(2) by adding at the end the following: "The Corporation may 
employ such funds for purposes of the Bank Insurance Fund or 
the Savings Association Insurance Fund and the borrowing 
shall become a liability of each such fund to the extent funds 
are employed therefor. There are hereby appropriated to the 
Secretary, for fiscal year 1989 and each fiscal year thereafter, 
such sums as may be necessary to carry out this section."; and 
(3) by striking out "the current average rate on outstanding 
marketable and nonmarketable obligations of the United States 
as of the last day of the month preceding the making of such 
loan" and inserting in lieu thereof the following: "an amount 
determined by the Secretary of the Treasury, taking into consid-
eration current market yields on outstanding marketable 
obligations of the United States of comparable maturities". 
SEC. 219. EXEMPTION FROM TAXATION; LIMITATION ON BORROWING. 
Section 15 of the Federal Deposit Insurance Act (12 U.S.C. 1825) is 
amended— 
(1) by inserting "(a) GENERAL RULE.—" before "AH"; and 
(2) by adding at the end the following new subsections: 
"(b) OTHER EXEMPTIONS.—When acting as a receiver, the following 
provisions shall apply with respect to the Corporation: 
103 STAT. 262 
PUBLIC LAW 101-73—AUG. 9, 1989 
f 
"(1) The Corporation including its franchise, its capital, re-
serves, and surplus, and its income, shall be exempt from all 
. 
taxation imposed by any State, county, municipality, or local 
' 
taxing authority, except that any real property of the Corpora-
tion shall be subject to State, territorial, county, municipal, or 
local taxation to the same extent according to its value as other 
real property is taxed, except that, notwithstanding the failure 
" 
of any person to challenge an assessment under State law of 
such property's value, such value, and the tax thereon, shall be 
^.: determined as of the period for which such tax is imposed. 
"(2) No property of the Corporation shall be subject to levy, 
attachment, garnishment, foreclosure, or sale without the con-
sent of the Corporation, nor shall any involuntary lien attach to 
the property of the Corporation. 
Taxes. 
"(3) The Corporation shall not be liable for any amounts in 
the nature of penalties or fines, including those arising from the 
failure of any person to pay any real property, personal prop-
erty, probate, or recording tax or any recording or filing fees 
when due. 
This subsection shall not apply with respect to any tax imposed (or 
other amount arising) under the Internal Revenue Code of 1986. 
'•(c) LIMITATION ON BORROWING.— 
"(1) 
COST ESTIMATE FOR OUTSTANDING OBUGATIONS UABIL-
ITIES.—As soon as practicable after the date of enactment of the 
Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989, the Corporation shall estimate the aggregate cost to the 
Corporation for all outstanding obligations and guarantees of 
the Corporation which were issued, and all outstanding liabil-
ities which were incurred, by the Corporation before such date. 
"(2) ESTIMATE OF NOTES AND OTHER OBUGATIONS REQUIRED.— 
Before issuing an obligation or making a guarantee, the Cor-
poration shall estimate the cost of such obligations or guaran-
tees. 
"(3) INCLUSION OF ESTIMATES IN FINANCIAL STATEMENTS.—The 
Corporation shall— 
f. 
"(A) reflect in its financial statements the estimates 
made by the Corporation under paragraphs (1) and (2) of the 
/ rr 
aggregate amount of the costs to the Corporation for 
outstanding obligations and other liabilities, and 
^ ' 
"(B) make such adjustments as are appropriate in the 
>
? 
estimate of such aggregate amount not less frequently than 
• ;
_ 
quarterly. 
"(4) ESTIMATE OF OTHER ASSETS REQUIRED.—The Corporation 
shall— 
"(A) estimate the market value of assets held by it £is a 
result of case resolution activities, with a reduction for 
expenses expected to be incurred by the Corporation in 
connection with the management and sale of such assets; 
"(B) reflect the amounts so estimated in its financial 
statements; and 
"(C) make such adjustments as are appropriate of such 
•5 
i 
market value not less than quarterly. 
"(5) MINIMUM NET WORTH REQUIRED.—The Corporation may 
not issue any note or similar obligation, and may not incur any 
liability under a guarantee or similar obligation, with respect to 
either the Bank Insurance Fund or the Savings Association 
Insurance Fund if, after reduction for the estimated cost of the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 263 
obligation or guarantee, the net worth of the affected insurance 
fund would be less than 10 percent of assets, 
"(6) EXCEPTION.—With the prior approval of the Secretary of 
the Treasury, the Corporation may issue or incur up to 
$5,000,000,000 in the aggregate of additional liabilities in excess 
of the limitations of paragraph (5). The amount which the 
Corporation may borrow from the Treasury under section 14 of 
this Act shall be reduced by the amount of additional liabilities 
issued or incurred under this paragraph. 
"(7) NET WORTH AND ASSET VALUATION.—For the purpose of 
paragraph (5)— 
"(A) the assets of the Bank Insurance Fund or the Sav-
ings Association Insurance Fund shall be calculated based 
on the most recent audit of such Fund by the Comptroller 
General of the United States, subject to any adjustments 
described in paragraph (3) or (4) and taking into account 
_. 
any subsequent transactions; and 
"(B) the net worth of the Bank Insurance Fund or the 
Savings Association Insurance Fund shall be calculated 
based on the most recent audit of such Fund by the 
Comptroller General of the United States, subject to any 
adjustments described in paragraphs (3) and (4) and taking 
into account any subsequent transactions. 
"(d) FULL FAITH AND CREDIT.—The full faith and credit of the 
United States is pledged to the payment of any obligation issued 
after the date of the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 by the Corporation, with 
respect to both principal and interest, if— 
v 
"(1) the principal amount of such obligation is steted in the 
"
^ 
obligation; and 
"(2) the term to maturity or the date of maturity of such 
obligation is steted in the obligation.". 
SEC. 220. REPORTS. 
^ 
(a) IN GENERAL.—Section 17 of the Federal Deposit Insurance Act 
(12 US.C. 1827) is amended— 
(1) by striking out subsection (a) and inserting the following: 
"(a) ANNUAL REPORTS ON BIF, S A I F , AND THE F S L I C RESOLUTION 
FUND.— 
"(1) IN GENERAL.—The Corporation shall annually submit a 
full report of its operations, activities, budget, receipts, and 
expenditures for the preceding 12-month period. The report 
shall include, with respect to the Bank Insurance Fund, the 
Savings Association Insurance Fund, and the FSLIC Resolution 
Fund, an analysis by the Corporation of— 
"(A) the current financial condition of each such fund; 
"(B) the purpose, effect, and estimated cost of each resolu-
tion action token for an insured depository institution 
during the preceding year; 
"(C) the extent to which the actual costs of assistence 
provided to, or for the benefit of, an insured depository 
institution during the preceding year exceeded the esti-
mated costs of such assistence reported in a previous year 
under paragraph (A); 
"(D) the exposure of each insurance fund to changes in 
those economic factors most likely to affect the condition of 
that fund; 
103 STAT. 264 
PUBLIC LAW 101-73—AUG. 9, 1989 
•}ppf^'f' "(E) a current estimate of the resources needed for the 
Bank Insurance Fund, the Savings Association Insurance 
Fund, or the FSLIC Resolution Fund to achieve the pur-
poses of this Act; and 
"(F) any findings, conclusions, and recommendations for 
legislative and administrative actions considered appro-
priate to future resolution activities by the Corporation. 
"(2) MANNER OF SUBMISSION.—Such report shall be submitted 
to the President of the Senate and the Speaker of the House of 
Representatives, who shall cause the same to be printed for the 
information of Congress, and the President as soon as prac-
ticable after the first day of January each year."; 
(2) by redesignating subsections (b), (c), and (d) as (e), (0, and 
(g), respectively; and 
(3) by inserting after subsection (a) the following new subsec-
tions: 
"(b) QUARTERLY REPORTS TO TREASURY.— 
"(1) FINANCIAL OPERATING PLANS AND FORECASTS.—Before the 
f- 
beginning of each fiscal quarter, the Corporation shall provide 
to the Secretary of the Treasury a copy of the Corporation's 
financial operating plans and forecasts. 
"(2) FINANCIAL CONDITION AND REPORTS OF OPERATIONS.—AS 
soon £is practicable after the end of each fiscal quarter, the 
Corporation shall submit to the Secretary of the Treasury a 
copy of the report of the Corporation's financial condition as of 
the end of such fiscal quarter and the results of the (Corpora-
tion's operations during such fiscal quarter. 
"(3) ITEMS TO BE INCLUDED.—The plans, forecasts, and reports 
required under this subsection shall reflect the estimates re-
quired to be made under section 15(b) of the liabilities and 
obligations of the Corporation described in such section. 
"(4) RULE OF CONSTRUCTION.—The requirement to provide 
plans, forecasts, and reports to the Secretary of the Treasury 
under this subsection may not be construed as implying any 
; 
obligation on the part of the C!orporation to obtain the consent 
or approval of such Secretary with respect to such plans, fore-
casts, and reports. 
"(c) REPORTS TO O M B . — 
"(1) FINANCIAL INFORMATION.—The (Dorporation shall con-
tinue to provide to the Director of the Office of Management 
and Budget financial information consistent with that con-
tained in the reports that were being provided to the Director 
immediately prior to the effective date of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989. 
. 
"(2) FINANCIAL OPERATING PLANS AND FORECASTS.—The (Cor-
poration shall also provide to the Director copies of the (Corpora-
tion's financial operating plans and forecasts as prepared by the 
(Corporation in the ordinary course of its operations, and copies 
of the quarterly reports of the (Corporation s financial condition 
and results of operations as prepared by the Corporation in the 
ordinary course of its operations. 
"(3) RULE OF CONSTRUCTION.—This subsection may not be 
construed as implying any obligation on the part of the (Corpora-
tion to consult with or obtain the consent or approval of the 
Director with respect to any reports, plans, forecasts, or other 
information referred to in paragraph (1) or (2) or any jurisdic-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 265 
tion or oversight over the affairs or operations of the Corpora-
tion. 
"(d) AUDIT.— 
"(1) AUDIT REQUIRED.—The Comptroller General shall audit 
annually the financial transactions of the Corporation, the 
Bank Insurance Fund, the Savings Association Insurance Fund, 
and the FSLIC Resolution Fund in accordance with generally 
accepted government auditing standards. 
"(2) ACCESS TO BOOKS AND RECORDS.—All books, records, ac-
counts, reports, files, and property belonging to or used by the 
Corporation, the Bank Insurance Fund, the Savings Association 
Insurance Fund, and the FSLIC Resolution Fund, or by an 
independent certified public accountant retained to audit the 
Fund's financial statements, shall be made available to the 
Comptroller (Jeneral.". 
(b) SPECIFIC REPORTS.— 
(1) RISK-BASED ASSESSMENTS.— 
12 use 1827 
(A) REPORT REQUIRED.—The Federal Deposit Insurance 
note. 
Corporation shall study the establishment of premium 
assessment categories related to tjrpes of risk to the insur-
ance funds and shall report its recommendations to the 
Congress not later than January 1, 1991. If the Corporation 
should recommend the establishment of such a risk-based 
assessment plan, it shall also provide a timetable and plan 
for implementation. 
(B) CONGRESSIONAL RESPONSE.—Not later than 180 days 
after receipt by the Congress of the report required under 
subparagraph (A) and the accompanying plan and time-
table, the Congress shall make a recommendation to the 
Chairperson of the Board of Directors regarding the disposi- 
" 
tion of such plan and timetable. 
(2) STUDY OF DEPOSIT INSURANCE PASS-THROUGH.—Not later 
than 6 months after the date of enactment of this Act, the 
Federal Deposit Insurance Corporation shall transmit to the 
Congress a report containing its findings and recommendations 
relating to the pass-through of deposit insurance either to 
individual investors in unit investment trust funds or to individ-
ual participants in pension or to profit sharing plans qualified 
under section 401 of the Internal Revenue Code of 1986. Such 
report shall also contain the Corporation's assessment of the 
potential effects of broadening deposit insurance coverage on 
the safety of the insurance funds and the operation of capital 
markets. 
(3) REPORT ON DIRECTORS' AND OFFICERS' UABILTTY INSUR-
ANCE.— 
(A) STUDY.—The Federal Deposit Insurance Corporation 
shall, together with the Secretary of the Treasury and the 
Attorney General, conduct a comprehensive study of direc-
tors' and officers' liability insurance and depository institu-
tion bonds, and the availability of such insurance for 
directors and officers of insured depository institutions. The 
study shall include— 
(i) consideration of State laws limiting liability for 
directors and officers; 
(ii) the effect of contractual provisions limiting insur-
^ ., , J 4 
ance coverage when an institution is placed in receiver-
ship or conservatorship; 
103 STAT. 266 
PUBLIC LAW 101-73—AUG. 9, 1989 
* 
* 
(iii) provisions limiting coverage when a claim is 
made by the Federal Deposit Insurance Corporation; 
and 
(iv) provisions limiting claims made by one insured 
against another insured. 
In addition, the study shall consider the need for such 
insurance or bonds and the effect any change in any of the 
V above noted conditions or terms may have on the future 
availability of such insurance, and the ability of depository 
institutions to attract qualified officers and directors. 
(B) REPORT.—Not later than 6 months after the date of 
enactment of the Financial Institutions Reform, Recovery, 
- and Enforcement Act of 1989, the Federal Deposit Insur-
ance Corporation, together with the Secretary of the Treas-
ury and the Attorney General, shall report the findings 
from the study under subparagraph (A) to the Congress, 
., J, 
together with legislative recommendations, if appropriate. 
SEC. 221. REGULATIONS GOVERNING INSURED DEPOSITORY INSTITU-
TIONS. 
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is 
amended— 
(1) by striking out "(a)" and the 1st 2 sentences of subsection 
(a) and inserting the following: 
"(a) INSURANCE LOGO.— 
^
^ 
-^ 
"(1) INSURED SAVINGS ASSOCIATIONS.—Each insured savings 
^ 
association shall display at each place of business maintained by 
such association a sign containing only the following items: 
"(A) A statement that insured deposits are backed by the 
full faith and credit of the United States Government. 
"(B) A statement that deposits are federally insured to 
$100,000. 
"(C) The symbol of an eagle. 
The sign shall not contain any reference to a Government 
agency and shall accord each item substantially equal promi-
nence. 
"(2) INSURED BANKS.—Not later than 30 days after the date of 
enactment of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, each insured bank shall display at 
each place of business maintained by such bank one of the 
following: 
"(A) The sign required to be displayed by insured banks 
under regulations prescribed by the Corporation in effect 
on January 1,1989. 
"(B) The sign prescribed under paragraph (1). 
"(3) REGULATIONS.—The (Corporation shall prescribe regula-
tions to carry out the purposes of this subsection, including 
regulations governing the manner of display or use of such 
signs, except that the size of the sign prescribed under para-
graph (1) shall be similar to that prescribed under paragraph 
(2XA). Initial regulations under this subsection shall be pre-
scribed on the date of enactment of the Financial Institutions 
Recovery, Reform, and Enforcement Act of 1989."; 
(2) in subsection (c)— 
(A) in paragraph (2), by striking out subparagraph (C) and 
inserting the following: 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 267 
"(C) the Corporation if the acquiring, assuming, or resulting 
bank is to be a State nonmember insured bank (except a District 
bank or a savings bank supervised by the Director of the Office 
of Thrift Supervision); and 
"(D) the Director of the Office of Thrift Supervision if the 
acquiring, assuming, or resulting institution is to be a savings 
association."; 
(B) by striking out paragraph (12); 
(C) in paragraphs (3), (4), (6), (7), and (9), by inserting after 
the word "bank" or "banks" each time it appears, the 
words "or savings association" or "or savings associations", 
respectively; and 
(D) in paragraph (3), by striking out "failure" and insert-
ing in lieu thereof "default"; 
(3) in subsection (iX2)— 
(A) by striking out "insured bank" and inserting in lieu 
thereof "insured Federal depository institution"; 
(B) by striking out "insured State bank" and inserting in 
lieu thereof "insured State depository institution"; 
(C) by striking out the period at the end of subpargraph 
(C) and inserting in lieu thereof "; and"; 
(D) by inserting after subparagraph (C) the following new 
subparagraph: 
"(D) the Director of the Office of Thrift Supervision if the 
resulting institution is to be an insured State savings 
association."; 
^ 
(E) in paragraph (4XD), by inserting "and fitness" after 
"character"; and 
* 
(F) by striking out paragraph (5); and 
(4) by adding at the end the following: 
"(m) ACTIVITIES OF SAVINGS ASSOCIATIONS AND THEIR SUBSIDI-
ARIES.— 
"(1) PROCEDURES.—When an insured savings association 
establishes or acquires a subsidiary or when an insured savings 
association elects to conduct any new activity through a subsidi-
ary that the insured savings association controls, the insured 
savings association— 
"(A) shall notify the Corporation and the Director of the 
_ 
Office of Thrift Supervision not less than 30 days prior to 
the establishment, or acquisition, of any such subsidiary, 
and not less than 30 days prior to the commencement of 
any such activity, and in either case shall provide at that 
time such information as each such agency may, by regula-
tion, require; and 
, 
"(B) shall conduct the activities of the subsidiary in 
accordance with regulations and orders of the Director of 
i 
the Office of Thrift Supervision. 
"(2) ENFORCEMENT POWERS.—With respect to any subsidiary of 
an insured savings association: 
"(A) the Corporation and the Director of the Office of 
Thrift Supervision shall each have, with respect to such 
subsidiary, the respective powers that each has with respect 
to the insured savings association pursuant to this section 
or section 8; and 
"(B) the Director of the Office of Thrift Supervision may 
^^^ 
4 
determine, after notice and opportunity for hearing, that 
the continuation by the insured savings association of its 
103 STAT. 268 
PUBLIC LAW 101-73—AUG. 9, 1989 
' 
ownership or control of, or its relationship to, the" sub-
sidiary— 
"(i) constitutes a serious risk to the safety, soundness, 
or stability of the insured savings association, or 
'
*
= ' 
"(ii) is inconsistent with sound banking principles or 
. " 
with the purposes of this Act. 
Upon making any such determination, the Corporation or 
the Director of the Office of Thrift Supervision shall have 
authority to order the insured savings association to divest 
' 
itself of control of the subsidiary. The Director of the Office 
of Thrift Supervision may take any other corrective meas-
ures with respect to the subsidiary, including the authority 
to require the subsidiary to terminate the activities or 
operations posing such risks, as the Director may deem 
appropriate. 
"(3) ACTIVITIES INCOMPATIBLE WITH DEPOSIT INSURANCE.— 
- 
"(A) IN GENERAL.—The Corporation may determine by 
regulation or order that any specific activity poses a serious 
J , 
threat to the Savings Association Insurance Fund. Prior to 
adopting any such regulation, the Corporation shall consult 
with the Director of the Office of Thrift Supervision and 
shall provide appropriate State supervisors the opportunity 
o comment thereon, and the Corporation shall specifically 
ake such comments into consideration. Any such regula-
ion shall be issued in accordance with section 553 of title 5, 
* 
Jnited States Code. If the Board of Directors makes such a 
ietermination with respect to an activity, the Corporation 
shall have authority to order that no Savings Association 
Insurance Fund member may engage in the activity di-
rectly. 
"(B) AUTHORITY OF DIRECTOR.—This section does not limit 
c 
the authority of the Office of Thrift Supervision to issue 
regulations to promote safety and soundness or to enforce 
compliance with other applicable laws. 
"(C) ADDITIONAL AUTHORITY OF FDIC TO PREVENT SERIOUS 
RISKS TO INSURANCE FUND.—Notwithstanding subparagraph 
^ 
(A), the Corporation may prescribe and enforce such regula-
tions and issue such orders as the Corporation determines 
to be necessary to prevent actions or practices of savings 
associations that pose a serious threat to the Savings 
Association Insurance Fund or the Bank Insurance Fund. 
"(4) 'SUBSIDIARY' DEFINED.—As used in this subsection, the 
term 'subsidiary' does not include an insured depository institu-
' 
tion. 
"(5) APPUCABILITY TO CERTAIN SAVINGS BANKS.—Subpara-
graphs (A) and (B) of paragraph (1) of this subsection do not 
apply to— 
"(A) any Federal savings bank that w£is chartered prior 
to October 15, 1982, as a savings bank under State law, or 
"(B) a savings association that acquired its principal 
assets from an institution that was chartered prior to Octo-
ber 15,1982, as a savings bank under State law. 
"(n) CALCULATION OF CAPITAL.—No appropriate Federal banking 
agency shall allow any insured depository institution to include an 
unidentifiable intangible asset in its calculation of compliance with 
^ 
. 
the appropriate capital standard, if such unidentifiable intangible 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 269 
asset was acquired after April 12, 1989, except to the extent per-
mitted under section 5(t) of the Home Owners'Loan Act." 
SEC. 222. ACTIVITIES OF SAVINGS ASSOCIATIONS. 
The Federal Deposit Insurance Act is amended by adding at the 
end the following new section: 
"SEC. 28. ACTIVITIES OF SAVINGS ASSOCIATIONS. 
12 USC 1831e. 
"(a) IN GENERAL.—On and after January 1, 1990, a savings 
/ 
^ 
association chartered under State law may not engage as principal 
in any type of activity, or in any activity in an amount, that is not 
permissible for a Federal savings association unless— 
"(1) the Corporation has determined that the activity would 
pose no significant risk to the affected deposit insurance fund; 
and 
"(2) the savings association is and continues to be in compli-
ance with the fully phased-in capital standards prescribed 
under section 5(t) of the Home Owners'Loan Act. 
"0>) DIFFERENCES OF MAGNITUDE BETWEEN STATE AND FEDERAL 
POWERS.—Notwithstanding subsection (aXD, if an activity (other 
than an activity described in section 5(cX2XB) of the Home Owners' 
Loan Act) is permissible for a Federal savings association, a savings 
association chartered under State law may engage as principal in 
that activity in an amount greater than the amount permissible for 
a Federal savings association if— 
"(1) the Corporation has not determined that engaging in that 
amount of the activity poses any significant risk to the affected 
deposit insurance fund; and 
(2) the savings association chartered under State law is and 
continues to be in compliance with the fully phased-in capital 
standards prescribed under section 5(t) of the Home Owners' 
Loan Act. 
"(c) EQUITY INVESTMENTS B
Y STATE SAVINGS ASSOCIATIONS.— 
"(1) IN GENERAL.—Notwithstending subsections (a) and (b), a 
savings association chartered under State law may not directly 
acquire or retain any equity investment of a tjrpe or in an 
amount that is not permissible for a Federal savings association. 
"(2) EXCEPTION FOR SERVICE CORPORATIONS.—Paragraph (1) 
does not prohibit a savings association from acquiring or retain-
ing shares of one or more service corporations if— 
"(A) the Corporation has determined that no significant 
risk to the affected deposit insurance fund is posed by— 
"(i) the amount that the association proposes to 
acquire or retain, or 
"(ii) the activities in which the service corporation 
engages; and 
"(B) the savings association is and continues to be in 
compliance with the fully phased-in capital standards pre-
scribed under section 5(t) of the Home Owners' Loan Act. 
"(3) TRANSITION RULE.— 
"(A) IN GENERAL.—The Corporation shall require any 
savings association to divest any equity investment the 
retention of which is not permissible under paragraph (1) or 
(2) as quickly as can be prudently done, and in any event 
not later than July 1,1994. 
103 STAT. 270 
PUBLIC LAW 101-73—AUG. 9, 1989 
. , 
••••I "(B) 
TREATMENT OF NONCOMPLIANCE DURING DIVEST-
MENT.—With respect to any equity investment held by any 
savings association on May 1, 1989, the savings association 
shall be deemed not to be in violation of the prohibition in 
paragraph (1) or (2) on retaining such investment so long as 
J , 
the savings association complies with any applicable 
requirement established by the Corporation pursuant to 
subparagraph (A) for divesting such investments. 
*^ 
"(d) CORPORATE DEBT SECURITIES NOT OF INVESTMENT GRADE.— 
"(1) IN GENERAL.—No savings association may, directly or 
through a subsidiary, acquire or retain any corporate debt 
security not of investment grade. 
"(2) EXCEPTION FOR SECURITIES HELD BY QUAUFiED AFFIUATE.— 
Paragraph (1) shall not apply with respect to any corporate debt 
security not of investment grade which is acquired and retained 
by any qualified affiliate of a savings association. 
"(3) TRANSITION RULE.— 
"(A) IN GENERAL.—The Corporation shall require any 
: ;, , 
savings association or any subsidiary of any savings associa-
tion to divest any corporate debt security not of investment 
grade the retention of which is not permissible under para-
graph (1) as quickly as can be prudently done, and in any 
event not later than July 1,1994. 
"(B) 
TREATMENT OF NONCOMPUANCE 
DURING DIVEST-
MENT.—With respect to any corporate debt security not of 
investment grade held by any savings association or 
subsidiary on the date of enactment of the Financial 
' 
Institutions Reform, Recovery, and Enforcement Act of 
1989, the savings association or subsidiary shall be deemed 
not to be in violation of the prohibition in paragraph (1) on 
> 
retaining such investment so long as the association or 
subsidiary complies with any applicable requirement estab-
lished by the Corporation pursuant to subparagraph (A) for 
divesting such securities. 
"(4) DEFINITIONS.—For purposes of this section— 
"(A) INVESTMENT GRADE.—Any corporate debt security is 
not of 'investment grade' unless that security, when ac-
quired by the savings association or subsidiary, was rated in 
one of the 4 highest rating categories by at least one 
nationally recognized statistical rating organization. 
"(B) QUAUFIED AFFIUATE.—The term 'qualified affiliate' 
means— 
jfj^^.. 
"(i) in the case of a stock savings association, an 
affiliate other than a subsidiary or an insured deposi-
torv institution; and 
' (ii) in the case of a' mutual savings association, a 
? 
,. 
subsidiary other than an insured depository institution, 
so long as all of the savings association's investments in 
and extensions of credit to the subsidiary are deducted 
. -'t 
from the savings association's capital. 
"(C) CERTAIN SECURITIES NOT INCLUDED.—The term 'cor-
porate debt security not of investment grade' does not 
include any obligation issued or guaranteed by a corpora-
tion that may be held by a Federal savings association 
3 
without limitation as to percentage of assets under subpara-
graphs (D), (E), or (F) of section 5(cXl) of the Home Owners' 
Loan Act. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 271 
"(e) TRANSFER OF CORPORATE DEBT SECURITY NOT OF INVESTMENT 
GRADE IN EXCHANGE FOR A QUAUFIED NOTE.— 
"(1) ACQUISITION OF NOTE.—Notwithstanding subsections (a), 
(b), and (c) of section 5 of the Home Owners' Loan Act and any 
other provision of Federal or State law governing extensions of 
credit by savings associations, any insured savings association, 
and any subsidiary of any insured savings association, that, on 
the date of the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, holds any corporate 
debt security not of investment grade may acquire a qualified 
note in exchange for the trsuisfer of such security to— 
"(A) any holding company which controls 80 percent or 
more of the shares of such insured savings association; or 
"(B) any company other than an insured savings associa-
tion, or any subsidiary of any insured savings association, 
80 percent or more of the shares of which are controlled by 
such holding company, 
if the conditions of paragraph (2) are met. 
"(2) CONDITIONS FOR EXCHANGE OF SECURITY FOR QUAUFIED 
NOTE.—The conditions of this paragraph are met if— 
"(A) the insured savings association was in compliance 
with applicable capital requirements on December 31,1988, 
and the insured savings association after such date— 
"(i) remains in compliance with applicable capital 
requirements; or 
"(ii) adopts and complies with a capital plan accept-
able to the Director of the Office of Thrift Supervision; 
"(Bj the company to which the corporate debt security 
not of investment grade is transferred is not a bank holding 
company, an insured savings association, or a direct or 
indirect subsidiary of such holding company or insured 
savings association; 
^ 
"(C) before the end of the 90-day period beginning on the 
date of the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, the insured savings 
association notifies the Director of the Office of Thrift 
Supervision of such association's intention to transfer the 
corporate debt security not of investment grade to the 
savings and loan holding company or the subsidiary of such 
holding company; 
"(D) the transfer of the corporate debt security not of 
investment grade is completed— 
"(i) before the end of the 1-year period b a n n i n g on 
the date of the enactment of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, in the 
case of an insured savings association that, as of such 
date, is controlled by a savings and loan holding com-
pany; or 
"(ii) before the end of the 2-year period beginning on 
such date, in the case of a savings association that is 
not, as of such date, a subsidiary of a savings and loan 
holding company; 
"(E) the insured sa\'ings association receives in exchange 
for the corporate debt security not of investment grade the 
fair market value of such security; 
"(F) the Director of the Office of Thrift Supervision has— 
"(i) approved the transaction; and 
103 STAT. 272 
PUBLIC LAW 101-73—AUG. 9,1989 
v^,. 
.., 
"(ii) determined that the transfer represents a com-
* 
" 
• 
plete and effective divestiture of the corporate debt 
, , 
security not of investment grade and is in compliance 
' • 
with the provisions of this subsection; and 
"(G) any gain on the sale of the corporate debt security 
. 
not of investment grade is recognized, and included for 
applicable regulatory capital requirements, by the insured 
savings association only at such time and to the extent that 
the insured savings association receives payment of prin-
cipal on the note in cash in excess of the fair market value 
of the transferred corporate debt security not of investment 
^ 
grade as carried on the accounts of the insured savings 
association immediately prior to the transfer. 
"(3) QuAUFiED NOTE DEFINED,—The term 'qualified note' 
means any note t h a t ^ 
"(A) is at all times fully secured by the corporate debt 
security not of investment grade transferred in exchange 
for the note, or by other collateral of at least equivalent 
value that is acceptable to the Director of the Office of 
' 
Thrift Supervision; 
"(B) contains provisions acceptable to the Director of the 
Office of Thrift Supervision that would— 
"(i) prevent any action to encumber or impair the 
value of the collateral referred to in subparagraph (A); 
_. 
^
^
^
^
^ 
"(ii) allow the sale of the corporate debt security not 
'^ 
[' 
of investment grade if the proceeds of the sale are 
reinvested in assets of equivalent value; 
"(C) is on market terms, including interest rate, which 
must in all cases be above the insured savings association's 
borrowing rate for similar term funds; 
'>~' 
"(D) is fully repayable over a period of time not to exceed 
5 years from the date of transfer; 
' ' 
"(E) is repaid with annual principal pajonents at least as 
large as would be necessary to repay the note within 5 
years if it were on a level payment amortization schedule 
and the interest rate for the first year of repayment were 
fixed throughout the amortization period; 
"(F) is fully guaranteed by each holding company of the 
insured savings association that acquires such note; and 
., , 
"(G) is repaid in full in cash in accordance with its terms 
''' 
and this subsection. 
"(4) FAILURE TO REPAY ON SCHEDULE.—The exemption pro-
vided by this subsection from subsections (a), (b), and (c) of 
section 11 of the Home Owners' Loan Act any other applicable 
provision of Federal or State law shall terminate immediately if 
the insured savings association or any affiliate of such associa-
tion fails to comply with the terms of the qualified note or this 
subsection. 
"(f) DETERMINATIONS.—The Corporation shall make determina-
tions under this section by regulation or order. 
"(g) ACTIVITY DEFINED.—For purposes of subsections (a) and (b)— 
"(1) IN GENERAL.—The term 'activity' includes acquiring or 
retaining any investment. 
"(2) DIVESTITURE OF CERTAIN ASSETS.— Notwithstanding para-
graph (1), subsections (a) and (b) shall not be construed to 
require a savings association to divest itself of any assets ac-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 273 
quired before the date of enactment of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989. 
"(h) DISCLOSURES B
Y UNINSURED SAVINGS ASSOCIATIONS.— 
"(1) IN GENERAL.—Any savings association the deposits of 
which are not insured by the Corporation under this Act shall 
disclose clearly and conspicuously in periodic statements of 
account and in all advertising that the savings association's 
deposits are 'not federally insured'. 
"(2) MANNER AND CONTENT.—The Corporation may, by regula-
tion or order, prescribe the manner and content of the disclo-
sure. 
"(3) ENFORCEMENT.—Compliance with the requirements of 
this subsection, and any regulation prescribed or order issued 
under this subsection, shall be enforced under section 8 in the 
same manner and to the same extent as if the savings associa-
tion were an insured State nonmember bank, 
"(i) OTHER AUTHORITY NOT AFFECTED.—This section may not be 
construed as limiting— 
"(1) any other authority of the Corporation; or 
"(2) any authority of the Director of the Office of Thrift 
Supervision or of a State to impose more stringent restric- 
-r 
tions.". 
SEC. 223. NONDISCRIMINATION. 
Section 22 of the Federal Deposit Insurance Act (12 U.S.C. 1830) is 
amended to read as follows: 
"SEC. 22. NONDISCRIMINATION. 
"It is not the purpose of this Act to discriminate in any manner 
against State nonmember banks or State savings associations and in 
favor of national or member banks or Federal savings associations, 
respectively. It is the purpose of this Act to provide all banks and 
savings associations with the same opportunity to obtain and enjoy 
the benefits of this Act.". 
SEC. 224. BROKERED DEPOSITS. 
(a) IN GENERAL.—The Federal Deposit Insurance Act is amended 
by inserting after section 28 (as added by section 222 of this title) the 
following new section: 
"SEC. 29. BROKERED DEPOSITS. 
12 USC 1831f. 
"(a) IN GENERAL.—A troubled institution may not accept funds 
obtained, directly or indirectly, by or through any deposit broker for 
deposit into 1 or more deposit accounts. 
(b) 
RENEWALS AND ROLLOVERS TREATED AS ACCEPTANCE OF 
FUNDS.—Any renewal of an account in any troubled institution and 
any rollover of any amount on deposit in any such account shall be 
treated as an acceptance of funds by such troubled institution for 
purposes of subsection (a). 
"(c) WAIVER AUTHORITY.—The Corporation may, on a case-by-case 
basis and upon application by an insured depository institution, 
waive the applicability of subsection (a) upon a finding that the 
acceptance of such deposits does not constitute an unsafe or unsound 
practice with respect to such institution, 
^ 
"(d) LIMITED EXCEPTION FOR CERTAIN CONSERVATORSHIPS.—In the 
case of any insured depository institution for which the Ck)rporation 
has been appointed as conservator, subsection (a) shall not apply to 
103 STAT. 274 
PUBLIC LAW 101-73—AUG. 9, 1989 
the acceptance of deposits (described in such subsection) by such 
institution if the Corporation determines that the acceptance of 
such deposits— 
"(1) is not an unsafe or unsound practice; and 
"(2) either— 
"(A) is necessary to enable the institution to meet the 
demands of its depositors or pay its obligations in the 
ordinary course of business; or 
"(B) is consistent with the conservator's fiduciary duty to 
minimize the losses of the institution. 
"(e) ADDITIONAL RESTRICTIONS.—The Corporation may impose, by 
regulation or order, such additional restrictions on the acceptance of 
brokered deposits by any troubled institution £is the Corporation 
may determine to be appropriate. 
"(f) DEFINITIONS RELATING TO DEPOSIT BROKER.— 
"(1) DEPOSIT BROKER.—The term 'deposit broker' means— 
"(A) any person engaged in the business of placing de-
/ 
posits, or facilitating the placement of deposits, of third 
parties with insured depository institutions or the business 
'. 
of placing deposits with insured depository institutions for 
the purpose of selling interests in those deposits to third 
parties; and 
"(B) an £Lgent or trustee who establishes a deposit account 
to facilitate a business arrangement with an insured deposi-
T 
tory institution to use the proceeds of the account to fund a 
prearranged loan. 
"(2) 
EXCLUSIONS.—The term 
'deposit broker' 
does not 
include— 
"(A) an insured depository institution, with respect to 
funds placed with that depository institution; 
"(B) an employee of an insured depository institution, 
with respect to funds placed with the employing depository 
institution; 
"(C) a trust department of an insured depository institu-
tion, if the trust in question has not been established for the 
/ 
primary purpose of placing funds with insured depository 
> 
institutions; 
^ 
"(D) the trustee of a pension or other employee benefit 
plan, with respect to funds of the plan; 
"(E) a person acting £is a plan administrator or an invest-
ment adviser in connection with a pension plan or other 
employee benefit plan provided that that person is perform-
ing managerial functions with respect to the plan; 
"(F) the trustee of a testamentary account; 
'^"- 
"(G) the trustee of an irrevocable trust (other than one 
described in paragraph (IXB)), as long as the trust in ques-
tion has not been established for the primary purpose of 
placing funds with insured depository institutions; 
"(H) a trustee or custodian of a pension or profitsharing 
plan qualified under section 401(d) or 403(a) of the Internal 
^ 
Revenue (Dode of 1986; or 
"(I) an agent or nominee whose primary purpose is not 
the placement of funds with depository institutions. 
"(3) INCLUSION OF DEPOSITORY INSTITUTIONS ENGAGING IN CER-
TAIN ACTIVITIES.—Notwithstanding paragraph (2), the term 'de-
posit broker' includes any insured depository institution, and 
any employee of any insured depository institution, which en-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 275 
gages, directly or indirectly, in the solicitation of deposits by 
offering rates of interest (with respect to such deposits) which 
are significantly higher than the prevailing rates of interest on 
deposits offered by other insured depository institutions having 
the same t3^pe of charter in such depository institution's normsd 
market area. 
"(4) EMPLOYEE.—For purposes of this subsection, the term 
'employee' means any employee— 
(A) who is employed exclusively by the insured deposi-
torv institution; 
(B) whose compensation is primarily in the form of a 
salary; 
"(C) who does not share such employee's compensation 
with a deposit broker; and 
"(D) whose office space or place of business is used exclu-
sively for the benefit of the insured depository institution 
which employs such individual. 
"(g) TROUBLED INSTITUTION DEFINED.—The term 'troubled institu-
tion means any insured depository institution which does not meet 
the minimum capital requiremente applicable with respect to such 
institution.". 
(b) EFFECTIVE DATE.—The Eunendment made by subsection (a) 
shall apply to deposits accepted after the end of the 120-day period 
beginning on the date of the enactment of this Act. 
SEC. 225. CONTRACTS BETWEEN DEPOSITORY INSTITUTIONS AND PER-
SONS PROVIDING GOODS, PRODUCTS, OR SERVICES. 
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by inserting after section 29 (as added by section 224 of this 
title) the following new section: 
"SEC. 30. CONTRACTS BETWEEN DEPOSITORY INSTITUTIONS AND PER-
SONS PROVIDING GOODS, PRODUCTS, OR SERVICES. 
"(a) IN GENERAL.—An insured depository institution may not 
enter into a written or oral contract with any person to provide 
goods, products, or services to or for the benefit of such depository 
institution if the performance of such contract would adversely 
affect the safety or soundness of the institution. 
"(b) RULEMAKING.—The Corporation shall prescribe such regula-
tions and issue such orders, including definitions consistent with 
this section, as may be necessary to administer and carry out the 
purposes of, and prevent evasions of, this section. 
"(c) ENFORCEMENT.—Any action taken by any appropriate Federal 
banking agency under section 8 to enforce compliance on the part of 
any insured depository institution with the requirements of this 
section may include a requirement that such institution properly 
reflect the transaction on its books and records. 
"(d) No PRIVATE RIGHT OF ACTION.—This section may not 
be 
construed as creating any private right of action. 
"(e) STUDY.— 
"(1) IN GENERAL.—The Attorney General and the Comptroller 
General of the United States shall jointly conduct a study on 
the extent to which— 
"(A) insured depository institutions are entering into con-
tracts with vendors under which venders agree to purchase 
stock or assets from insured depository institutions or to 
invest capital in or make deposits in such institutions; and 
12 use 1831f 
note. 
12 use 1831g. 
Regulations. 
103 STAT. 276 
PUBLIC LAW 101-73—AUG. 9, 1989 
?i 
ij 
"(B) if such practices occur, the extent to which such 
practices are having an anticompetitive effect and should 
^ 
be prohibited. 
"(2) REPORT TO CONGREI^.—Before the end of the 1-year period 
beginning on the date of the enactment of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989, the 
Attorney General and the Comptroller General shall submit a 
report to the Congress on the results of the study conducted 
pursuant to paragraph (1).". 
SEC. 226. SAVINGS ASSOCIATION INSURANCE FUND INDUSTRY ADVISORY 
COMMITTEE ESTABLISHED. 
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by inserting after section 30 (as added by section 225 of this 
title) the foUospog new section: 
12 use 1831h. 
"SEC. 31. SAVINGS ASSOCIATION INSURANCE FUND INDUSTRY ADVISORY 
COMMITTEE. 
"(a) EIsTABUSHMENT.—There is hereby established the Savings 
Association Insurance Fund Industry Advisory Committee (herein-
after referred to in this section as the 'Committee'). 
"(b) MEMBERSHIP.—The Committee shall consist of 18 members, 
appointed as follows: 
"(1) 1 member elected from each Federal home loan bank 
district (by the members of the Board of Directors of each such 
bank who were elected by the members of such bank) from 
among individuals residing therein who are officers of insured 
depository institutions that are Savings Association Insurance 
Fund members. 
"(2) 6 members appointed by the Corporation from among 
individuals who shall represent the public interest. 
"(c) VACANCIES.—Any vacancy on the Committee shall be filled in 
the same manner in which the original appointment was made. 
"(d) PAY AND EXPENSES.—Members of the Committee shall serve 
without pay, but each member shall be reimbursed, in such manner 
as the Corporation shall prescribe by regulation, for expenses in-
curred in connection with attendance of such members at meetings 
H 
• 
of the Committee. 
"(e) TERMS.—Members shall be appointed or elected for terms of 1 
year. 
"(f) AUTHORITY OF THE COMMITTEE.—The Committee may select its 
Chairperson, Vice Chairperson, and Secretary, and adopt methods of 
procedure, and shall have power— 
"(1) to confer with the Board of Directors on general and 
special business conditions and regulatory and other matters 
affecting insured financial institutions that are members of the 
Savings Association Insurance Fund; and 
"(2) to request information, and to make recommendations, 
with respect to matters within the jurisdiction of the Corpora-
tion. 
"(g) MEETINGS.—The Committee shall meet 4 times each year, and 
more frequently if requested by the Corporation. 
"(h) REPORTS.—The Committee shall submit a semiannual written 
report to the Committee on Banking, Finance and Urban Affairs of 
the House and to the Committee on Banking, Housing, and Urban 
Affairs of the Senate. Such report shall describe the activities of the 
PUBLIC LAW 101-73~AUG. 9, 1989 
103 STAT. 277 
Committee for such semiannual period and contain such rec-
ommendations as the Committee considers appropriate. 
"(i) PROVISION OF STAFF AND OTHER RESOURCES.—The Corporation 
shall provide the Committee with the use of such resources, includ-
ing staff, as the Committee reasonably shall require to carry out its 
duties, including the preparation and submission of reports to Con-
gress, under this section. 
"(j) FEDERAL ADVISORY COMMITTEE ACT DOES NOT APPLY.—The 
Federal Advisory Committee Act shall not apply to the Committee. 
"(k) SUNSET.—The Committee shall cease to exist 10 years after 
i
^ 
the enactment of this s^tion.". 
TITLE III—SAVINGS ASSOCIATIONS 
SEC. 301. AMENDMENT TO HOME OWNERS* LOAN ACT OF 1933. 
The Home Owners' Loan Act of 1933 is amended to read as 
follows: 
"SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
12 USC 1461. 
"This Act may be cited as the 'Home Owners' Loan Act'. 
"TABLE OF CONTENTS 
"Sec. 1. Short title and table of contents. 
"Sec. 2. Deflnitions. 
"Sec. 3. Director of the Office of Thrift Supervision. 
"Sec. 4. Supervision of savings associations. 
"Sec. 5. Federal savings associations. 
"Sec. 6. Liquid asset requirements. 
—
^ 
"Sec. 7. Applicability. 
"Sec. 8. District associations. 
"Sec. 9. Examination fees. 
"Sec. 10. Regulation of holding companies. 
, 
"Sec. 11. Transactions with affiliates; extensions of credit to executive officers, di-
rectors, and principal shareholders. 
"Sec. 12. Advertising. 
"Sec. 13. Powers of examiners. 
"Sec. 14. Separability provision. 
"SEC. 2. DEFINITIONS. 
12 USC 1462. 
"For purposes of this Act— 
"(1) DIRECTOR.—The term 'Director' means the Director of the 
Office of Thrift Supervision. 
"(2) CORPORATION.—The term 'Corporation' means the Fed-
eral Deposit Insurance Corporation. 
"(3) OFFICE.—The term 'Office' means the Office of Thrift 
Supervision. 
"(4) SAVINGS ASSOCIATION.—The term 'savings association' 
means a savings association, as defined in section 3 of the 
Federal Deposit Insurance Act, the deposits of which are in- 
^ 
sured by the Corporation. 
"(5) FEDERAL SAVINGS ASSOCIATION.—The term 'Federal sav-
ings association' means a Federal savings association or a Fed-
eral savings bank chartered under section 5 of this Act. 
"(6) NATIONAL BANK.—The term 'national bank' has the same 
meaning as in section 3 of the Federal Deposit Insurance Act. 
"(7) FEDERAL BANKING AGENCIES.—The term 'Federal banking 
, agencies' means the Office of the Comptroller of the Currency, 
the Board of Grovernors of the Federsil Reserve System, and the 
Federal Deposit Insurance Corporation. 
103 STAT. 278 
PUBLIC LAW 101-73—AUG. 9, 1989 
. 
"(8) STATE.—The term 'State' has the same meaning as in 
section 3 of the Federal Deposit Insurance Act. 
"(9) AFFIUATE.—The term 'affiliate' means any person that 
^ 
controls, is controlled by, or is under common control with, a 
savings association, except as provided in section 10. 
12 use 1462a. 
"SEC. 3. DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION. 
' 
*^ 
"(a) ESTABLISHMENT OF OFFICE.—There is established the Office of 
Thrift Supervision, which shall be an office in the Department of the 
Treasury. 
"(b) ESTABLISHMENT OF POSITION OF DIRECTOR.— 
"(1) IN GENERAL.—There is established the position of the 
Director of the Office of Thrift Supervision, who shall be the 
head of the Office of Thrift Supervision and shall be subject to 
the general oversight of the Secretary of the Treasury. 
"(2) AUTHORITY TO PRESCRIBE REGULATIONS.—The Director 
may prescribe such regulations and issue such orders as the 
Director may determine to be necessary for carrying out this 
^ 
^ 
Act and all other laws within the Director's jurisdiction. 
* 
"(3) AUTONOMY OF DIRECTOR.—The Secretary of the Treasury 
may not intervene in any matter or proceeding before the 
Director unless otherwise provided by law. 
"(c) APPOINTMENT; TERM.— 
"(1) APPOINTMENT.—The Director shall be appointed by the 
President, by and with the advice and consent of the Senate, 
from among individuals who are citizens of the United States. 
"(2) TERM.—The Director shall be appointed for a term of 5 
years. 
' 
"(3) VACANCY.—A vacancy in the position of Director which 
occurs before the expiration of the term for which a Director 
was appointed shall be filled in the manner established in 
paragraph (1) and the Director appointed to fill such vacancy 
shall be appointed only for the remainder of such term. 
"(4) SERVICE AFTER END OP TERM.—An individual may serve as 
^ 
Director after the expiration of the term for which appointed 
until a successor Director has been appointed. 
' 
'•• 
"(5) TRANSITIONAL PROVISION.—Notwithstanding paragraphs 
(1) and (2), the Chairman of the Federal Home Loan Bank Board 
on the date of enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, shall be the Director 
until the date on which that individual's term as Chairman of 
the Federal Home Loan Bank Board would have expired. 
"(d) PROHIBITION ON FINANCIAL INTERESTS.—The Director shall 
not have a direct or indirect financial interest in any insured 
^ 
depository institution, as defined in section 3 of the Federal Deposit 
Insurance Act. 
"(e) POWERS OF THE DIRECTOR.—The Director shall have all powers 
which— 
"(1) were vested in the Federal Home Loan Bank Board (in 
the Board's capacity as such) or the Chairman of such Board on 
the day before the date of the enactment of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989; 
and 
"(2) were not— 
_y. 
"(A) transferred to the Federal Deposit Insurance Cor-
poration, the Federal Housing Finance Board, the Resolu-
tion Trust Corporation, or the Federal Home Loan Mort-
V 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 279 
gage Corporation pursuant to any amendment made by 
such Act; or 
"(B) established under any provision of law repealed by 
such Act. 
"(f) ANNUAL REPORT REQUIRED.—The Director shall make an 
annual report to the Congress. Such report shall include— 
"(1) a description of any changes the Director has made or is 
considering making in the district offices of the Office, including 
a description of the geographic allocation of the Office's re-
sources and personnel used to carry out examination and super-
vision functions; and 
"(2) a description of actions taken to carry out section 308 of 
the Financial Institutions Reform, Recovery, and Enforcement 
Actofl989. 
"(g) STAFF.— 
"(1) APPOINTMENT AND COMPENSATION.—The Director shall fix 
the compensation and number of, and appoint and direct, all 
employees of the Office of Thrift Supervision notwithstanding 
section 301(fXi) of title 31, United States Code. Such compensa-
tion shall be paid without regard to the provisions of other laws 
applicable to officers or employees of the United States. 
"(2) RATES OF BASIC PAY.—Rates of basic pay for employees of 
the Office may be set and adjusted by the Director without 
regard to the provisions of chapter 51 or subchapter III of 
chapter 53 of title 5, United States Code. 
"(3) ADDITIONAL COMPENSATION AND BENEFITS.—The Director 
may provide additional compensation and benefits to employees 
of the Office if the same type of compensation or benefits are 
then being provided by any Federal banking agency or, if not 
then being provided, could be provided by such an agency under 
applicable provisions of law, rule, or regulation. In setting and 
adjusting the total amount of compensation and benefits for 
employees of the Office, the Director shall consult, and seek to 
maintain comparability with, the Federal banking agencies. 
"(4) DELEGATION AUTHORITY.— 
"(A) IN GENERAL.—The Director may— 
"(i) designate who shall act as Director in the Direc-
tor's absence; and 
"(ii) delegate to any employee, representative, or 
agent any power of the Director. 
"(B) LIMITATIONS.—Notwithstanding subparagraph (AXii), 
the Director shall not, directly or indirectly— 
"(i) after October 10, 1989, delegate to any Federal 
home loan bank or to any officer, director, or employee 
of a Federal home loan bank, any power involving 
examining, supervising, taking enforcement action 
/ 
with respect to, or otherwise regulating any savings 
association, savings and loan holding company, or other 
person subject to regulation by the Director; or 
"(ii) delegate the Director's authority to serve as a 
member of the Corporation's Board of Directors. 
"(h) FUNDING THROUGH ASSESSMENTS.—The compensation of the 
<
^ 
Director and other employees of the Office and all other expenses 
thereof may be paid from assessments levied under this Act. 
"(i) GAO AUDIT.—The Director shall make available to the 
Comptroller General of the United States all books and records 
103 STAT. 280 
PUBLIC LAW 101-73—AUG. 9, 1989 
necessary to audit all of the activities of the Office of Thrift Super-
vision. 
12 use 1463. 
"SEC. 4. SUPERVISION OP SAVINGS ASSOCIATIONS. 
\^i 
"(a) FEDERAL SAVINGS ASSOCIATIONS.— 
"(1) IN GENERAL.—The Director shall provide for the examina-
> 
tion, safe and sound operation, and regulation of savings 
associations. 
"(2) REGULATIONS.—The Director may issue such regulations 
as the Director determines to be appropriate to carry out the 
responsibilities of the Director or the Office. 
"(3) SAFE AND SOUND HOUSING CREDIT TO BE ENCOURAGED.— 
The Director shall exercise all powers granted to the Director 
under this Act so as to encourage savings gissociations to provide 
credit for housing safely and soundly. 
^ 
"(b) ACCOUNTING AND DISCLOSURE.— 
^ 
"(1) IN GENERAL.—The Director shall, by regulation, prescribe 
uniform accounting and disclosure standards for savings 
associations, to be used in determining savings associations' 
compliance with all applicable regulations. 
"(2) SPECIFIC REQUIREMENTS FOR ACCOUNTING STANDARDS.— 
Subject to section 5(t), the uniform accounting standards pre-
scribed under paragraph (1) shall— 
"(A) incorporate generally accepted accounting principles 
to the same degree that such principles are used to deter-
mine compliance with regulations prescribed by the Fed-
eral banking agencies; 
"(B) allow for no deviation from full compliance with 
such standards as are in effect after December 31,1993; and 
"(C) prior to January 1, 1994, require full compliance by 
savings associations with accounting standards in effect at 
any time before such date not later than provided under the 
schedule in section 563.23-3 of title 12, Code of Federal 
Regulations (as in effect on May 1,1989). 
"(3) AUTHORITY TO PRESCRIBE MORE STRINGENT ACCOUNTING 
STANDARDS.—The Director may at any time prescribe account-
ing standards more stringent than required under paragraph (2) 
if the Director determines that the more stringent standards 
are necessary to ensure the safe and sound operation of savings 
associations. 
"(c) STRINGENCY OF STANDARDS.—All regulations and policies of 
the Director governing the safe and sound operation of savings 
associations, including regulations and policies governing asset 
classification and appraisals, shall be no less stringent than those 
established by the Comptroller of the Currency for national banks. 
"(d) INVESTMENT OF CERTAIN FUNDS IN ACCOUNTS OF SAVINGS 
ASSOCIATIONS.—The savings accounts and share accounts of savings 
associations insured by the Corporation shall be lawful investments 
and may be accepted as security for all public funds of the United 
States, fiduciary and trust funds under the authority or control of 
the United States or any officer thereof, and for the funds of all 
corporations organized under the laws of the United States (subject 
to any regulatory authority otherwise applicable), regardless of any 
limitation of law upon the investment of any such funds or upon the 
acceptance of security for the investment or deposit of any of such 
funds. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 281 
"(e) PARTICIPATION BY SAVINGS ASSOCIATIONS IN LOTTERIES AND 
RELATED ACTIVITIES.— 
"(1) 
PARTICIPATION 
PROHIBITED.—No savings 
association 
may— 
"(A) deal in lottery tickets; 
"(B) deal in bets used as a means or substitute for partici-
pation in a lottery; 
"(C) announce, advertise, or publicize the existence of any 
lottery; or 
"(D) announce, advertise, or publicize the existence or 
^ 
identity of any participant or winner, as such, in a lottery. 
"(2) USE OF FACILITIES PROHIBITED.—No savings association 
may permit— 
"(A) the use of any part of any of its own offices by any 
person for any purpose forbidden to the institution under 
paragraph (1); or 
, 
"(B) direct access by the public from any of its own offices 
to any premises used by any person for any purpose forbid-
den to the institution under paragraph (1). 
"(3) DEFINITIONS.—For purposes of this subsection— 
"(A) DEAL IN.—The term 'deal in' includes making, 
taking, buying, selling, redeeming, or collecting. 
"(B) LOTTERY.—The term 'lottery' includes any arrange-
ment under which— 
"(i) 3 or more persons (hereafter in this subparagraph 
referred to as the 'participants') advance money or 
credit to another in exchange for the possibility or 
expectation that 1 or more but not all of the partici-
Rij 
pants (hereafter in this paragraph referred to as the 
'winners') will receive by reason of those participants' 
advances more than the amounts those participants 
- • ,;-
have advanced; and 
"(ii) the identity of the winners is determined by any 
means which includes— 
"(I) a random selection; 
"(II) a game, race, or contest; or 
• 
^' 
"(III) any record or tabulation of the result of 1 
or more events in which any participant has no 
interest except for the bearing that event has on 
the possibility that the participant may become a 
winner. 
"(C) LOTTERY TICKET.—The term 'lottery ticket' includes 
any right, privilege, or possibility (and any ticket, receipt, 
record, or other evidence of any such right, privilege, or 
possibility) of becoming a winner in a lottery. 
"(4) EXCEPTION FOR STATE LOTTERIES.—Paragraphs (1) and (2) 
shall not apply with respect to any savings association accepting 
funds from, or performing any lawful services for, any State 
operating a lottery, or any officer or employee of such a State 
^ 
who is charged with administering the lottery. 
"(5) REGULATIONS.—The Director shall prescribe such regula-
tions as may be necessary to provide for enforcement of this 
subsection and to prevent any evasion of any provision of this 
subsection. 
"(f) FEDERALLY RELATED MORTGAGE LOAN DISCLOSURES.—A sav-
ings association may not make a federally related mortgage loan to 
^ 
an agent, trustee, nominee, or other person acting in a fiduciary 
103 STAT. 282 
PUBLIC LAW 101-73—AUG. 9, 1989 
capacity without requiring that the identity of the person receiving 
the beneficial interest of such loan shall at all times be revealed to 
Reports. 
the savings association. At the request of the Director, the savings 
association shall report to the Director the identity of such person 
and the nature and amount of the loan. 
"(g) PREEMPTION OF STATE USURY LAWS.—(1) Notwithstanding any 
State law, a savings association may charge interest on any exten-
sion of credit at a rate of not more than 1 percent in excess of the 
discount rate on 90-day commercial paper in effect at the Federal 
Reserve bank in the Federal Reserve district in which such savings 
association is located or at the rate allowed by the laws of the State 
in which such savings association is located, whichever is greater. 
"(2) If the rate prescribed in paragraph (1) exceeds the rate such 
savings association would be permitted to charge in the absence of 
this subsection, the receiving or charging a greater rate of interest 
than that prescribed by paragraph (1), when knowingly done, shall 
be deemed a forfeiture of the entire interest which the extension of 
credit carries with it, or which has been agreed to be paid thereon. If 
such greater rate of interest has been paid, the person who paid it 
may recover, in a civil action commenced in a court of appropriate 
jurisdiction not later than 2 years after the date of such payment, an 
amount equal to twice the amount of the interest paid from the 
savings association taking or receiving such interest. 
"(h) FORM AND MATURITY OF SECURITIES.—No savings association 
shall— 
"(1) issue securities which guarantee a definite maturity 
except with the specific approval of the Director, or 
"(2) issue any securities the form of which has not been 
approved by the Director. 
12 use 1464. 
"SEC. 5. FEDERAL SAVINGS ASSOCIATIONS. 
Housing. 
"(a) IN GENERAL.—In order to provide thrift institutions for the 
deposit of funds and for the extension of credit for homes and other 
< - ^ 
goods and services, the Director is authorized, under such regula-
tions as the Director may prescribe— 
"(1) to provide for the organization, incorporation, examina-
tion, operation, and regulation of associations to be known as 
Federal savings associations (including Federal savings banks), 
and 
"(2) to issue charters therefor, 
giving primary consideration of the best practices of thrift institu-
tions in the United States. The lending and investment po>yers 
conferred by this section are intended to encourage such institutions 
to provide credit for housing safely and soundly. 
"(b) DEPOSITS AND RELATED POWERS.— 
"(1) DEPOSIT ACCOUNTS.— 
"(A) Subject to the terms of its charter and regulations of 
the Director, a Federal savings association may— 
"(i) raise funds through such deposit, share, or other 
J? 
accounts, including demand deposit accounts (hereafter 
in this section referred to as 'accounts'); and 
"(ii) issue peissbooks, certificates, or other evidence of 
accounts. 
f 
"(B) A Federal savings association may not— 
. 
"(i) pay interest on a demand account; or 
"(ii) permit any overdraft (including an intraday 
overdraft) on behalf of an affiliate, or incur any such 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 283 
overdraft in such savings association's account at a 
• J- 
Federal reserve bank or Federal home loan bank on 
behalf of an affiliate. 
All savings accounts and demand accounts shall have the 
same priority upon liquidation. Holders of accounts and 
obligors of a Federal savings association shall, to such 
extent as may be provided by its charter or by regulations 
of the Director, be members of the savings association, and 
shall have such voting rights and such other rights as are 
thereby provided. 
"(C) A Federal savings association may require not less 
than 14 days notice prior to payment of savings accounts if 
the charter of the savings association or the regulations of 
the Director so provide. 
"(D) If a Federal savings association does not pay all 
withdrawals in full (subject to the right of the gissociation, 
where applicable, to require notice), the payment of 
withdrawals from accounts shall be subject to such rules 
and procedures as may be prescribed by the savings eissocia-
tion's charter or by regulation of the Director. Except as 
authorized in writing by the Director, any Federal savings 
association that fails to make full payment of any with-
drawal when due shall be deemed to be in an unsafe or 
unsound condition. 
"(E) Accounts may be subject to check or to withdrawal 
or transfer on negotiable or transferable or other order or 
authorization to the Federal savings association, £is the 
Director may by regulation provide. 
"(F) A Federal savings association may establish remote 
service units for the purpose of crediting savings or demand 
-
accounts, debiting such accounts, crediting payments on 
loans, and the disposition of related financial transactions, 
as provided in regulations prescribed by the Director. 
"(2) OTHER UABIUTIES.—To such extent as the Director may 
authorize in writing, a Federal savings association may borrow, 
. 
may give security, may be surety as defined by the Director and 
may issue such notes, bonds, debentures, or other obligations, or 
other securities, including capital stock. 
"(3) LOANS FROM STATE HOUSING FINANCE AGENCIES.— 
"(A) IN GENERAL.—Subject to regulation by the Director 
but without regard to any other provision of this subsection, 
any Federal savings sissociation that is in compliance with 
the capital standards in effect under subsection (t) may 
borrow funds from a State mortgage finance agency of the 
State in which the head office of such savings association is 
situated to the same extent as State law authorizes a 
savings association organized under the laws of such State 
to borrow from the State mortgage finance agency. 
/ 
"(B) INTEREST RATE.—A Federal savings association may 
not make any loan of funds borrowed under subparagraph 
(A) at an interest rate which exceeds by more than 1% 
percent per annum the interest rate paid to the State 
mortgage finance agency on the obligations issued to obtain 
the funds so borrowed. 
"(4) CREDIT CARDS.—Subject to regulations of the Director, a 
Federal savings association may issue credit cards, extend credit 
103 STAT. 284 
PUBLIC LAW 101-73—AUG. 9, 1989 
in connection therewith, and otherwise engage in or participate 
in credit card operations. 
"(5) MUTUAL CAPITAL CERTIFICATES.—In accordance with regu-
lations issued by the Director, mutual capital certificates may 
be issued and sold directly to subscribers or through under-
writers. Such certificates may be included in calculating capital 
for the purpose of subsection (t) to the extent permitted by the 
Director. The issuance of certificates under this paragraph does 
not constitute a change of control or ownership under this Act 
or any other law unless there is in fact a change in control or 
reorganization. Regulations relating to the issuance and sale of 
mutual capital certificates shall provide that such certificates— 
"(A) are subordinate to all savings accounts, savings cer-
tificates, and debt obligations; 
"(B) constitute a claim in liquidation on the general 
reserves, surplus, and undivided profits of the Federal sav-
ings association remaining after the payment in full of all 
savings accounts, savings certificates, and debt obligations; 
"(C) are entitled to the payment of dividends; and 
"(D) may have a fixed or variable dividend rate. 
"(c) LOANS AND INVESTMENTS.—To the extent specified in regula-
tions of the Director, a Federal savings association may invest in, 
sell, or otherwise deal in the following loans and other investments: 
"(1) LOANS OR INVESTMENTS WITHOUT PERCENTAGE OF ASSETS 
UMiTATiON.—Without limitation as a percentage of assets, the 
following are permitted: 
"(A) ACCOUNT LOANS.—Loans on the security of its sav-
ings accounts and loans specifically related to transaction 
accounts. 
"(B) RESIDENTIAL REAL PROPERTY LOANS.—Loans on the 
security of liens upon residential real property. 
"(C) 
UNITED STATES GOVERNMENT SECURITIES.—Invest-
ments in obligations of, or fully guaranteed as to principal 
and interest by, the United States. 
"(D) FEDERAL HOME LOAN BANK AND FEDERAL NATIONAL 
MORTGAGE ASSOCIATION SECURITIES.—Investments in the 
stock or bonds of a Federal home loan bank or in the stock 
of the Federal National Mortgage Association. 
"(E) FEDERAL HOME LOAN MORTGAGE CORPORATION IN-
STRUMENTS.—Investments in mortgages, obligations, or 
other securities which are or have been sold by the Federal 
\ 
Home Loan Mortgage Corporation pursuant to section 305 
or 306 of the Federal Home Loan Mortgage Corporation 
Act. 
"(F) 
OTHER GOVERNMENT SECURITIES.—Investments in 
-^ 
obligations, participations, securities, or other instruments 
issued by, or fully guaranteed as to principal and interest 
by, the Federal National Mortgage Association, the Student 
Loan Marketing Association, the Government National 
Mortgage Association, or any agency of the United States. 
A savings association may issue and sell securities which 
are guaranteed pursuant to section 306(g) of the National 
Housing Act. 
"(G) DEPOSITS.—Investments in accounts of any insured 
,.. . 
depository institution, as defined in section 3 of the Federal 
Deposit Insurance Act. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 285 
"(H) STATE SECURITIES.—Investments in obligations issued 
by any State or political subdivision thereof (including any 
agency, corporation, or instrumentality of a State or politi-
cal subdivision). A Federal savings association may not 
invest more than 10 percent of its capital in obligations of 
any one issuer, exclusive of investments in general obliga-
tions of any issuer. 
"(I) PURCHASE OF INSURED LOANS.—Purchase of loans se-
cured by liens on improved real estate which are insured or 
guaranteed under the National Housing Act, the Service-
men's Readjustment Act of 1944, or chapter 37 of title 38, 
United States Code. 
"(J) 
HOME 
IMPROVEMENT AND MANUFACTURED 
HOME 
LOANS.—Loans made to repair, equip, alter, or improve any 
Real property, 
residential real property, and loans made for manufactured 
home financing. 
"(K) INSURED LOANS TO FINANCE THE PURCHASE OF FEE 
^ 
SIMPLE.—Loans insured under section 240 of the National 
Housing Act. 
"(L) LOANS TO FINANCIAL INSTITUTIONS, BROKERS, AND 
DEALERS.—Loans to— 
"(i) financial institutions with respect to which the 
United States or an agency or instrumentality thereof 
has any function of examination or supervision, or 
"(ii) any broker or dealer registered with the Securi-
ties and Exchange Commission, 
which are secured by loans, obligations, or investments in 
which the Federal savings association has the statutory 
authority to invest directly. 
"(M) LIQUIDITY INVESTMENTS.—Investments which, when 
made, are of a type that may be used to satisfy any liquidity 
, 
requirement imposed by the Director pursuant to section 6. 
* 
"(N) INVESTMENT IN THE NATIONAL HOUSING PARTNERSHIP 
CORPORATION, PARTNERSHIPS, AND JOINT VENTURES.—Invest-
ments in shares of stock issued by a corporation authorized 
to be created pursuant to title IX of the Housing and Urban 
Development Act of 1968, and investments in any partner-
ship, limited partnership, or joint venture formed pursuant 
to section 907(a) or 907(c) of such Act. 
"(O) 
CERTAIN HUD INSURED OR GUARANTEED INVEST-
MENTS.—Loans that are secured by mortgages— 
"(i) insured under title X of the National Housing 
Act, or 
"(ii) guaranteed under title IV of the Housing and 
Urban Development Act of 1968, under part B of the 
National Urban Policy and New Community Develop-
ment Act of 1970, or under section 802 of the Housing 
and (Community Development Act of 1974. 
"(P) STATE HOUSING CORPORATION INVESTMENTS.—Obliga-
tions of and loans to any State housing corporation, if— 
"(i) such obligations or loans are secured directly, or 
indirectly through an agent or fiduciary, by a first lien 
on improved real estate which is insured under the 
provisions of the National Housing Act, and 
"(ii) in the event of default, the holder of the obliga-
tions or loans has the right directly, or indirectly 
through an agent or fiduciary, to cause to be subject to 
103 STAT. 286 
PUBLIC LAW 101-73—AUG. 9, 1989 
the satisfaction of such obligations or loans the real 
* , 
estate described in the first lien or the insurance pro-
ceeds under the National Housing Act. 
, J J 
"(Q) INVESTMENT COMPANIES.—A Federal savings associa-
j . 
tion may invest in, redeem, or hold shares or certificates 
,". J 
issued by any open-end management investment company 
which— 
^ 
_ ^„, 
"(i) is registered with the Securities and Exchange 
, 
!-,. 
Commission under the Investment Company Act of 
1940, and 
;/ , 
"(ii) the portfolio of which is restricted by such 
management company's investment policy (changeable 
5 
only if authorized by shareholder vote) solely to invest-
^ .. 
ments that a Federal savings association by law or 
regulation may, without limitation as to percentage of 
assets, invest in, sell, redeem, hold, or otherwise deal 
in. 
"(R) MORTGAGE-BACKED SECURITIES.—Investments in secu-
rities that— 
"(i) are offered and sold pursuant to section 4(5) of 
the Securities Act of 1933; or 
"(ii) are mortgage related securities (as defined in 
section 3(aX41) of the Securities Exchange Act of 1934), 
subject to such regulations as the Director may prescribe, 
including regulations prescribing minimum size of the issue 
(at the time of initial distribution) or minimum aggregate 
sales price, or both. 
"(2) LOANS OR INVESTMENTS UMITED TO A PERCENTAGE OF 
ASSETS OR CAPITAL.—The following loans or investments are 
permitted, but only to the extent specified: 
"(A) COMMERCIAL AND OTHER LOANS.—Secured or 
un-
secured loans for commercial, corporate, business, or agri-
cultural purposes. The aggregate amount of loans under 
this paragraph shall not exceed 10 percent of the assets of 
the Federal savings association. 
"(B) NONRESIDENTIAL REAL PROPERTY LOANS.— 
"(i) IN GENERAL.—Loans on the security of liens upon 
nonresidential real property. Except as provided in 
clause (ii), the aggregate amount of such loans shall not 
exceed 400 percent of the Federal savings association's 
capital, as determined under subsection (t). 
(ii) EXCEPTION.—The Director may permit a savings 
association to exceed the limitation set forth in clause 
(i) if the Director determines that the increased author-
i t y -
"(I) poses no significant risk to the safe and 
/ 
sound operation of the association, and 
"(II) is consistent with prudent operating prac-
tices, 
"(iii) MONITORING.—If the Director permits any in-
' 
• 
f^ 
creased authority pursuant to clause (ii), the Director 
shall closely monitor the Federal savings association's 
i
,
^ 
condition and lending activities to ensure that the 
savings association carries out all authority under this 
paragraph in a safe and sound manner and complies 
with this subparagraph and all relevant laws and regu-
, 
lations 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 287 
"(C) INVESTMENTS IN PERSONAL PROPERTY.—Investments 
in tangible personal property, including, vehicles, manufac-
tured homes, machmery, equipment, or furniture, for 
rental or sale. Investments under this subparagraph may 
not exceed 10 percent of the assets of the Federal savings 
association. 
-
^ 
n i » 
"(D) (DoNSUMER LOANS AND CERTAIN SECURITIES.—A Fed-
eral savings association may make loans for personal, 
family, or household purposes, including loans reasonably 
incident to providing such credit, and may invest in, sell, or 
hold commercial paper and corporate debt securities, as 
defined and approved by the Director. Loans and other 
, 
investments under this subparagraph may not exceed 30 
percent of the assets of the Federal savings association. 
"(3) LOANS OR INVESTMENTS UMITED TO 5 PERCENT OF ASSETS.— 
The following loans or investments are permitted, but not to 
exceed 5 percent of assets of a Federal savings association for 
each subparagraph: 
"(A) EDUCATION LOANS.—Loans made for the pa3mient of 
educational expenses. 
"(B) COMMUNITY 
DEVELOPMENT INVESTMENTS.—Invest- Real property. S 
ments in real property and obligations secured by liens on 
real property located within a geographic area or neighbor-
hood receiving concentrated development assistance by a 
local government under title I of the Housing and (Commu-
nity Development Act of 1974. No investment under this 
subparagraph in such real property may exceed an aggre-
gate of 2 percent of the assets of the Federal savings 
association. 
"(C) NONCONFORMING LOANS.—Loans upon the security of Real property. 
or respecting real property or interests therein used for 
primarily residential or farm purposes that do not comply 
with the limitations of this subsection. 
"(D) CONSTRUCTION LOANS WITHOUT SECURITY.—Loans— 
"(i) the principal purpose of which is to provide 
financing with respect to what is or is expected to 
become primarily residential real estate; and 
"(ii) with respect to which the association— 
"(I) relies substantially on the borrower's general 
credit standing and projected future income for 
repa)mient, without other security; or 
'(II) relies on other assurances for repa)mient, 
including a guarantee or similar obligation of a 
third party. 
The aggregate amount of such investments shall not exceed 
the greater of the Federal savings association's capital or 5 
percent of its assets. 
"(4) OTHER LOANS AND INVESTMENTS.—The following addi-
tional loans and other investments to the extent authorized 
below: 
"(A) 
BUSINESS DEVELOPMENT CREDIT CORPORATIONS.—A 
Federal savings association that is in compliance with the 
capital standards prescribed under subsection (t) may invest 
in, lend to, or to commit itself to lend to, any business 
development credit corporation incorporated in the State in 
which the home office of the association is located in the 
same manner and to the same extent as savings associa-
103 STAT. 288 
PUBLIC LAW 101-73—AUG. 9, 1989 
Securities. 
Housing. 
"(d) 
tions chartered by such State are authorized. The aggregate 
amount of such investments, loans, and commitments of 
any such Federal savings association shall not exceed one-
half of 1 percent of the association's total outstanding loans 
or $250,000, whichever is less. 
"(B) SERVICE CORPORATIONS.—Investments in the capital 
stock, obligations, or other securities of any corporation 
organized under the laws of the State in which the Federal 
savings association's home office is located, if such corpora-
tion's entire capital stock is available for purchase only by 
savings associations of such State and by Federal associa-
tions having their home offices in such State. No Federal 
savings association may make any investment under this 
subparagraph if the association's aggregate outstanding 
investment under this subparagraph would exceed 3 per-
cent of the association's assets. Not less than one-half of the 
investment permitted under this subparagraph which ex-
ceeds 1 percent of the association's assets shall be used 
primarily for community, inner-city, and community devel-
opment purposes. 
"(C) FOREIGN ASSISTANCE INVESTMENTS.—Investments in 
housing project loans having the benefit of any guaranty 
under section 221 of the Foreign Assistance Act of 1961 or 
loans having the benefit of any guarantee under section 224 
of such Act, or any commitment or agreement with respect 
to such loans made pursuant to either of such sections and 
in the share capital and capital reserve of the Inter-Amer-
ican Savings and Loan Bank. This authority extends to the 
acquisition, holding, and disposition of loans guaranteed 
under section 221 or 222 of such Act. Investments under 
this subparagraph shall not exceed 1 percent of the Federal 
savings association's assets. 
"(D) SMALL BUSINESS INVESTMENT COMPANIES.—A Federal 
savings association may invest in stock, obligations, or 
other securities of any small business investment company 
formed pursuant to section 301(d) of the Small Business 
Investment Act of 1958 for the purpose of aiding members 
of a Federal home loan bank. A Federal savings association 
may not make any investment under this subparagraph if 
its aggregate outstanding investment under this subpara-
graph would exceed 1 percent of the assets of such savings 
association. 
"(5) DEFINITIONS.—As used in this subsection— 
* 
"(A) RESIDENTIAL PROPERTY.—The terms 'residential real 
property' or 'residential real estate' mean leaseholds, 
homes (including condominiums and cooperatives, except 
that in connection with loans on individual cooperative 
units, such loans shall be adequately secured as defined by 
the Director) and, combinations of homes or dwelling units 
and business property, involving only minor or incidental 
business use, or property to be improved by construction of 
such structures. 
"(B) LOANS.—The term 'loans' includes obligations and 
extensions or advances of credit; and any reference to a 
loan or investment includes an interest in such a loan or 
investment. 
REGULATORY AUTHORITY.— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 289 
'(1) IN GENERAL.— 
"(A) ENFORCEMENT.—The Director shall have power to 
enforce this section, section 8 of the Federal Deposit Insur-
ance Act, and regulations prescribed hereunder. In enforc-
ing any provision of this section, regulations prescribed 
under this section, or any other law or regulation, or in any 
other action, suit, or proceeding to which the Director is a 
party or in which the Director is interested, and in the 
administration of conservatorships and receiverships, the 
Director may act in the Director's own name and through 
the Director's own attorneys. Except as otherwise provided, C!ourts, U.S. 
the Director shall be subject to suit (other than suits on 
claims for money damages) by any Federal savings associa- 
h j , 
tion or director or officer thereof with respect to any matter 
under this section or any other applicable law, or regula-
tion thereunder, in the United States district court for the 
judicial district in which the savings association's home 
office is located, or in the United States District Court for 
the District of Columbia, and the Director may be served 
with process in the manner prescribed by the Federal Rules 
of Civil Procedure. 
"(B) ANCILLARY PROVISIONS.—(i) In making examinations 
of savings associations, examiners appointed by the Direc- 
H 
tor shall have power to make such examinations of the 
affairs of all affiliates of such savings £issociations as shall 
be necessary to disclose fully the relations between such 
savings associations and their affiliates and the effect of 
such relations upon such savings associations. For purposes 
' 
of this subsection, the term 'affiliate' has the same meaning 
as in section 2(b) of the Banking Act of 1933, except that the 
term 'member bank' in section 2(b) shall be deemed to refer 
to a savings association. 
"(ii) In the course of any examination of any savings 
association, upon request by the Director, prompt and com-
plete access shall be given to all savings association officers, 
directors, employees, and agents, and to all relevant books, 
records, or documents of any type. 
: 
"(iii) Upon request made in the course of supervision or 
oversight of any savings association, for the purpose of 
acting on any application or determining the condition of 
any savings sissociation, including whether operations are 
being conducted safely, soundly, or in compliance with 
charters, laws, regulations, directives, written agreements, 
or conditions imposed in writing in connection with the 
granting of an application or other request, the Director 
shall be given prompt and complete access to all savings 
association officers, directors, employees, and agents, and to 
all relevant books, records, or documents of any type. 
"(iv) If prompt and complete access upon request is not Courts, U.S. 
given as required in this subsection, the Director may apply 
to the United States district court for the judicial district 
(or the United States court in any territory) in which the 
principal office of the institution is located, or in which the 
person denying such access resides or carries on business, 
for an order requiring that such information be promptly 
provided. 
103 STAT. 290 
PUBLIC LAW 101-73—AUG. 9, 1989 
Courts, U.S. 
Ck)urts, U.S. 
"(v) In connection with examinations of savings associa-
tions and affiliates thereof, the Director may— 
"(I) administer oaths and affirmations and examine 
and to take and preserve testimony under oath as to 
any matter in respect of the affairs or ownership of any 
such savings association or affiliate, and 
"(II) issue subpenas and, for the enforcement thereof, 
apply to the United States district court for the judicial 
district (or the United States court in any territory) in 
which the principal office of the savings association or 
affiliate is located, or in which the witness resides or 
carries on business. 
Such courts shall have jurisdiction and power to order and 
require compliance with any such subpena. 
' (vi) In any proceeding under this section, the Director 
may administer oaths and affirmations, take depositions, 
and issue subpenas. The Director may prescribe regulations 
with respect to any such proceedings. The attendance of 
witnesses and the production of documents provided for in 
this subsection may be required from any place in any State 
or in any territory at any designated place where such 
proceeding is being conducted. 
"(vii) Any party to a proceeding under this section may 
apply to the United States District Court for the District of 
Columbia, or the United States district court for the judicial 
district (or the United States court in any territory) in 
which such proceeding is being conducted, or where the 
witness resides or carries on business, for enforcement of 
any subpena issued pursuant to this subsection or section 
10(c) of the Federal Deposit Insurance Act, and such courts 
shall have jurisdiction and power to order and require 
compliance therewith. Witnesses subpenaed under this sec-
tion shall be paid the same fees and mileage that are paid 
witnesses in the district courts of the United States. All 
expenses of the Director in connection with this section 
shall be considered as nonadministrative expenses. Any 
court having jurisdiction of any proceeding instituted under 
this section by a savings association, or a director or officer 
thereof, may allow to any such party reasonable expenses 
and attorneys' fees. Such expenses and fees shall be paid by 
the savings association. 
*(2) CONSERVATORSHIPS AND RECEIVERSHIPS.— 
"(A) 
GROUNDS FOR APPOINTMENT FOR FEDERAL SAVINGS 
ASSOCIATIONS.—A conservator or receiver may be appointed 
for a Federal savings association if one or more of the 
following conditions exist: 
"(i) insolvency in that the assets of the association 
are less than its obligations to its creditors and others, 
including its members; 
"(ii) substantial dissipation of assets or earnings due 
to any violation or violations of law or regulations, or to 
any unsafe or unsound practice or practices; 
(iii) an unsafe or unsound condition to transact 
business, including having substantially insufficient 
capital or otherwise; 
(iv) willful violation of a cease-and-desist order 
which has become final; 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 291 
"(v) concealment of books, papers, records, or assets 
of the savings association or refusal to submit books, 
papers, records, or affairs of the association for inspec-
tion to any examiner or to any lawful agent of the 
Director; 
"(vi) the association is not likely to be able to meet 
the demands of its depositors or pay its obligations in 
the normal course of business; 
"(viiXD the association has incurred or is likely to 
incur losses that will deplete all or substantially all of 
its capital, and (II) there is no reasonable prospect for 
the replenishment of the capital of the association 
without Federal assistance; or 
"(viii) there is a violation or violations of laws or 
regulations, or an unsafe or unsound practice or condi-
tion which is likely to cause insolvency or substantial 
dissipation of assets or earnings, or is likely to weaken 
the condition of the association or otherwise seriously 
prejudice the interests of its depositors. 
"(B) ADDITIONAL GROUNDS FOR APPOINTMENT OF FEDERAL 
ASSOCIATIONS.—In addition to the foregoing provisions, the 
Director may, without any requirement of notice, hearing, 
or other action, appoint a conservator or receiver for a 
Federal savings association if^ 
"(i) the association, by resolution of its board of 
directors or of its members, consents to such appoint-
ment, or 
"(ii) the association is removed from membership in 
any Federal home loan bank, or its status as an institu-
tion the accounts of which are insured by the Corpora-
tion is terminated. 
"(C) 
GROUNDS FOR APPOINTMENT FOR STATE ASSOCIA-
TIONS.—Notwithstanding any other provision of law, the 
Director shall have power and jurisdiction to appoint a 
conservator or receiver for an insured State savings associa-
tion, if the Director determines that any of the following 
grounds for the appointment of a conservator or receiver 
exists: 
"(i) insolvency in that the assets of the savings 
association are less than its obligations to its creditors 
and others, including its members; 
"(ii) substantial dissipation of assets or earnings due 
to any violation or violations of law or regulations, or to 
any unsafe or unsound practice or practices; 
'(iii) an unsafe or unsound condition to transact 
business, including having substantially insufficient 
capital or otherwise; 
*(iv) the association is not likely to be able to meet 
the demands of its depositors or pay its obligations in 
the normal course of business; 
"(vXD the savings association has incurred or is likely 
to incur losses that will deplete all or substantially all 
of its capital, and (II) there is no reasonable prospect 
for the savings association's capital to be replenished 
without Federal assistance; or 
"(vi) there is a violation or violations of laws or 
regulations, or an unsafe or unsound practice or condi- 
'' 
103 STAT. 292 
PUBLIC LAW 101-73—AUG. 9, 1989 
Ck)urts, U.S. 
tion which is likely to cause insolvency or substantial 
dissipation of assets or earnings, or is likely to weaken 
the condition of the association or otherwise seriously 
prejudice the interests of its depositors. 
"(D) APPROVAL OF STATE OFFICIAL.—(i) The authority con-
ferred by subparagraph (C) shall not be exercised without 
the written approval of the State official having jurisdiction 
over the insured State savings association that one or more 
of the grounds specified for such exercise exist. 
"(ii) If such approval has not been received within 30 days 
of receipt of notice to the State that the Director has 
determined such grounds exist, and the Director has re-
sponded in writing to the State's written reasons, if any, for 
withholding approval, then the Director may proceed with-
out State approval. 
"(E) 
POWER OF APPOINTMENT; JUDICIAL REVIEW.—The 
Director shall have exclusive power and jurisdiction to 
appoint a conservator or receiver for a Federal savings 
association. If, in the opinion of the Director, a ground for 
the appointment of a conservator or receiver for a savings 
association exists, the Director is authorized to appoint ex 
parte and without notice a conservator or receiver for the 
savings association. In the event of such appointment, the 
association may, within 30 days thereafter, bring an action 
in the United States district court for the judicial district in 
which the home office of such association is located, or in 
the United States District Court for the District of Colum-
bia, for an order requiring the Director to remove such 
conservator or receiver, and the court shall upon the merits 
dismiss such action or direct the Director to remove such 
conservator or receiver. Upon the commencement of such 
an action, the court having jurisdiction of any other action 
or proceeding authorized under this subsection to which the 
association is a party shall stay such action or proceeding 
during the pendency of the action for removal of the con-
servator or receiver. 
"(F) REPLACEMENT.—The Director may, without any prior 
notice, hearing, or other action, replace a conservator with 
another conservator or with a receiver, but such replace-
ment shall not affect any right which the association may 
have to obtain judicial review of the original appointment, 
except that any removal under this subparagraph shall be 
removal of the conservator or receiver in office at the time 
of such removal. 
"(G) COURT ACTION.—Except as otherwise provided in this 
subsection, no court may take any action for or toward the 
removal of any conservator or receiver or, except at the 
request of the Director, to restrain or affect the exercise of 
powers or functions of a conservator or receiver. 
"(H) POWERS.— 
"(i) IN GENERAL.—A conservator shall have all the 
powers of the members, the stockholders, the directors, 
and the officers of the association and shall be au-
thorized to operate the association in its own name or 
to conserve its assets in the manner and to the extent 
' "•' •- authorized by the Director. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 293 
"(ii) FDIC OR RTC AS CONSERVATOR OR RECEIVER.— 
Except as provided in section 21A of the Federal Home 
Loan Bank Act, the Director, at the Director's discre-
tion, may appoint the Federal Deposit Insurance 
Corporation or the Resolution Trust Corporation, as 
appropriate, as conservator for a savings association. 
The Director shall appoint only the Federal Deposit 
Insurance Corporation or the Resolution Trust Cor-
poration, as appropriate, as receiver for a savings 
association for the purpose of liquidation or winding up 
the affairs of such savings association. The conservator 
or receiver so appointed shall, as such, have power to 
buy at its own sale. The Federal Deposit Insurance 
Corporation, as such conservator or receiver, shall have 
all the powers of a conservator or receiver, as appro-
priate, granted under the Federal Deposit Insurance 
Act, and (when not inconsistent therewith) any other 
rights, powers, and privileges possessed by conservators 
or receivers, as appropriate, of savings associations 
under this Act and any other provisions of law. 
"(I) 
DISCLOSURE REQUIREMENT FOR THOSE ACTING ON 
BEHALF OF CONSERVATOR.—A conscrvator shall require that 
any independent contractor, consultant, or counsel em-
ployed by the conservator in connection 
with the 
conservatorship of a savings association pursuant to this 
section shall fully disclose to all parties with which such 
contractor, consultant, or counsel is negotiating, any limita-
tion on the authoritv of such contractor, consultant, or 
^ 
counsel to make legally binding representations on behalf 
of the conservator. 
"(8) REGULATIONS.— 
"(A) IN GENERAL.—The Director may prescribe regula-
tions for the reorganization, consolidation, liquidation, and 
dissolution of savings associations, for the merger of in-
sured savings associations with insured savings associa-
tions, for savings associations in conservatorship and 
receivership, and for the conduct of conservatorships and 
receiverships. The Director may, by regulation or other-
wise, provide for the exercise of functions by members, 
stockholders, directors, or officers of a savings association 
during conservatorship and receivership. 
"(B) FDIC O
R RTC AS CONSERVATOR OR RECEIVER.—In any 
case where the Federal Deposit Insurance Corporation or 
the Resolution Trust Corporation is the conservator or 
receiver, any regulations prescribed by the Director shall be 
consistent with any regulations prescribed by the Federal 
Deposit Insurance Corporation pursuant to the Federal 
Deposit Insurance Act. 
"(4) 
REFUSAL TO COMPLY 
WITH 
DEMAND.—Whenever a Lawenforce-
conservator or receiver appointed by the Director demands ment and crime, 
possession of the property, business, and assets of any savings 
association, or of any part thereof, the refusal by any director, 
officer, employee, or agent of such association to comply with 
the demand shall be punishable by a fine of not more than 
i 
$5,000 or imprisonment for not more than one year, or both. 
"(5) DEFINITIONS.—As used in this subsection, the term 'sav-
ings association' includes any savings association or former 
29-194 O—91—Part 1 
11 : QL 3 
103 STAT. 294 
PUBLIC LAW 101-73—AUG. 9, 1989 
savings association that retains deposits insured by the Corpora-
tion, notwithstanding termination of its status as an institution 
insured by the Corporation. 
"(6) 
COMPLIANCE 
WITH 
MONETARY 
TRANSACTION 
RECORD-
KEEPING AND REPORT REQUIREMENTS.— 
Regulations. 
"(A) CoMPUANCE PROCEDURES REQUIRED.—The Director 
shall prescribe regulations requiring savings associations to 
establish and maintain procedures reasonably designed to 
s 
assure and monitor the compliance of such associations 
v
f 
with the requirements of subchapter II of chapter 53 of title 
31, United States Code. 
"(B) EXAMINATIONS OF SAVINGS ASSOCIATIONS TO INCLUDE 
REVIEW OF COMPUANCE PROCEDURES.— 
"(i) IN GENERAL.—Each examination of a savings 
. . - 
association by the Director shall include a review of the 
procedures required to be established and maintained 
under subparagraph (A). 
"(ii) EXAM REPORT REQUIREMENT.—The report of 
examination shall describe any problem with the proce-
dures maintained by the association. 
"(C) ORDER TO COMPLY WITH REQUIREMENTS.—If the Direc-
tor determines that a savings association— 
"(i) has failed to establish and maintain the proce-
. dures described in subparagraph (A); or 
"(ii) has failed to correct any problem with the proce-
dures maintained by such association which was pre-
viously reported to the association by the Director, 
the Director shall issue an order under section 8 of the 
Federal Deposit Insurance Act requiring such association to 
cease and desist from its violation of this paragraph or 
regulations prescribed under this paragraph. 
"(e) CHARACTER AND RESPONSIBILITY.—A charter may be granted 
only— 
"(1) to persons of good character and responsibility, 
"(2) if in the judgment of the Director a necessity exists for 
such an institution in the community to be served, 
"(3) if there is a reasonable probability of its usefulness and 
success, and 
"(4) if the association can be established without undue injury 
to properly conducted existing local thrift and home financing 
institutions, 
p 
"(f) FEDERAL HOME LOAN BANK MEMBERSHIP.—Each Federal sav-
ings association, upon receiving its charter, shall become automati-
cally a member of the Federal home loan bank of the district in 
which it is located, or if convenience requires and the Director 
approves, shall become a member of a Federal home loan bank of an 
adjoining district. Such associations shall qualify for such member-
ship in the manner provided in the Federal Home Loan Bank Act 
with respect to other members. 
• 
j
M ij 
"(g) PREFERRED SHARES.—[Repealed.] 
"(h) DISCRIMINATORY STATE AND LOCAL TAXATION PROHIBITED.— 
No State, county, municipal, or local taxing authority may impose 
any tax on Federal savings associations or their franchise, capital, 
reserves, surplus, loans, or income greater than that imposed by 
such authority on other similar local mutual or cooperative thrift 
and home financing institutions, 
"(i) CONVERSIONS.— 
? 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 295 
(1) IN GENERAL.—Any savings association which is, or is eli-
gible to become, a member of a Federal home loan bank may 
convert into a Federal savings association (and in so doing may 
change directly from the mutual form to the stock form, or from 
the stock form to the mutual form). Such conversion shall be Regulations. 
subject to such regulations as the Director shall prescribe. 
Thereafter such Federal savings association shall be entitled to 
all the benefits of this section and shall be subject to examina-
tion and regulation to the same extent as other associations 
incorporated pursusmt to this Act. 
"(2) AUTHORITY OF DIRECTOR.—(A) No savings association may 
' 
^ 
convert from the mutual to the stock form, or from the stock 
form to the mutual form, except in accordance with the regula-
tions of the Director. 
"(B) Any aggrieved person may obtain review of a final action 
of the Director which approves or disapproves a plan of conver-
sion pursuant to this subsection only by complying with the 
provisions of section 100") of this Act within the time limit and 
in the manner therein prescribed, which provisions shall apply 
in all respects as if such final action were an order the review of 
which is therein provided for, except that such time limit shall 
commence upon publication of notice of such final action in the 
Federal Register or upon the giving of such general notice of 
such final action as is required by or approved under regula-
tions of the Director, whichever is later. 
"(C) Any Federal savings association may change its designa-
tion from a Federal savings association to a Federal savings 
bank, or the reverse. 
"(3) CONVERSION TO STATE ASSOCIATION.—(A) Any Federal sav-
ings association may convert itself into a savings association or 
\ 
savings bank organized pursuant to the laws of the State in 
which the principal office of such Federal savings association is 
located if— 
"(i) the State permits the conversion of any savings 
association or savings bank of such State into a Federal 
savings association; 
"(ii) such conversion of a Federal savings association into 
such a State savings association is determined— 
"(I) upon the vote in favor of such conversion cast in 
person or by proxy at a special meeting of members or 
stockholders called to consider such action, specified by 
the law of the State in which the home office of the 
, 
Federal savings association is located, as required by 
such law for a State-chartered institution to convert 
itself into a Federal savings association, but in no event 
upon a vote of less than 51 percent of all the votes cast 
at such meeting, and 
"(II) upon compliance with other requirements recip-
rocally equivalent to the requirements of such State 
law for the conversion of a State-chartered institution 
into a Federal savings association; 
"(iii) notice of the meeting to vote on conversion shall be 
given as herein provided and no other notice thereof shall 
be necessary; the notice shall expressly state that such 
meeting is called to vote thereon, as well as the time and 
place thereof; and such notice shall be mailed, postage 
prepaid, at least 30 and not more than 60 days prior to the 
103 STAT. 296 
PUBLIC LAW 101-73—AUG. 9, 1989 
date of the meeting, to the Director and to each member or 
stockholder of record of the Federal savings association at 
the member's or stockholder's last address as shown on the 
books of the Federal savings association; 
; 
"(iv) when a mutual savings association is dissolved after 
conversion, the members or shareholders of the savings 
/ 
association will share on a mutual basis in the assets of the 
'
^ 
association in exact proportion to their relative share or 
account credits; 
"(v) when a stock savings association is dissolved after 
conversion, the stockholders will share on an equitable 
basis in the assets of the association; and 
"(vi) such conversion shall be effective upon the date that 
all the provisions of this Act shall have been fully complied 
with and upon the issuance of a new charter by the State 
wherein the savings association is located. 
"(BXi) The act of conversion constitutes consent by the institu-
tion to be bound by all the requirements that the Director may 
impose under this Act. 
* (ii) The savings association shall upon conversion and there-
after be authorized to issue securities in any form currently 
approved at the time of issue by the Director for issuance by 
similar savings associations in such State. 
I 
"(iii) If the insurance of accounts is terminated in connection 
with such conversion, the notice and other action shall be taken 
"
i
»
< as provided by law and regulations for the termination of 
ai«: insurance of accounts. 
"(4) SAVINGS BANK ACTIVITIES.—(A) To the extent authorized 
by the Director, but subject to section 18(mX3) of the Federal 
-
* Deposit Insurance Act— 
"(i) any Federal savings bank chartered as such prior to 
October 15, 1982, may continue to make any investment or 
engage in any activity not otherwise authorized under this 
section, to the degree it was permitted to do so as a Federal 
• •
- '"i savings bank prior to October 15,1982; and 
"(ii) any Federal savings bank in existence on the date of 
enactment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 and formerly orjganized as a 
mutual savings bank under State law may continue to make 
any investment or engage in any activity not otherwise 
authorized under this section, to the degree it was author-
ized to do so as a mutual savings bank under State law. 
"(B) The authority conferred by this paragraph may be uti-
lized by any Federal savings association that acquires, by 
merger or consolidation, a Federal savings bank enjoying grand-
father rights hereunder. 
"(j) SUBSCRIPTION FOR SHARES.—[Repealed.] 
"(k) DEPOSITORY OF PUBUC MONEY.—When designated for that 
purpose by the Secretary of the Treasury, a savings association the 
deposits of which are insured by the Corporation shall be a deposi-
tory of public money and may be employed as fiscal agent of the 
Government under such regulations as may be prescribed by the 
Secretary and shall perform all such reasonable duties as fiscal 
R^ulations. 
agent of the Government as may be required of it. A savings 
association the deposits of which are insured by the Corporation 
may act as agent for any other instrumentality of the United States 
when designated for that purpose by such instrumentality, includ-
ing services in connection with the collection of taxes and other 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 297 
Records. 
District of 
Ck>lumbia. 
obligations owed the United States, and the Secretary of the Treas-
ury may deposit public money in any such savings association, and 
shall prescribe such regulations as may be necessary to carry out 
the purposes of this subsection. 
"(1) RETIREMENT ACCOUNTS.—A Federal savings association is au-
thorized to act as trustee of any trust created or organized in the 
United States and forming part of a stock bonus, pension, or profit-
sharing plan which qualifies or qualified for specific tax treatment 
under section 401(d) of the Internal Revenue Code of 1986 and to act 
as trustee or custodian of an individual retirement account within 
the meaning of section 408 of such Code if the funds of such trust or 
account are invested only in savings accounts or deposits in such 
Federal savings association or in obligations or securities issued by 
such Federal savings association. All funds held in such fiduciary 
capacity by any Federal savings association may be commingled for 
appropriate purposes of investment, but individual records shall be 
kept by the fiduciary for each participant and shall show in proper 
detail all transactions engaged in under this paragraph. 
"(m) BRANCHING.— 
"(1) IN GENERAL.— 
"(A) No savings association incorporated under the laws 
of the District of Columbia or organized in the District or 
doing business in the District shall establish any branch or 
move its principal office or any branch without the Direc-
tor's prior written approval. 
"(B) No savings association shall establish any branch in 
the District of Columbia or move its principal office or any 
branch in the District without the Director's prior written 
approval. 
"(2) DEFINITION.—For purposes of this subsection the term 
'branch' means any office, place of business, or facility, other 
than the principal office as defined by the Director, of a savings 
association at which accounts are opened or payments are 
received or withdrawals are made, or any other office, place of 
business, or facility of a savings association defined by the 
Director as a branch within the meaning of such sentence. 
"(n) TRUSTS.— 
"(1) PERMITS.—The Director may grant by special permit to a 
Federal savings association applying therefor the right to act as 
trustee, executor, administrator, guardian, or in any other fidu-
ciary capacity in which State banks, trust companies, or other 
corporations which compete with Federal savings associations 
are permitted to act under the laws of the State in which the 
Federal savings association is located. Subject to the regulations Securities 
of the Director, service corporations may invest in State or 
federally chartered corporations which are located in the State 
in which the home office of the Federal savings association is 
located and which are engaged in trust activities. 
"(2) SEGREGATION OF ASSETS.—A Federal savings association Records, 
exercising any or all of the powers enumerated in this section 
shall segregate all assets held in any fiduciary capacity from the 
general assets of the association and shall keep a separate set of 
books and records showing in proper detail all transactions 
engaged in under this subsection. The State banking authority 
involved may have access to reports of examination made by the 
Director insofar as such reports relate to the trust department 
of such association but nothing in this subsection shall be 
103 STAT. 298 
PUBLIC LAW 101-73—AUG. 9, 1989 
Law 
enforcement 
and crime. 
construed as authorizing such State banking authority to exam-
ine the books, records, and assets of such associations. 
"(3) PROHIBITIONS.—No Federal savings association shall re-
ceive in its trust department deposits of current funds subject to 
check or the deposit of checks, drafts, bills of exchange, or other 
items for collection or exchange purposes. Funds deposited or 
held in trust by the association awaiting investment shall be 
carried in a separate account and shall not be used by the 
association in the conduct of its business unless it shall first set 
aside in the trust department United States bonds or other 
securities approved by the Director. 
"(4) SEPARATE UEN.—In the event of the failure of a Federal 
savings association, the owners of the funds held in trust for 
investment shall have a lien on the bonds or other securities so 
set apart in addition to their claim against the estate of the 
association. 
"(5) DEPOSITS.—Whenever the laws of a State require corpora-
tions acting in a fiduciary capacity to deposit securities with the 
State authorities for the protection of private or court trusts, 
Federal savings associations so acting shall be required to make 
similar deposits. Securities so deposited shall be held for the 
protection of private or court trusts, as provided by the State 
law. Federal savings associations in such cases shall not be 
required to execute the bond usually required of individuals if 
State corporations under similar circumstances are exempt 
from this requirement. Federal savings associations shall have 
power to execute such bond when so required by the laws of the 
State involved. 
"(6) OATHS AND AFFIDAVITS.—In any case in which the laws of 
a State require that a corporation acting as trustee, executor, 
administrator, or in any capacity specified in this section, shall 
take an oath or make an affidavit, the president, vice president, 
cashier, or trust officer of such association may take the nec-
essary oath or execute the necessary affidavit. 
"(7) CERTAIN LOANS PROHIBITED.—It shall be unlawful for any 
Federal savings association to lend any officer, director, or 
employee any funds held in trust under the powers conferred by 
this section. Any officer, director, or employee making such 
loan, or to whom such loan is made, may be fined not more than 
$50,000 or twice the amount of that person's gain from the loan, 
whichever is greater, or may be imprisoned not more than 5 
years, or may be both fined and imprisoned, in the discretion of 
the court. 
"(8) FACTORS TO BE CONSIDERED.—In reviewing applications for 
permission to exercise the powers enumerated in this section, 
the Director may consider— 
"(A) the amount of capital of the appljdng Federal sav-
ings association, 
"(B) whether or not such capital is sufficient under the 
circumstances of the case, 
"(C) the needs of the community to be served, and 
"(D) any other facts and circumstances that seem to it 
proper. 
The Director may grant or refuse the application accordingly, 
except that no permit shall be issued to any association having 
capital less than the capital required by State law of State 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 299 
banks, trust companies, and corporations exercising such 
powers. 
"(9) SURRENDER 
OF CHARTER.—(A) Any Federal savings 
association may surrender its right to exercise the powers 
granted under this subsection, and have returned to it any 
securities which it may have deposited with the State authori-
ties, by filing with the Director a certified copy of a resolution of 
its board of directors indicating its intention to surrender its 
right. 
"(B) Upon receipt of such resolution, the Director, if satisfied 
that such Federal savings association has been relieved in 
accordance with State law of all duties as trustee, executor, 
administrator, guardian or other fiduciary, may in the Direc-
tor's discretion, issue to such association a certificate that such 
association is no longer authorized to exercise the powers 
granted by this subsection. 
"(C) Upon the issuance of such a certificate by the Director, 
such Federal savings association (i) shall no longer be subject to 
the provisions of this section or the regulations of the Director 
made pursuant thereto, (ii) shall be entitled to have returned to 
it any securities which it may have deposited with State 
authorities, and (iii) shall not exercise thereafter any of the 
powers granted by this section without first applying for and 
obtaining a new permit to exercise such powers pursuant to the 
provisions of this section. 
"(D) The Director may prescribe regulations necessary to 
enforce compliance with the provisions of this subsection. 
"(10) REVOCATION.—(A) In addition to the authority conferred 
by other law, if, in the opinion of the Director, a Federal savings 
association is unlawfully or unsoundly exercising, or has unlaw-
fully or unsoundly exercised, or has failed for a period of 5 
consecutive years to exercise, the powers granted by this subsec-
tion or otherwise fails or has failed to comply with the require-
ments of this subsection, the Director may issue and serve upon 
the association a notice of intent to revoke the authority of the 
association to exercise the powers granted by this subsection. 
The notice shall contain a statement of the facts constituting 
the alleged unlawful or unsound exercise of powers, or failure to 
exercise powers, or failure to comply, and shall fix a time and 
place at which a hearing will be held to determine whether an 
order revoking authority to exercise such powers should issue 
against the association. 
"(B) Such hearing shall be conducted in accordance with the 
provisions of subsection (dXlXB), and subject to judicial review 
as therein provided, and shall be fixed for a date not earlier 
than 30 days and not later than 60 days after service of such 
notice unless the Director sets an earlier or later date at the 
request of any Federal savings association so served. 
' (C) Unless the Federal savings association so served shall 
appear at the hearing by a duly authorized representative, it 
shall be deemed to have consented to the issuance of the 
revocation order. In the event of such consent, or if upon the 
record made at any such hearing, the Director shall find that 
£uiy allegation specified in the notice of charges has been estab-
lished, the Director may issue and serve upon the eissociation an 
order prohibiting it from accepting any new or additional trust 
accounts and revoking authority to exercise any and all powers 
103 STAT. 300 
PUBLIC LAW 101-73—AUG. 9, 1989 
granted by this subsection, except that such order shall permit 
the association to continue to service all previously accepted 
trust accounts pending their expeditious divestiture or termi-
nation. 
"(D) A revocation order shall become effective not earlier 
than the expiration of 30 days after service of such order upon 
the £issociation so served (except in the case of a revocation 
order issued upon consent, which shall become effective at the 
time specified therein), and shall remain effective and enforce-
able, except to such extent as it is stayed, modified, terminated, 
or set aside by action of the Director or a reviewing court, 
"(o) CONVERSION OF STATE SAVINGS BANKS.—(1) Subject to 
the 
provisions of this subsection and under regulations of the Director, 
the Director may authorize the conversion of a State-chartered 
savings bank that is a Bank Insurance Fund member into a Federsd 
savings bank, if such conversion is not in contravention of State law, 
and provide for the organization, incorporation, operation, examina-
tion, and regulation of such institution. 
"(2)(A) Any Federal savings bank chartered pursuant to this 
subsection shall continue to be a Bank Insurance Fund member 
until such time as it changes its status to a Savings Association 
Insurance Fund member. 
"(B) The Director shgdl notify the Corporation of any application 
under this Act for conversion to a Federal charter by an institution 
insured by the Corporation, shall consult with the Corporation 
before disposing of the application, and shall notify the Corporation 
of the Director's determination with respect to such application. 
"(C) Notwithstanding any other provision of law, if the Corpora-
tion determines that conversion into a Federal stock savings bank or 
the chartering of a Federal stock savings bank is necessary to 
prevent the default of a savings bank it insures or to reopen a 
savings bank in default that it insured, or if the Corporation deter-
mines, with the concurrence of the Director, that severe financial 
conditions exist that threaten the stability of a savings bank insured 
by the Corporation and that such a conversion or charter is likely to 
improve the financial condition of such savings bank, the Corpora-
tion shall provide the Director with a certificate of such determina-
tion, the reasons therefor in conformance with the requirements of 
this Act, and the bank shall be converted or chartered by the 
Director, pursuant to the regulations thereof, from the time the 
Corporation issues the certificate. 
"(D) A bank may be converted under subparagraph (C) only if the 
board of trustees of the bank— 
"(i) has specified in writing that the bank is in danger of 
closing or is closed, or that severe financial conditions exist that 
threaten the stability of the bank and a conversion is likely to 
improve the financial condition of the bank; and 
(ii) has requested in writing that the Corporation use the 
authority of subparagraph (C). 
"(EXi) Before making a determination under subparagraph (D), 
the Corporation shall consult the State bank supervisor of the State 
in which the bank in danger of closing is chartered. The State bank 
supervisor shall be given a reasonable opportunity, and in no event 
less than 48 hours, to object to the use of the provisions of subpara-
graph (D). 
"(ii) If the State supervisor objects during such period, the Cor-
poration may use the authority of subparagraph (D) only by an 
PUBLIC LAW 101-73-AUG. 9, 1989 
103 STAT. 301 
affirmative vote of three-fourths of the Board of Directors. The 
Board of Directors shall provide the State supervisor, as soon as 
practicable, with a written certification of its determination. 
^ 
"(3) A Federal savings bank chartered under this subsection shall 
have the same authority with respect to investments, operations, 
and activities, and shall be subject to the same restrictions, includ-
ing those applicable to branching and discrimination, as would 
apply to it if it were chartered as a Federal savings bank under any 
other provision of this Act. 
"(p) CONVERSIONS.—(1) Notwithstanding any other provision of 
law, and consistent with the purposes of this Act, the Director may 
authorize (or in the case of a Federal savings association, require) 
the conversion of any mutual savings association or Federal mutual 
savings bank that is insured by the Corporation into a Federal stock 
savings association or Federal stock savings bank, or charter a 
Federal stock savings association or Federal stock savings bank to 
acquire the assets of, or merge with such a mutual institution under 
the regulations of the Director. 
"(2) Authorizations under this subsection may be made only— 
"(A) if the Director has determined that severe financial 
conditions exist which threaten the stability of an association 
and that such authorization is likely to improve the financial 
condition of the association, 
"(B) when the Corporation has contracted to provide assist- 
v 
ance to such association under section 13 of the Federal Deposit 
Insurance Act, or 
"(C) to assist an institution in receivership. 
"(3) A Federal savings bank chartered under this subsection shall 
Securities, 
have the same authority with respect to investments, operations and 
activities, and shall be subject to the same restrictions, including 
those applicable to branching and discrimination, as would apply to 
it if it were chartered as a Federal savings bank under any other 
; 
provision of this Act, and may engage in any investment, activity, or 
operation that the institution it acquired was engaged in if that 
institution was a Federal savings bank, or would have been au-
thorized to engage in had that institution converted to a Federal 
charter. 
"(q) TYING ARRANGEMENTS.—(1) A savings association may not in 
any manner extend credit, lease, or sell property of any kind, or 
furnish any service, or fix or vary the consideration for any of the 
foregoing, on the condition or requirement— 
"(A) that the customer shall obtain additional credit, prop-
erty, or service from such savings association, or from any 
service corporation or affiliate of such association, other than a 
loan, discount, deposit, or trust service; 
"(B) that the customer provide additional credit, property, or 
service to such association, or to any service corporation or 
affiliate of such association, other than those related to and 
usually provided in connection with a similar loan, discount, 
^ 
deposit, or trust service; and 
"(C) that the customer shall not obtain some other credit, 
property, or service from a competitor of such association, or 
from a competitor of any service corporation or affiliate of such 
^ 
association, other than a condition or requirement that such 
association shall reasonably impose in connection with credit 
transactions to assure the soundness of credit. 
103 STAT. 302 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(2XA) Any person may sue for and have injunctive relief, in any 
court of the United States having jurisdiction over the parties, 
against threatened loss or damage by reason of a violation of 
paragraph (1), under the same conditions and principles as injunc-
tive relief against threatened conduct that will cause loss or damage 
is granted by courts of equity and under the rules governing such 
proceedings. 
"(B) Upon the execution of proper bond against damages for an 
injunction improvidently granted and a showing that the danger of 
irreparable loss or damage is immediate, a preliminary injunction 
may issue. 
Courts, U.S. 
"(3) Any person injured by a violation of paragraph (1) may bring 
an action in any district court of the United States in which the 
defendant resides or is found or has an agent, without regard to the 
amount in controversy, or in any other court of competent jurisdic-
tion, and shall be entitled to recover three times the amount of the 
damages sustained, and the cost of suit, including a reasonable 
attorney's fee. Any such action shall be brought within 4 years from 
the date of the occurrence of the violation. 
"(4) Nothing contained in this subsection affects in any manner 
the right of the United States or any other party to bring an action 
under any other law of the United States or of any State, including 
any right which may exist in addition to specific statutory authority, 
challenging the legality of any act or practice which may be pro-
scribed by this subsection. No regulation or order issued by the 
Director under this subsection shall in any manner constitute a 
defense to such action. 
"(5) For purposes of this subsection, the term 'loan' includes 
obligations and extensions or advances of credit. 
"(r) OUT-OF-STATE BRANCHES.—(1) No Federal savings association 
may establish, retain, or operate a branch outside the State in which . 
the Federal savings association has its home office, unless the 
association qualifies as a domestic building and loan association 
under section 7701(aX19) of the Internal Revenue CJode of 1986 or 
meets the asset composition test imposed by subparagraph (c) of that 
section on institutions seeking so to qualify. No out-of-State branch 
so established shall be retained or operated unless the total assets of 
the Federal savings association attributable to all branches of the 
Federal savings association in that State would qualify the branches 
as a whole, were they otherwise eligible, for treatment as a domestic 
building and loan association under section 7701(aX19). 
"(2) The limitations of paragraph (1) shall not apply if— 
"(A) the branch results from a transaction authorized under 
section 13(k) of the Federal Deposit Insurance Act; 
"(B) the branch was authorized for the Federal savings 
association prior to October 15,1982; 
"(C) the law of the State where the branch would be located 
would permit the branch to be established if the branch were a 
Federal savings association chartered by the State in which its 
home office is located; or 
^ 
"(D) the branch was operated lawfully as a branch under 
State law prior to the £issociation's conversion to a Federal 
charter. 
"(3) The Director, for good cause shown, may sdlow Federal sav-
ings associations up to 2 years to comply with the requirements of 
this subsection, 
"(s) MINIMUM CAPITAL REQUIREMENTS.— 
? 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 303 
"(1) IN GENERAL.—Consistent with the purposes of section 908 
of the International Lending Supervision Act of 1983 and the 
capital requirements established pursuant to such section by 
the appropriate Federal banking agencies (as defined in section 
903(1) of such Act), the Director shall require all savings associa-
tions to achieve and maintain adequate capital by— 
7 
"(A) establishing minimum levels of capital for savings 
associations; and 
"(B) using such other methods as the Director determines 
to be appropriate. 
, 
"(2) MINIMUM CAPITAL LEVELS MAY BE DETERMINED BY DIREC-
TOR CASE-BY-CASE.—The Director may, consistent with subsec-
tion (t), establish the minimum level of capital for a savings 
association at such amount or at such ratio of capital-to-assets 
as the Director determines to be necessary or appropriate for 
such association in light of the particular circumstances of the 
association. 
"(3) UNSAFE OR UNSOUND PRACTICE.—In the Director's discre-
tion, the Director may treat the failure of any savings associa-
tion to maintain capital at or above the minimum level required 
by the Director under this subsection or subsection (t) as an 
* 
unsafe or unsound practice. 
"(4) DIRECTIVE TO INCREASE CAPITAL.— 
"(A) PLAN MAY BE REQUIRED.—In addition to any other 
action authorized by law, including paragraph (3), the 
Director may issue a directive requiring any savings 
association which fails to maintain capital at or above the 
minimum level required by the Director to submit and 
adhere to a plan for increasing capital which is acceptable 
to the Director. 
"(B) ENFORCEMENT OF PLAN.—Any directive issued and 
plan approved under subparagraph (A) shall be enforceable 
under section 8 of the Federal Deposit Insurance Act to the 
same extent and in the same manner as an outstanding 
order which w£is issued under section 8 of the Federal 
Deposit Insurance Act and has become final. 
"(5) PLAN TAKEN INTO ACCOUNT IN OTHER PROCEEDINGS.—The 
• 
Director may— 
"(A) consider a savings association's progress in adhering 
to any plan required under paragraph (4) whenever such 
association or any affiliate of such association (including 
any company which controls such association) seeks the 
Director's approval for any proposal which would have the 
effect of diverting earnings, diminishing capital, or other-
wise impeding such association's progress in meeting the 
minimum level of capital required by the Director; and 
"(B) disapprove any proposal referred to in subparagraph 
(A) if the Director determines that the proposal would 
adversely affect the ability of the association to comply with 
such plan. 
'(t) CAPITAL STANDARDS.— 
"(1) IN GENERAL.— 
"(A) REQUIREMENT FOR STANDARDS TO BE PRESCRIBED.— 
The Director shall, by regulation, prescribe and maintain 
uniformly applicable capital standards for savings associa-
tions. Those standards shall include— 
"(i) a leverage limit; 
103 STAT. 304 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(ii) a tangible capital requirement; and 
^ ' 
"(iii) a risk-based capital requirement. 
' 
"(B) CoMPUANCE.—A savings association is not in compli-
• 
ance with capital standards for purposes of this subsection 
unless it complies with all capital standards prescribed 
under this paragraph. 
"(C) STRINGENCY.—The standards prescribed under this 
paragraph shall be no less stringent than the capital stand-
'* 
ards applicable to national banl^. 
"(D) DEADUNE FOR REGULATIONS.—The Director shall 
promulgate final regulations under this paragraph not 
later than 90 days after the date of enactment of the 
Financial Institutions Reform, Recovery, and Enforcement 
J , 
Act of 1989, and those regulations shall become effective 
not later than 120 days after the date of enactment. 
' '(2) CONTENT OF STANDARDS.— 
"(A) LEVERAGE UMIT.—The leverage limit prescribed 
under paragraph (1) shall require a savings association to 
maintain core capital in an amount not less than 3 percent 
of the savings association's total Eissets. 
"(B) TANGIBLE CAPITAL REQUIREMENT.—The tangible cap-
ital requirement prescribed under paragraph (1) shall re-
quire a savings association to maintain tangible capital in 
an amount not less than 1.5 percent of the savings associa-
'•':%: 
tion's total assets. 
"(C) RISK-BASED CAPITAL REQUIREMENT.—Notwithstanding 
paragraph (IXC), the risk-based capital requirement pre-
ii 
scribed under paragraph (1) may deviate from the risk-
based capital standards applicable to national banks to 
^ 
t 
reflect interest-rate risk or other risks, but such deviations 
shall not, in the aggregate, result in materially lower levels 
of capital being required of savings associations under the 
risk-based capital requirement than would be required 
^ • 
under the risk-based capital standards applicable to na-
tional banks. 
"(3) TRANSITION RULE.— 
"(A) 
CERTAIN QUALIFYING SUPERVISORY GOODWILL IN-
CLUDED IN CALCULATING CORE CAPITAL.—Notwithstanding 
paragraph (9XA), an eligible savings association may in-
clude qualifying supervisory goodwill in calculating core 
capital. The amount of qualifying supervisory goodwill that 
may be included may not exceed the applicable percentage 
of total assets set forth in the following table: 
V 
.' 
"For the following 
The applicable 
period: 
percentage is: 
Prior to January 1, 1992 
1.500 percent 
January 1, 1992-December 31, 1992 
1.000 percent 
January 1, 1993-December 31, 1993 
0.750 percent 
January 1, 1994-December 31, 1994 
0.375 percent 
Thereafter 
0 percent 
"(B) EuGiBLE SAVINGS ASSOCIATIONS.—For purposes of 
subparagraph (A), a savings association is an eligible sav-
ings association so long as the Director determines that— 
"(i) the savings association's management is com-
petent; 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 305 
"(ii) the savings association is in substantial compli-
ance with all applicable statutes, regulations, orders, 
and supervisory agreements and directives; and 
"(iii) the savings association's management has not 
engaged in insider dealing, speculative practices, or 
any other activities that have jeopardized the associa-
tion's safety and soundness or contributed to impairing 
the association's capital. 
"(4) 
SPECIAL RULES FOR PURCHASED MORTGAGE SERVICING 
RIGHTS.— 
"(A) IN GENERAL.—Notwithstanding paragraphs (1)(C) 
and (9), the standards prescribed under paragraph (1) may 
permit a savings association to include in calculating cap-
ital for the purpose of the leverage limit and risk-based 
capital requirement prescribed under paragraph (1), on 
terms no less stringent than under both the capital stand-
ards applicable to State nonmember banks and (except as to 
the amount that may be included in calculating capital) the 
capital standards applicable to national banks, 90 percent 
of the fair market value of readily marketable purchased 
mortgage servicing rights. 
"(B) TANGIBLE CAPITAL REQUIREMENT.—Notwithstanding 
paragraphs (IXC) and (9XC), the standards prescribed under 
paragraph (1) may permit a savings association to include 
in calculating capital for the purpose of the tangible capital 
requirement prescribed under paragraph (1), on terms no 
less stringent than under both the capital standards ap-
plicable to State nonmember banks and (except as to the 
amount that may be included in calculating capital) the 
capital standards applicable to national banks, 90 percent 
of the fair market value of readily marketable purchased 
mortgage servicing rights. 
"(C) PERCENTAGE UMITATION PRESCRIBED BY FDIC.—Not-
withstanding paragraph (1)(C) and subparagraphs (A) and 
(B) of this paragraph— 
"(i) for the purpose of subparagraph (A), the maxi-
mum £imount of purchased mortgage servicing rights 
that may be included in calculating capital under the 
leverage limit and the risk-based capital requirement 
prescribed under paragraph (1) may not exceed the 
amount that could be included if the savings associa-
tion were an insured State nonmember bank; and 
"(ii) for the purpose of subparagraph (B), the Cor-
poration shall prescribe a maximum percentage of the 
tangible capital requirement that savings associations 
may satisfy by including purchased mortgage servicing 
rights in calculating such capital. 
"(D) QUARTERLY VALUATION.—The fair market value of 
purchased mortgage servicing rights shall be determined 
not less often than quarterly. 
"(5) SEPARATE CAPITAUZATION REQUIRED FOR CERTAIN SUBSIDI-
ARIES.— 
"(A) IN GENERAL.—In determining compliance with cap-
ital standards prescribed under paragraph (1), all of a 
savings association's investments in and extensions of 
credit to any subsidiary engaged in activities not permis-
103 STAT. 306 
PUBLIC LAW 101-73—AUG. 9, 1989 
sible for a national bank shall be deducted from the savings 
association's capital. 
"(B) EXCEPTION FOR AGENCY ACTIVITIES.—Subparagraph 
(A) shall not apply with respect to a subsidiary engaged, 
solely as agent for its customers, in activities not permis-
sible for a national bank unless the Corporation, in its sole 
discretion, determines that, in the interests of safety and 
soundness, this subparagraph should cease to apply to that 
subsidiary. 
"(C) OTHER EXCEPTIONS.—Subparagraph (A) shall not 
apply with respect to any of the following: 
"(i) MORTGAGE BANKING SUBSIDIARIES.—A savings 
association's investments in and extensions of credit to 
a subsidiary engaged solely in mortgage-banking activi-
ties. 
"(ii) SUBSIDIARY INSURED DEPOSITORY INSTITUTIONS.— 
A savings association's investments in and extensions 
of credit to a subsidiary— 
"(I) that is itself an insured depository institu-
tion or a company the sole investment of which is 
an insured depository institution, and 
"(II) that was acquired by the parent insured 
depository institution prior to May 1,1989. 
"(iii) CERTAIN FEDERAL SAVINGS BANKS.—Any Federal 
savings association existing as a Federal savings 
association on the date of enactment of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989— 
"(I) that was chartered prior to October 15, 1982, 
as a savings bank or a cooperative bank under 
State law; or 
"(II) that acquired its principal assets from an 
association that was chartered prior to October 15, 
1982, as a savings bank or a cooperative bank 
under State law. 
"(D) TRANSITION RULE.— 
"(i) 
INCLUSION 
IN 
CAPITAL.—Notwithstanding 
subparagraph (A), if a savings association's subsidiary 
was, as of April 12, 1989, engaged in activities not 
permissible for a national bank, the savings association 
may include in calculating capital the applicable 
percentage (set forth in clause (ii)) of the lesser of— 
"(I) the savings association's investments in and 
extensions of credit to the subsidiary on April 12, 
1989; or 
"(II) the savings association's investments in and 
extensions of credit to the subsidiary on the date as 
of which the savings association's capital is being 
determined. 
"(ii) APPLICABLE PERCENTAGE.—For purposes of clause 
(i), the applicable percentage is as follows: 
"For the following 
The applicable 
period: 
percentage is: 
Prior to July 1, 1990 
100 percent 
July 1, 1990-June 30, 1991 
90 percent 
July 1, 1991-June 30, 1992 
75 percent 
July 1, 1992-June 30, 1993 
60 percent 
July 1, 1993-June 30, 1994 
40 percent 
Thereafter 
0 percent 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 307 
"(iii) FDIC'S DISCRETION T
O PRESCRIBE LESSER PERCENT-
AGE.—The Corporation may prescribe by order, with 
respect to a particular savings association, an ap-
plicable percentage less than that provided in clause (ii) 
if the Corporation determines, in its sole discretion, 
that the use of a greater percentage would, under the 
circumstances, constitute an unsafe or unsound prac-
tice or be likely to result in the association's being in 
an unsafe or unsound condition. 
"(E) 
CONSOLIDATION 
OF SUBSIDIARIES NOT SEPARATELY 
CAPiTAUZED.—In determining compliance with 
capital 
standards prescribed under paragraph (1), the assets and 
liabilities of each of a savings association's subsidiaries 
(other than any subsidiary described in subparagraph 
(C)(ii)) shgdl be consolidated with the savings association's 
assets and liabilities, unless all of the savings association's 
investments in and extensions of credit to the subsidiary 
are deducted from the savings association's capital pursu-
ant to subparagraph (A). 
"(6) 
CONSEQUENCES OF FAILING TO COMPLY WITH CAPITAL 
STANDARDS.— 
"(A) PRIOR TO JANUARY i, I99i.—Prior to January 1,1991, 
the Director— 
"(i) may restrict the asset growth of any savings 
association not in compliance with capital standards; 
and 
"(ii) shall, beginning 60 days following the promulga-
tion of final regulations under this subsection, require 
any savings association not in compliance with capital 
standards to submit a plan under subsection (s)(4XA) 
that— 
"(I) addresses the savings association's need for 
increased capital; 
"(II) describes the manner in which the savings 
association will increase its capital so as to achieve 
compliance with capital standards; 
"(III) specifies the types and levels of activities in 
which the savings association will engage; 
"(IV) requires any increase in assets to be accom-
panied by an increase in tangible capital not less in 
percentage amount than the leverage limit then 
applicable; 
"(V) requires any increase in assets to be accom-
panied by an increase in capital not less in percent-
age amount than required under the risk-based 
capital standard then applicable; and 
"(VI) is acceptable to the Director. 
"(B) ON OR AFTER JANUARY i, 1991.—On or after Jan-
uary 1,1991, the Director— 
"(i) shall prohibit any asset growth by any savings 
association not in compliance with capital standards, 
except as provided in subparagraph (C); and 
"(ii) shall require any savings association not in 
compliance with capital standards to comply with a 
capital directive issued by the Director (which may 
103 STAT. 308 
PUBLIC LAW 101-73—AUG. 9, 1989 
include such restrictions, including restrictions on the 
payment of dividends and on compensation, as the 
Director determines to be appropriate). 
"(C) LIMITED GROWTH EXCEPTION.—The Director may 
permit any savings association that is subject to subpara-
graph (B) to increase its assets in an amount not exceeding 
the amount of net interest credited to the savings associa-
tion's deposit liabilities if— 
"(i) the savings association obtains the Director's 
prior approval; 
"(ii) any increase in assets is accompanied by an 
increase in tangible capital in an amount not less than 
6 percent of the increase in assets (or, in the Director's 
discretion if the leverage limit then applicable is less 
than 6 percent, in an amount equal to the increase in 
assets multiplied by the percentage amount of the 
leverage limit); 
"(iii) any increase in assets is accompanied by an 
increase in capital not less in percentage amount than 
required under the risk-based capital standard then 
applicable; 
"(iv) any increase in assets is invested in low-risk 
assets, such as first mortgage loans secured by 1- to 4-
family residences and fully secured consumer loans; 
and 
"(v) the savings association's ratio of core capital to 
total assets is not less than the ratio existing on Janu-
ary 1, 1991. 
"(D) ADDITIONAL RESTRICTIONS IN CASE OF EXCESSIVE RISKS 
O
R RATES.—The Director may restrict the asset growth of 
any savings association that the Director determines is 
taking excessive risks or paying excessive rates for deposits. 
"(E) FAILURE TO COMPLY WITH PLAN, REGULATION, OR 
ORDER.—The Director shall treat as an unsafe and unsound 
practice any material failure by a savings association to 
comply with any plan, regulation, or order under this para-
graph. 
"(F) EFFECT ON OTHER REGULATORY AUTHORITY.—This 
paragraph does not limit any authority of the Director 
under other provisions of law. 
"(7) EXEMPTION FROM CERTAIN SANCTIONS.— 
"(A) APPLICATION FOR EXEMPTION.—Any savings associa-
tion not in compliance with the capital standards pre-
scribed under paragraph (1) may apply to the Director for 
an exemption from any applicable sanction or penalty for 
noncompliance which the Director may impose. 
"(B) EFFECT OF GRANT OF EXEMPTION.—If the Director 
approves any savings association's application 
under 
subparagraph (A), the only sanction or penalty to be im-
posed by the Director for the savings association's failure to 
comply with the capital standards prescribed under para-
graph (1) is the growth limitation contained in paragraph 
(6)(B) or paragraph (6)(C), whichever is applicable. 
"(C) STANDARDS FOR APPROVAL OR DISAPPROVAL.— 
"(i) APPROVAL.—The Director may approve an ap-
plication for an exemption if the Director determines 
that— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 309 
"(I) such exemption would pose no significant 
risk to the affected deposit insurance fund; 
"(II) the savings association's management is 
competent; 
"(III) the savings association is in substantial 
compliance with all applicable statutes, regula-
tions, orders, and supervisory agreements and 
directives; and 
"(IV) the savings association's management has 
not engaged in insider dealing, speculative prac-
tices, or any other activities that have jeopardized 
the association's safety and soundness or contrib-
uted to impairing the association's capital. 
"(ii) DENIAL OR REVOCATION OF APPROVAL.—The 
Director shall deny any application submitted under 
clause (i) and revoke any prior approval granted with 
respect to any such application if the Director deter-
mines that the association's failure to meet any capital 
standards prescribed under paragraph (1) is accom-
panied by— 
"(I) a pattern of consistent losses; 
"(II) substantial dissipation of assets; 
"(III) evidence of imprudent management or 
business behavior; 
"(IV) a material violation of any Federal law, 
any law of any State to which such association is 
subject, or any applicable regulation; or 
"(V) any other unsafe or unsound condition or 
activity, other than the failure to meet such capital 
standards. 
"(D) SUBMISSION OF PLAN REQUIRED.—Any application 
submitted under subparagraph (A) shall be accompanied by 
a plan which— 
"(i) meets the requirements of paragraph (6)(A)(ii); 
and 
"(ii) is acceptable to the Director. 
"(E) FAILURE TO COMPLY WITH PLAN.—The Director shall 
treat as an unsafe and unsound practice any material 
failure by any savings association which has been granted 
an exemption under this paragraph to comply with the 
provisions of any plan submitted by such association under 
subparagraph (D). 
"(F) EXEMPTION NOT AVAILABLE WITH RESPECT TO UNSAFE 
O
R UNSOUND PRACTICES.—This paragraph does not limit any 
authority of the Director under any other provision of law, 
including section 8 of the Federal Deposit Insurance Act, to 
take any appropriate action with respect to any unsafe or 
unsound practice or condition of any savings association, 
other than the failure of such savings association to comply 
with the capital standards prescribed under paragraph (1). 
"(8) TEMPORARY AUTHORITY TO MAKE EXCEPTIONS FOR ELIGIBLE 
SAVINGS ASSOCIATIONS.— 
"(A) IN GENERAL.—Notwithstanding paragraph (1)(C), the 
Director may, by order, make exceptions to the capital 
standards prescribed under paragraph (1) for eligible sav-
ings associations. No exception under this paragraph shall 
be effective after January 1,1991. 
103 STAT. 310 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) STANDARDS FOR APPROVAL OR DISAPPROVAL.—In deter-
mining whether to grant an exception under subparagraph 
(A), the Director shall apply the same standards as apply to 
determinations under paragraph (7)(C). 
"(9) DEFINITIONS.—For purposes of this subsection— 
"(A) CORE CAPITAL.—Unless the Director prescribes a 
more stringent definition, the term 'core capital' means 
core capital as defined by the Comptroller of the Currency 
for national banks, less any unidentifiable intangible 
assets, plus any purchased mortgage servicing rights ex-
cluded from the Comptroller's definition of capital but in-
cluded in calculating the core capital of savings associations 
pursuant to paragraph (4). 
"(B) QuAUFYiNG 
SUPERVISORY GOODWILL.—The term 
'qualifying supervisory goodwill' means supervisory good-
will existing on April 12, 1989, amortized on a straightline 
basis over the shorter of— 
"(i) 20 years, or 
"(ii) the remaining period for amortization in effect 
on April 12,1989. 
"(C) TANGIBLE CAPITAL.—The term 'tangible capital' 
means core capital minus any intangible assets (as intangi-
ble assets are defined by the Comptroller of the Currency 
for national banks). 
"(D) TOTAL ASSETS.—The term 'total assets' means total 
assets (as total assets are defined by the Comptroller of the 
Currency for national banks) adjusted in the same manner 
as total assets would be adjusted in determining compliance 
with the leverage limit applicable to national banks if the 
savings association were a national bank. 
"(10) USE OF COMPTROLLER'S DEFINITIONS.— 
(A) IN GENERAL.—The standards prescribed under para-
graph (1) shall include all relevant substantive definitions 
established by the Comptroller of the Currency for national 
banks. 
"(B) SPECIAL RULE.—If the Comptroller of the Currency 
has not made effective regulations defining core capital or 
establishing a risk-based capital standard, the Director 
shall use the definition and standard contained in the 
Comptroller's most recently published final regulations, 
"(u) LIMITS ON LOANS TO ONE BORROWER.— 
"(1) IN GENERAL.—Section 5200 of the Revised Statutes shall 
apply to savings associations in the same manner and to the 
same extent as it applies to national banks. 
"(2) SPECIAL RULES.— 
"(A) Notwithstanding paragraph (1), a savings association 
may make loans to one borrower under one of the following 
clauses: 
"(i) for any purpose, not to exceed $500,000; or 
"(ii) to develop domestic residential housing units, 
not to exceed the lesser of $30,000,000 or 30 percent of 
the savings association's unimpaired capital and 
unimpaired surplus, i
f
— 
"(I) the purchase price of each single family 
dwelling unit the development of which is financed 
under this clause does not exceed $500,000; 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 311 
"(II) the savings association is and continues to 
be in compliance with the fully phased-in capital 
standards prescribed under subsection (t); 
"(III) the Director, by order, permits the savings 
association to avail itself of the higher limit pro-
vided by this clause; 
"(IV) loans made under this clause to all borrow-
ers do not, in aggregate, exceed 150 percent of the 
savings 
association's 
unimpaired 
capital 
and 
unimpaired surplus; and 
"(V) such loans comply with all applicable loan-
to-value requirements. 
"(B) A savings association's loans to one borrower to Real property, 
finance the sale of real property acquired in satisfaction of 
debts previously contracted in good faith shall not exceed 50 
percent of the savings association's unimpaired capital and 
unimpaired surplus. 
"(3) AUTHORITY TO IMPOSE MORE STRINGENT RESTRICTIONS.— 
The Director may impose more stringent restrictions on a sav-
ings association's loans to one borrower if the Director deter-
mines that such restrictions are necessary to protect the safety 
and soundness of the savings association. 
'(v) REPORTS OF CONDITION.— 
"(1) IN GENERAL.—Each association shall make reports of 
conditions to the Director which shall be in a form prescribed by 
the Director and shall contain— 
"(A) information sufficient to allow the identification of 
potential interest rate and credit risk; 
"(B) a description of any assistance being received by the 
association, including the type and monetary value of such 
assistance; 
"(C) the identity of all subsidiaries and affiliates of the 
association; 
"(D) the identity, value, type, and sector of investment of 
all equity investments of the associations and subsidiaries; 
and 
"(E) other information that the Director may prescribe. 
"(2) PUBLIC DISCLOSURE.— 
"(A) Reports required under paragraph (1) and all 
information contained therein shall be available to the 
public upon request, unless the Director determines— 
"(i) that a particular item or classification of 
information should not be made public in order to 
protect the safety or soundness of the institution con-
cerned or institutions concerned, the Savings Associa-
tion Insurance Fund; or 
"(ii) that public disclosure would not otherwise be in 
the public interest. 
"(B) Any determination made by the Director under 
subparagraph (A) not to permit the public disclosure of 
information shall be made in writing, and if the Director 
restricts any item of information for savings institutions 
generally, the Director shall disclose the reason in detail in 
the Federal Register. 
"(C) The Director's determinations under subparagraph 
(A) shall not be subject to judicial review. 
"(3) ACCESS BY CERTAIN PARTIES.— 
Classified 
information. 
103 STAT. 312 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(A) Notwithstanding paragraph (2), the persons de-
scribed in subparagraph (B) shall not be denied access to 
any information contained in a report of condition, subject 
to reasonable 
requirements of confidentiality. 
Those 
requirements shall not prevent such information from 
being transmitted to the Comptroller General of the United 
States for analysis. 
"(B) The following persons are described in this subpara-
graph for purposes of subparagraph (A): 
"(i) the Chairman and ranking minority member of 
the Committee on Banking, Housing, and Urban Af-
fairs of the Senate and their designees; and 
"(ii) the Chairman and ranking minority member of 
the Committee on Banking, Finance and Urban Affairs 
of the House of Representatives and their designees. 
"(4) FIRST TIER PENALTIES.—Any savings association which— 
"(A) maintains procedures reasonably adapted to avoid 
any inadvertent and unintentional error and, as a result of 
such an error— 
"(i) fails to submit or publish any report or informa-
tion required by the Director under paragraph (1) or (2), 
within the period of time specified by the Director; or 
"(ii) submits or publishes any false or misleading 
report or information; or 
"(B) inadvertently transmits or publishes any report 
which 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 savings association 
shall have the burden of proving by a preponderence of the 
evidence that an error was inadvertent and unintentional and 
that a report was inadvertently transmitted or published late. 
"(5) 
SECOND 
TIER 
PENALTIES.—Any 
savings 
association 
which— 
"(A) fails to submit or publish any report or information 
required by the Director under paragraph (1) or (2), within 
the period of time specified by the Director; or 
"(B) submits or publishes any false or misleading report 
or information, 
in a manner not described in paragraph (4) 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. 
"(6) THIRD TIER PENALTIES.—If any savings association know-
ingly or with reckless disregard for the accuracy of any informa-
tion or report described in paragraph (5) submits or publishes 
any false or misleading report or information, the Director may 
assess a penalty of not more than $1,000,000 or 1 percent of total 
assets, whichever is less, per day for each day during which 
such failure continues or such false or misleading information is 
not corrected. 
"(7) ASSESSMENT.—Any penalty imposed under paragraph (4), 
(5), or (6) shall be assessed and collected by the Director in the 
manner provided in subparagraphs (E), (F), (G), and (I) of section 
8(i)(2) of the Federal Deposit Insurance Act (for penalties im-
posed under such section), and any such £issessment (including 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 313 
the determination of the amount of the penalty) shall be subject 
to the provisions of such subsection. 
"(8) HEARING.—Any savings association against which any 
penalty is assessed under this subsection shall be afforded a 
hearing if such savings association submits a request for such 
_ . 
hearing within 20 days after the issuance of the notice of 
assessment. Section 8(h) of the Federal Deposit Insurance Act 
shall apply to any proceeding under this subsection. 
'"SEC. 6. LIQUID ASSET REQUIREMENTS. 
12 USC 1465. 
r 
"(a) IN GENERAL.—The purpose of this section is to provide a 
means for creating effective and flexible liquidity in savings associa-
tions which can be increased when mortgage money is plentiful, 
maintained in easily liquidated instruments, and reduced to add to 
the flow of funds to the mortgage market in periods of credit 
stringency. More flexible liquidity will help support sound mortgage 
credit and a more stable supply of such credit. 
"(b) MAINTENANCE OF ACCOUNT.— 
"(1) IN GENERAL.—Every savings association shall maintain 
the aggregate amount of its assets of the following types at not 
less than such amount as, in the opinion of the Director, is 
appropriate: 
"(A) cash; 
"(B) balances maintained in a Federal reserve bank or passed 
through a Federal home loan bank or another depository 
institution to a Federal reserve bank pursuant to the Federal 
Reserve Act; and 
"(C) to such extent as the Director may approve for the 
Securities, 
purposes of this section— 
"(i) time and savings deposits in Federal home loan 
banks, institutions which are, or are eligible to become, 
members thereof, and commercial banks; 
"(ii) such obligations, including such special obligations, 
' 
of the United States, a State, any territory or possession of 
the United States, or a political subdivision, agency, or 
instrumentality of any one or more of the foregoing, and 
bankers' acceptances, as the Director may approve; 
"(iii) shares or certificates of any open-end management 
investment company which is registered with the Securities 
and Exchange Commission under the Investment Company 
Act of 1940 and the portfolio of which is restricted by such 
investment company's investment policy, changeable only 
if authorized by shareholder vote, solely to any of the 
obligations or other investments enumerated in subpara-
graph (A) and in clauses (i), (ii), (iv), (v), (vi), and (vii) of this 
subparagraph; 
"(iv) liquid, highly rated corporate debt obligations with 3 
years or less remaining until maturity; 
"(v) highly rated commercial paper with 270 days or less 
remaining until maturity; 
"(vi) mortgage related securities (as that term is defined 
^ 
in section 3(a)(41) of the Securities Exchange Act of 1934)— 
^ ^ 
"(I) that have one year or less remaining until matu-
rity; or 
, 
"(II) that are subject to an agreement (including a 
repurchase agreement, put option, right of redemption, 
or takeout commitment) that requires another person 
103 STAT. 314 
PUBLIC LAW 101-73—AUG. 9, 1989 
to purchase the securities within a period that does not 
exceed one year, and that person is an insured deposi-
tory institution (as defined in section 3 of the Federal 
Deposit Insurance Act) that is in compliance with ap-
plicable capital standards, a primary dealer in United 
States Government securities, or a broker or dealer 
registered under the Securities Exchange Act of 1934; 
and 
Loans. 
"(vii) mortgage loans on the security of a first lien on 
Real property. 
residential real property, if the mortgage loans qualify as 
backing for mortgage-backed securities issued by the Fed-
eral National Mortgage Association or the Federal Home 
Loan Mortgage Association or guaranteed by the Govern-
ment National Mortgage Association, and either— 
"(I) the mortgage loans have one year or less remain-
ing until maturity, or 
"(II) the mortgage loans are subject to an agreement 
(including a repurchase agreement, put option, right of 
! 
redemption, or takeout commitment) that requires an-
other person to purchase the loans within a period that 
does not exceed one year, and that person is an insured 
depository institution (as defined in section 3 of the 
Federal Deposit Insurance Act) that is in compliance 
with applicable capital standards, a primary dealer in 
United States Government securities, or a broker or 
dealer registered under the Securities Exchange Act of 
1934. 
"(2) LIMITATION.—The requirement prescribed by the Director 
pursuant to this subsection (hereafter in this section referred to 
as the 'liquidity requirement') may not be less than 4 percent or 
more than 10 percent of the obligation of the institution on 
withdrawable accounts and borrowings payable on demand or 
Regulations. 
with unexpired maturities of one year or less. The Director shall 
prescribe regulations to implement the provisions of this subsec-
tion. 
"(c) CALCULATION.—The amount of any savings association's 
liquidity requirement, and any deficiency in compliance therewith, 
shall be calculated as the Director shall prescribe. The Director may 
prescribe different liquidity requirements, within the limitations 
. 
specified herein, for different classes of savings associations, and for 
such purposes the Director is authorized to clsissify savings associa-
tions according to type, size, location, rate of withdrawals, or on 
such other basis or bases of differentiation as the Director may deem 
to be reasonably necessary or appropriate for the purposes of this 
section. 
"(d) DEFICIENCY ASSESSMENTS.—For any deficiency in compliance 
with the liquidity requirements, the Director may, in the Director's 
discretion, assess a penalty consisting of the payment by the institu-
tion of such sum as may be assessed by the Director but not in 
excess of a rate equal to the highest rate on Federal home loan bank 
advances of one year or less, plus 2 percent per year, on the amount 
of the deficiency for the period with respect to which the deficiency 
existed. Any penalty assessed under this subsection against a sav-
ings association shall be paid to the Director. The Director may 
authorize or require that, at any time before collection thereof, and 
whether before or after the bringing of any action or other legal 
proceeding, the obtaining of any judgment or other recovery, or the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 315 
issuance or levy of any execution or other legal process therefor, and 
with or without consideration, any such penalty or recovery be 
compromised, remitted, or mitigated in whole or part. The penalties 
authorized under this subsection are in addition to all remedies and 
sanctions otherwise available. 
"(e) REDUCTION OR SUSPENSION.—Whenever the Director deems it 
advisable in order to enable a savings association to meet withdraw-
als or to pay obligations, the Director may, to such extent and 
subject to such conditions as the Director may prescribe, permit the 
savings association to reduce its liquidity below the minimum 
amount. Whenever the Director determines that conditions of na-
tional emergency or unusual economic stress exist, the Director may 
suspend any part or all of the liquidity requirements hereunder for 
such period as the Director may prescribe. Any such suspension, 
unless sooner terminated by its terms or by the Director, shall 
terminate at the expiration of 90 days next after its commencement. 
The preceding sentence does not prevent the Director from again 
exercising, before, at, or after any such termination, the authority 
conferred by this subsection. 
"(f) REGULATING AUTHORITY.—The Director is authorized to issue 
such regulations, including definitions of terms used in this section, 
to make such examinations, and to conduct such investigations as 
the Director deems necessary or appropriate to effectuate the pur-
poses of this section. The reasonable cost of any such examination or 
investigation, as determined by the Director, shall be paid by the 
association. 
"SEC. 7. APPLICABILITY. 
"The provisions of this Act shall apply to the United States and to 
Puerto Rico, Guam, and the Virgin Islands. 
"SEC. 8. DISTRICT ASSOCIATIONS. 
"(a) IN GENERAL.—The Director shall, with respect to all incor-
porated or unincorporated building, building or loan, building and 
loan, or homestead associations, and similar institutions, of or 
transacting or doing business in the District of Columbia, or 
maintaining any office in the District of Columbia (other than 
Federal savings associations), have the same powers and functions 
as to examination, operation, and regulation as the Director has 
with respect to Federal savings associations. 
"(b) ADDITIONAL POWERS.—Any such association or institution 
incorporated under the laws of, or organized in, the District of 
Columbia shall have in addition to any existing statutory authority 
such statutory authority as is vested in Federal savings associations. 
"(c) CHARTER AMENDMENTS.—Charters, certificates of incorpora-
tion, articles of incorporation, constitutions, bylaws, or other organic 
documents of associations or institutions referred to in subsection (b) 
of this section may, without regard to anjrthing contained therein or 
otherwise, be amended in such manner and to such extent and upon 
such votes if any as the Director may by regulation or otherwise 
provide. 
"(d) LIMITATION.—Nothing in this section shall cause, or permit 
the Director to cause. District of Columbia associations to be or 
become Federal savings associations, or require the Director to 
impose on District of Columbia associations the same regulations as 
are imposed on Federal savings associations. 
Territories, U.S. 
12 u s e 1466. 
District of 
Columbia. 
12 u s e 1466a. 
103 STAT. 316 
PUBLIC LAW 101-73—AUG. 9, 1989 
12 use 1467. 
"SEC. 9. EXAMINATION FEES. 
' "«: 
' ..': 
"(a) EXAMINATION OF SAVINGS ASSOCIATIONS.—Thecostof conduct-
ing examinations of savings associations pursuant to section 5(d) of 
this Act shall be assessed by the Director against each such savings 
association in proportion to the assets or resources of the savings 
association. 
"(b) 
EXAMINATION OF AFFIUATES.—The cost of conducting 
examinations of affiliates of savings associations pursuant to this 
Act may be assessed by the Director against each affiliate which is 
examined in proportion to the assets or resources held by the 
affiliate on the date of any such examination. 
"(c) ASSESSMENT AGAINST ASSOCIATION IN CASE OF AFFIUATE'S 
REFUSAL To PAY.— 
"(1) IN GENERAL.—Subject to paragraph (2), if any affiliate of 
any savings association— 
"(A) refuses to pay any assessment under subsection (b); 
-;_;, 
or 
'' 
"(B) fails to pay any such assessment before the end of 
the 60-day period beginning on the date of the assessment, 
the Director may assess such cost against, and collect such cost 
from, such savings association. 
"(2) AFFIUATE OF MORE THAN 1 SAVINGS ASSOCIATION.—If any 
affiliate referred to in paragraph (1) is an affiliate of more than 
1 savings association, the assessment with respect to the affili-
ate agEiinst, and collected from, any affiliated savings associa-
tion in such proportions as the Director may prescribe. 
"(d) 
CIVIL 
MONEY 
PENALTY FOR AFFIUATE'S 
REFUSAL TO 
COOPERATE.— 
"(1) PENALTY IMPOSED.—If any affiliate of any savings associa-
tion— 
"(A) refuses to permit any examiner appointed by the 
Director to make an examination; or 
"(B) refuses to provide any information required to be 
disclosed in the course of any examination, 
the savings association shall forfeit and pay a civil penalty of 
not more than $5,000 for each day that any such refusal contin-
ues. 
"(2) ASSESSMENT AND COLLECTION.—Any penalty imposed 
under paragraph (1) shall be assessed and collected by the 
Director, in the manner provided in section 8(iX2) of the Federal 
Deposit Insurance Act. 
"(e) REGULATIONS.—Only the Director may prescribe regulations 
with respect to— 
"(1) the computation of, and the assessment for, the cost of 
conducting examinations pursuant to this section; and 
"(2) the collection and use of such assessments and any fees 
under this section. 
y. 
Such regulations may establish formulas to determine a fee or 
schedule of fees to cover the costs of examinations and also to cover 
the cost of processing applications, filings, notices, and requests for 
approvals by the Director or the Director's designee. 
"(f) CJoLLECTiON THROUGH F D I C OR FEDERAL HOME LOAN BANKS.— 
^ 
The Corporation or the Federal home loan banks shall, upon request 
of and by agreement with the Director, collect fees and assessments 
on behalf of the Director and be reimbursed for the actual cost of 
collection. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 317 
"(g) COSTS OF OTHER EXAMINATIONS.— 
"(1) EXAMINATION OF FIDUCIARY ACTIVITIES.—In addition to 
any assessment imposed pursuant to subsection (a), the cost of 
conducting examinations of fiduciary activities of savings 
associations which exercise fiduciary powers (including savings 
associations or similar institutions in the District of Columbia) 
shall be assessed by the Director against such savings eissocia-
tions (or similar institutions). 
"(2) EXAMINATIONS IN EXCESS OF 2 PER CALENDAR YEAR.—If 
any savings association or affiliate of a savings association is 
examined by the Director, or the Corporation, as the c£ise may 
be, more than 2 times in any calendar year, the cost of conduct-
ing such additional examinations shall be assessed, in addition 
to any assessment imposed pursuant to subsection (a), by the 
Director or the Corporation, as the case may be, against such 
savings association or affiliate. 
"(h) ADDITIONAL INFORMATION.—Any savings association and any 
affiliate of any savings association shall provide the Director with 
access to any information or report with respect to any examination 
made by any public regulatory authority and furnish any additional 
information with respect thereto as the Director may require. 
"(i) TREATMENT OF EXAMINATION ASSESSMENTS.— 
"(1) DEPOSITS.—Amounts received by the Director from assess-
ments under this section (other than an assessment under 
subsection (d)(2)) or section 10(b)(4) may be deposited in the 
manner provided in section 5234 of the Revised Statutes with 
respect to assessments by the (Domptroller of the Currency. 
"(2) ASSESSMENTS ARE NOT GOVERNMENT FUNDS.—The amounts 
received by the Director from any assessment under this section 
shall not be construed to be Government or public funds or 
appropriated money. 
'(3) ASSESSMENTS ARE NOT SUBJECT TO APPORTIONMENT OF 
FUNDS.—Notwithstanding any other provision of law, the 
amounts received by the Director from any assessment under 
this section shall not be subject to apportionment for the pur-
pose of chapter 15 of title 31, United States Code, or under any 
other authority, 
"(j) PROCESSING FEE.—The Director may, in the Director's sole 
discretion, assess against any person that submits to the Director an 
application, filing, notice, or request a fee to cover the cost of 
processing such submission. 
"(k) FEES FOR EXAMINATIONS AND SUPERVISORY ACTIVITIES.—The 
Director may assess sigainst institutions for which the Director is 
the appropriate Federal banking agency, within the meaning of 
section 3 of the Federal Deposit Insurance Act, fees to fund the 
direct and indirect expenses of the Office. Such fees shall be imposed 
in proportion of the assets or resources of the institutions. The fees 
may be imposed more frequently than annually at the discretion of 
the Director. The annual rate of such fees shall be the same for all 
institutions subject to such fees. 
"(1) WORKING CAPITAL.—The Director is authorized to impose fees 
and assessments pursuant to subsections (a), (b), (e), and (k) of this 
section, in excess of actual expenses for any given year, to permit 
the Director to maintain a working capital fund. The Director shall 
remit to the payors of such fees and assessments any funds collected 
in excess of what he deems necessary to maintain such working 
capital fund. 
103 STAT. 318 
PUBLIC LAW 101-73-AUG. 9, 1989 
"(m) USE OF FUNDS.—The Director is authorized to use the com-
bined resources retained through fees and assessments imposed 
pursuant to this section to pay all direct and indirect salary and 
administrative expenses of the Office, including contracts and pur-
chases of property and services, and the direct and indirect expenses 
of the examinations and supervisory activities of the Office. 
12 u s e 1467a. 
"SEC. 10. REGULATION OF HOLDING COMPANIES. 
"(a) DEFINITIONS.— 
"(1) IN GENERAL.—As used in this section, unless the context 
otherwise requires— 
"(A) SAVINGS ASSOCIATION.—The term 'savings associa-
tion' includes a savings bank or cooperative bank which is 
deemed by the Director to be a savings association under 
subsection (1). 
"(B) 
UNINSURED 
INSTITUTION.—The term 
'uninsured 
institution' means any depository institution the deposits of 
which are not insured by the Federal Deposit Insurance 
Corporation. 
"(C) COMPANY.—The term 'company' means any corpora-
tion, partnership, trust, joint-stock company, or similar 
organization, but does not include the Federal Deposit 
Insurance Corporation, the Resolution Trust Corporation, 
any Federal home loan bank, or any company the majority 
of the shares of which is owned by the United States or any 
State, or by an instrumentality of the United States or any 
State. 
"(D) SAVINGS AND LOAN HOLDING COMPANY.—The term 
'savings and loan holding company' means any company 
which directly or indirectly controls a savings association or 
controls any other company which is a savings and loan 
holding company. 
"(E) MULTIPLE SAVINGS AND LOAN HOLDING COMPANY.— 
The term 'multiple savings and loan holding company' 
means any savings and loan holding company which di-
rectly or indirectly controls 2 or more savings associations. 
"(F) DIVERSIFIED SAVINGS AND LOAN HOLDING COMPANY.— 
The term 'diversified savings and loan holding company' 
means any savings and loan holding company whose 
subsidiary savings association and related activities as per-
mitted under paragraph (2) of subsection (c) of this section 
represented, on either an actual or a pro forma basis, less 
than 50 percent of its consolidated net worth at the close of 
its preceding fiscal year and of its consolidated net earnings 
for such fiscal year, as determined in accordance with 
regulations issued by the Director. 
"(G) SUBSIDIARY.—The term 'subsidiary' has the same 
meaning as in section 3 of the Federal Deposit Insurance 
Act. 
"(H) AFFILIATE.—The term 'affiliate' of a savings associa-
tion means any person which controls, is controlled by, or is 
under common control with, such savings association. 
"(I) BANK HOLDING COMPANY.—The terms 'bank holding 
company' and 'bank' have the meanings given to such 
terms in section 2 of the Bank Holding Company Act of 
1956. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 319 
*'(J) ACQUIRE.—The term 'acquire' has the meaning given 
to such term in section 13(fX8) of the Federal Deposit 
Insurance Act. 
"(2) CONTROL.—For purposes of this section, a person shall be 
deemed to have control of— 
"(A) a savings association if the person directly or in-
directly or acting in concert with one or more other per-
sons, or through one or more subsidiaries, owns, controls, or 
holds with power to vote, or holds proxies representing, 
more than 25 percent of the voting shares of such savings 
association, or controls in any manner the election of a 
majority of the directors of such association; 
(B) any other company if the person directly or in-
directly or acting in concert with one or more other per-
sons, or through one or more subsidiaries, owns, controls, or 
holds with power to vote, or holds proxies representing, 
more than 25 percent of the voting shares or rights of such 
other company, or controls in any manner the election or 
appointment of a majority of the directors or trustees of 
such other company, or is a general partner in or has 
contributed more than 25 percent of the capital of such 
other company; 
"(C) a trust if the person is a trustee thereof; or 
"(D) a savings association or any other company if the 
Director determines, after reasonable notice and oppor-
tunity for hearing, that such person directly or indirectly 
exercises a controlling influence over the management or 
policies of such association or other company. 
"(3) EXCLUSIONS.—Notwithstanding any other provision of 
this subsection, the term 'savings and loan holding company' 
does not include— 
"(A) any company by virtue of its ownership or control of 
voting shares of a savings association or a savings and loan 
holding company acquired in connection with the under-
writing of securities if such shares are held only for such 
period of time (not exceeding 120 days unless extended by 
the Director) as will permit the sale thereof on a reasonable 
basis; and 
"(B) any trust (other than a pension, profit-sharing, 
shareholders', voting, or business trust) which controls a 
savings association or a savings and loan holding company 
if such trust by its terms must terminate within 25 years or 
not later than 21 years and 10 months after the death of 
individuals living on the effective date of the trust, and is (i) 
in existence on June 26, 1967, or (ii) a testamentary trust 
created on or after June 26,1967. 
"(4) SPECIAL RULE RELATING TO QUAUFIED STOCK ISSUANCE.— 
No savings and loan holding company shall be deemed to 
control a savings association solely by reason of the purchsise by 
such savings and loan holding company of shares issued by such 
savings £issociation, or issued by any savings and loan holding 
company (other than a bank holding company) which controls 
such savings association, in connection with a qualified stock 
issuance if such purchase is approved by the Director under 
subsection (qXlXD), unless the acquiring savings and loan hold-
ing company, directly or indirectly, or acting in concert with 1 
or more other persons, or through 1 or more subsidiaries, owns, 
103 STAT. 320 
PUBLIC LAW 101-73—AUG. 9, 1989 
controls, or holds with power to vote, or holds proxies represent-
ing, more than 15 percent of the voting shares of such savings 
association or holding company. 
"(b) REGISTRATION AND EXAMINATION.— 
"(1) IN GENERAL.—Within 90 days after becoming a savings 
and loan holding company, each savings and loan holding com-
pany shall register with the Director on forms prescribed by the 
Director, which shall include such information, under oath or 
otherwise, with respect to the financial condition, ownership, 
operations, management, and intercompany relationships of 
such holding company and its subsidiaries, and related matters, 
as the Director may deem necessary or appropriate to carry out 
the purposes of this section. Upon application, the Director may 
extend the time within which a savings and loan holding com-
pany shall register and file the requisite information. 
"(2) REPORTS.—Each savings and loan holding company and 
each subsidiary thereof, other than a savings association, shall 
file with the Director, and the regional office of the Director of 
the district in which its principal office is located, such reports 
as may be required by the Director. Such reports shall be made 
under oath or otherwise, and shall be in such form and for such 
periods, as the Director may prescribe. Each report shall con-
tain such information concerning the operations of such savings 
and loan holding company and its subsidiaries as the Director 
may require. 
"(3) BOOKS AND RECORDS.—Each savings and loan holding 
company shall maintain such books and records as may be 
prescribed by the Director. 
"(4) EXAMINATIONS.—Each savings and loan holding company 
and each subsidiary thereof (other than a bank) shall be subject 
to such examinations as the Director may prescribe. The cost of 
such examinations shall be assessed against and paid by such 
holding company. Examination and other reports may be fur-
nished by the Director to the appropriate State supervisory 
authority. The Director shall, to the extent deemed feasible, use 
for the purposes of this subsection reports filed with or 
examinations made by other Federal agencies or the appro-
priate State supervisory authority. 
"(5) AGENT FOR SERVICE OF PROCESS.—The Director may re-
quire any savings and loan holding company, or persons con-
nected therewith if it is not a corporation, to execute and file a 
prescribed form of irrevocable appointment of agent for service 
of process. 
"(6) RELEASE FROM REGISTRATION.—The Director may at any 
time, upon the Director's own motion or upon application, 
release a registered savings and loan holding company from any 
registration theretofore made by such company, if the Director 
determines that such company no longer has control of any 
savings association. 
"(c) HOLDING COMPANY ACTIVITIES.— 
"(1) PROHIBITED ACTIVITIES.—Except as otherwise provided in 
this subsection, no savings and loan holding company and no 
subsidiary which is not a savings association shall— 
"(A) engage in any activity or render any service for or on 
behalf of a savings association subsidiary for the purpose or 
with the effect of evading any law or regulation applicable 
to such savings association; 
PUBLIC LAW 101-73-AUG. 9, 1989 
103 STAT. 321 
"(B) commence any business activity, other than the 
activities described in paragraph (2); or 
"(C) continue any business activity, other than the activi-
ties described in paragraph (2), after the end of the 2-year 
period beginning on the date on which such company re-
ceived approval under subsection (e) of this section to 
become a savings and loan holding company subject to the 
limitations contained in this subparagraph. 
"(2) EXEMPT ACTIVITIES.—The prohibitions of subparagraphs 
(B) and (C) of parsigraph (1) shall not apply to the following 
business activities of any savings and loan holding company or 
any subsidiary (of such company) which is not a savings associa-
tion: 
"(A) Furnishing or performing management services for a 
savings association subsidiary of such company. 
"(B) Conducting an insurance agency or escrow business. 
"(C) Holding, managing, or liquidating assets owned or 
acquired from a savings association subsidiary of such com-
pany. 
"(D) Holding or managing properties used or occupied by 
a savings association subsidiary of such company. 
"(E) Acting as trustee under deed of trust. 
"(F) Any other activity— 
"(i) which the Board of Governors of the Federal 
Reserve System, by regulation, has determined to be 
permissible for bank holding companies under section 
4(c) of the Bank Holding Company Act of 1956, unless 
the Director, by regulation, prohibits or limits any such 
activity for savings and loan holding companies; or _ 
"(ii) in which multiple savings and loan holding 
companies were authorized (by regulation) to directly 
engage on March 5,1987. 
"(G) In the case of a savings and loan holding company, 
purchasing, holding, or disposing of stock acquired in 
connection with a qualified stock issuance if the purchase of 
such stock by such savings and loan holding company is 
approved by the Director pursuant to subsection (qXlXD). 
"(3) CERTAIN LIMITATIONS ON ACTIVITIES NOT APPUCABLE TO 
CERTAIN HOLDING COMPANIES.—Notwithstanding paragraphs (4) ^ 
and (6) of this subsection, the limitations contained in subpara-
graphs (B) and (C) of paragraph (1) shall not apply to any 
savings and loan holding company (or any subsidiary of such 
company) which controls— 
"(A) only 1 savings association, if the savings association 
subsidiary of such company is a qualified thrift lender (as 
determined under subsection (m)); or 
"(B) more than 1 savings association, i
f
— 
"(i) all, or all but 1, of the savings association subsidi-
aries of such company were initially acquired by the 
^ 
company or by an individual who would be deemed to 
control such company if such individual were a com-
pany— 
"(I) pursuant to an acquisition under section 
13(c) or 13(k) of the Federal Deposit Insurance Act 
or section 408(m) of the National Housing Act; or 
"(II) pursuant to an acquisition in which assist-
ance was continued to a savings eissociation under 
103 STAT. 322 
PUBLIC LAW 101-73—AUG. 9, 1989 
' 
section 13(i) of the Federal Deposit Insurance Act; 
and 
"(ii) all of the savings association subsidiaries of such 
company are qualified thrift lenders (as determined 
under subsection (m)). 
"(4) PRIOR APPROVAL OF CERTAIN NEW ACTIVITIES REQUIRED.— 
^ 
' '' 
"(A) IN GENERAL.—No savings and loan holding company 
and no subsidiary which is not a savings association shall 
commence, either de novo or by an acquisition (in whole or 
in part) of a going concern, any activity described in para-
graph (2)(F)(i) of this subsection without the prior approval 
of the Director. 
"(B) FACTORS TO BE CONSIDERED BY DIRECTOR.—In consider-
. ' • ' ' ' • ing any application under subparagraph (A) by any savings 
and loan holding company or any subsidiary of any such 
company which is not a savings association, the Director 
shall consider— 
"(i) whether the performance of the activity de-
scribed in such application by the company or the 
• '-^ . 
subsidiary can reasonably be expected to produce bene-
fits to the public (such as greater 
convenience, 
increased competition, or gains in efficiency) that out-
weigh possible adverse effects of such activity (such as 
undue concentration of resources, decreased or unfair 
/ ' 
competition, conflicts of interest, or unsound financial 
practices); 
"(ii) the managerial resources of the companies in-
volved; and 
"(iii) the adequacy of the financial resources, includ-
ing capital, of the companies involved. 
• 
"(C) DIRECTOR MAY DIFFERENTIATE BETWEEN NEW AND 
ONGOING ACTIVITIES.—In prescribing any regulation or 
considering any application under this paragraph, the 
Director may differentiate between activities commenced 
' 
de novo and activities commenced by the acquisition, in 
whole or in part, of a going concern. 
"(D) APPROVAL OR DISAPPROVAL BY ORDER.—The approval 
or disapproval of any application under this paragraph by 
the Director shall be made in an order issued by the 
Director containing the reasons for such approval or dis-
approval. 
"(5) GRACE PERIOD TO ACHIEVE COMPLIANCE.—If any savings 
association referred to in paragraph (3) fails to maintain the 
status of such association as a qualified thrift lender, the Direc-
tor may allow, for good cause shown, any company that controls 
such association (or any subsidiary of such company which is 
not a savings association) up to 3 years to comply with the 
^ 
limitations contained in paragraph (1)(C). 
"(6) SPECIAL PROVISIONS RELATING TO CERTAIN COMPANIES 
AFFECTED BY 1987 AMENDMENTS.— 
"(A) EXCEPTION TO 2-YEAR GRACE PERIOD FOR ACHIEVING 
COMPLIANCE.—Notwithstanding paragraph (1)(C), any com-
pany which received approval under subsection (e) of this 
section to acquire control of a savings association between 
March 5, 1987, and August 10, 1987, shall not continue any 
business activity other than an activity described in para-
''- • 
graph (2) after August 10,1987. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 323 
"(B) EXEMPTION FOR ACTIVITIES LAWFULLY ENGAGED IN 
BEFORE MARCH 5, 1987.—Notwithstanding paragraph (IXQ 
and subject to subpargigraphs (C) and (D), any savings and 
loan holding company which received approval, before 
March 5,1987, under subsection (e) of this section to acquire 
control of a savings association may engage, directly or 
through any subsidiary (other than a savings association 
subsidiary of such company), in any activity in which such 
company or such subsidiary was lawfully engaged on such 
date. 
, 
"(C) TERMINATION OF SUBPARAGRAPH (B) EXEMPTION.— 
The exemption provided under subparagraph (B) for activi-
ties engaged in by any savings and loan holding company or 
a subsidiary of such company (which is not a savings 
association) which would otherwise be prohibited under 
paragraph (IXC) shall terminate with respect to such activi-
ties of such company or subsidiary upon the occurrence 
(after August 10,1987) of any of the following: 
"(i) The savings and loan holding company acquires 
control of a bank or an additional savings association 
(other than a savings association acquired pursuant to 
^ 
section 13(c) or 13(k) of the Federal Deposit Insurance 
Act or section 406(f) or 408(m) of the National Housing 
Act). 
"(ii) Any savings association subsidiary of the savings 
and loan holding company fails to qualify as a domestic 
building and loan association under section 7701(aX19) 
of the Internal Revenue (Dode of 1986. 
"(iii) The savings and loan holding company engages 
in any business activity— 
"(I) which is not described in paragraph (2); and 
"(II) in which it was not engaged on March 5, 
1987. 
"(iv) Any savings association subsidiary of the sav-
ings and loan holding company increases the number of 
locations from which such savings association conducts 
business after March 5, 1987 (other than an increase 
which occurs in connection with a transaction under 
section 13(c) or (k) of the Federal Deposit Insurance Act 
or section 408(m) of the National Housing Act. 
"(v) Any savings association subsidiary of the savings 
and loan holding company permits any overdraft 
(including an intraday overdraft), or incurs any such 
overdraft in its account at a Federal Reserve bank, on 
behalf of an affiliate, unless such overdraft is the result 
of an inadvertent computer or accounting error that is 
beyond the control of both the savings association 
subsidiary and the affiliate. 
"(D) ORDER BY DIRECTOR TO TERMINATE SUBPARAGRAPH (B) 
ACTIVITY.—Any activity described in subparagraph (B) may 
also be terminated by the Director, after opportunity for 
hearing, if the Director determines, having due regard for 
the purposes of this title, that such action is necessary to 
prevent conflicts of interest or unsound practices or is in 
the public interest. 
"(7) FOREIGN SAVINGS AND LOAN HOLDING COMPANY.—Notwith-
standing any other provision of this section, any savings and 
103 STAT. 324 
PUBLIC LAW 101-73—AUG. 9, 1989 
loan holding company organized under the laws of a foreign 
country as of June 1, 1984 (including any subsidiary thereof 
which is not a savings association), which controls a single 
savings association on August 10, 1987, shall not be subject to 
this subsection with respect to any activities of such holding 
company which are conducted exclusively in a foreign country. 
"(8) EXEMPTION FOR BANK HOLDING COMPANIES.—Except for 
paragraph (1)(A), this subsection shall not apply to any company 
* that is treated as a bank holding company for purposes of 
section 4 of the Bank Holding Company Act of 1956, or any of its 
subsidiaries. 
"(d) TRANSACTIONS WITH AFFILIATES.—Transactions between any 
subsidiary savings association of a savings and loan holding com-
pany and any affiliate (of such savings association subsidiary) shall 
be subject to the limitations and prohibitions specified in section 11 
\ 
of this Act. 
\ 
"(e) ACQUISITIONS.— 
\ 
"(1) IN GENERAL.—It shall be unlawful for— 
\ 
"(A) any savings and loan holding company directly or 
indirectly, or through one or more subsidiaries or through 
one or more transactions— 
"(i) to acquire, except with the prior written approval 
• I' 
^ 
of the Director, the control of a savings association or a 
savings and loan holding company, or to retain the 
' 
control of such an association or holding company ac-
quired or retained in violation of this section as here-
tofore or hereafter in effect; 
"(ii) to acquire, except with the prior written ap-
(•*;'• 
, \ 
proval of the Director, by the process of merger, 
consolidation, or purchase of assets, another savings 
association or a savings and loan holding company, or 
all or substantially all of the assets of any such associa-
tion or holding company; 
"(iii) to acquire, by purchase or otherwise, or to 
retain more than 5 percent of the voting shares of a 
savings association not a subsidiary, or of a savings and 
loan holding company not a subsidiary, or in the case of 
^ 
• 
a multiple savings and loan holding company (other 
'•'•-- •'•-•• 
than a company described in subsection (c)(8)), to so 
acquire or retain more than 5 percent of the voting 
shares of any company not a subsidiary which is en-
gaged in any business activity other than the activities 
specified in subsection (c)(2). This clause shall not apply 
to shares of a savings association or of a savings and 
loan holding company— 
"(I) held as a bona fide fiduciary (whether with 
_
^ ' 
or without the sole discretion to vote such shares); 
"(II) held temporarily pursuant to an underwrit-
ing commitment in the normal course of an under-
% 
writing business; 
"(III) held in an account solely for trading pur-
poses; 
"(IV) over which no control is held other than 
control of voting rights acquired in the normal 
course of a proxy solicitation; 
'
^
* ^r 
' 
' ' 
"(V) acquired in securing or collecting a debt 
^,.*' ' 
' 
previously contracted in good faith, during the 2-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 325 
year period beginning on the date of such acquisi-
tion or for such additional time (not exceeding 3 
years) as the Director may permit if the Director 
determines that such an extension will not be 
detrimental to the public interest; 
"(VI) acquired under section 408(m) of the Na-
tional Housing Act or section 13(k) of the Federal 
Deposit Insurance Act; 
(VII) held by any insurance company, as de-
fined in section 2(a)(17) of the Investment Company 
Act of 1940, except £is provided in paragraph (6); 
: 
"(VIII) acquired pursuant to a qualified stock 
issuance if such purchase is approved by the Direc-
tor under subsection (q)(l)(D); 
except that the aggregate amount of shares held under 
^ 
this clause (other than under subclauses (I), (II), (III), 
(IV), and (VI)) may not exceed 15 percent of all 
outstanding shares or of the voting power of a savings 
association or savings and loan holding company; or 
"(iv) to acquire the control of an uninsured institu-
tion, or to retain for more than one year after February 
14, 1968, or from the date on which such control was 
acquired, whichever is later, except that the Director 
may upon application by such company extend such 
one-year period from year to year, for an additional 
period not exceeding 3 years, if the Director finds such 
extension is warranted and is not detrimental to the 
public interest; 
"(B) any other company, without the prior written ap-
proval of the Director, directly or indirectly, or through one 
or more subsidiaries or through one or more transactions, 
to acquire the control of one or more savings associations, 
except that such approval shall not be required in connec- 
f 
tion with the control of a savings association, (i) acquired by 
devise under the terms of a will creating a trust which is 
excluded from the definition of 'savings and loan holding 
company' under subsection (a) of this section, or (ii) ac-
quired in connection with a reorganization in which a 
person or group of persons, having had control of a savings 
association for more than 3 years, vests control of that 
association in a newly formed holding company subject to 
the control of the same person or group of persons. The 
v 
Director shall approve an acquisition of a savings associa-
tion under this subparagraph unless the Director finds the 
financial and managerial resources and future prospects of 
the company and association involved to be such that the 
acquisition would be detrimental to the association or the 
insurance risk of the Savings Association Insurance Fund 
or Bank Insurance Fund, and shall render a decision within 
90 days after submission to the Director of the complete 
record on the application. 
"(2) FACTORS TO BE CONSIDERED.—The Director shall not ap-
prove any acquisition under subparagraph (A)(i) or (A)(ii), or of 
more than one savings association under subparagraph (B) of 
v 
paragraph (1) of this subsection, any acquisition of stock in 
connection with a qualified stock issuance, any acquisition 
under paragraph (4XA), or any transaction under section 13(k) 
103 STAT. 326 
PUBLIC LAW 101-73—AUG. 9, 1989 
of the Federal Deposit Insurance Act, except in accordance with 
this paragraph. In every case, the Director shall take into 
consideration the financial and managerial resources and 
future prospects of the company and association involved, the 
effect of the acquisition on the association, the insurance risk to 
; 
the Savings Association Insurance Fund or the Bank Insurance 
Fund, and the convenience and needs of the community to be 
served, and shall render a decision within 90 days after submis-
sion to the Director of the complete record on the application. 
Before approving any such acquisition, except a transaction 
under section 13(k) of the Federal Deposit Insurance Act, the 
Director shall request from the Attorney General and consider 
any report rendered within 30 da3rs on the competitive factors 
involved. The Director shall not approve any proposed acquisi-
tion— 
"(A) which would result in a monopoly, or which would be 
in furtherance of any combination or conspiracy to monopo-
s^ 
lize or to attempt to monopolize the savings and loan 
business in any part of the United States, or 
"(B) the effect of which in any section of the country may 
be substantially to lessen competition, or tend to create a 
monopoly, or which in any other manner would be in 
restraint of trade, unless it finds that the anticompetitive 
effects of the proposed acquisition are clearly outweighed in 
the public interest by the probable effect of the acquisition 
in meeting the convenience and needs of the community to 
be served. 
"(3) INTERSTATE ACQUISITIONS.—No acquisition shall be ap-
proved by the Director under this subsection which will result 
in the formation by any company, through one or more subsidi-
aries or through one or more transactions, of a multiple savings 
^ 
and loan holding company controlling savings associations in 
more than one State, unless— 
"(A) such company, or a savings association subsidiaiy of 
such company, is authorized to acquire control of a savings 
association subsidiary, or to operate a home or branch 
office, in the additional State or States pursuant to section 
13(k) of the Federal Deposit Insurance Act; 
"(B) such company controls a savings association subsidi-
ary which operated a home or branch office in the addi-
tional State or States as of March 5,1987; or 
"(C) the statutes of the State in which the savings associa-
tion to be acquired is located permit a savings association 
chartered by such State to be acquired by a savings associa-
tion chartered by the State where the acquiring savings 
association or savings and loan holding company is located 
or by a holding company that controls such a State char-
tered savings association, and such statutes specifically 
authorize such an acquisition by language to that effect and 
not merely by implication. 
"(4) ACQUISITIONS BY CERTAIN INDIVIDUALS.— 
"(A) IN GENERAL.—Notwithstanding subsection (hX2), any 
director or officer of a savings and loan holding company, or 
any individual who owns, controls, or holds with power to 
vote (or holds proxies representing) more than 25 percent of 
the voting shares of such holding company, may acquire 
control of any savings association not a subsidiary of such 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 327 
savings and loan holding company with the prior written 
approval of the Director. 
"(B) TREATMENT OF CERTAIN HOLDING COMPANIES.—If any 
individual referred to in subparagraph (A) controls more 
than 1 savings and loan holding company or more than 1 
savings association, any savings and loan holding company 
fc;o: 
controlled by such individual shall be subject to the activi-
ties limitations contained in subsection (c) to the same 
extent such limitations apply to multiple savings and loan 
holding companies, unless all or all but 1 of the savings 
associations (including any institution deemed to be a sav-
ings association under subsection (1) of this section) con-
trolled directly or indirectly by such individual was ac-
quired pursuant to an acquisition described in subclause (I) 
or (II) of subsection (c)(3)(B)(i). 
"(5) ACQUISITIONS PURSUANT TO CERTAIN SECURITY INTERESTS.— 
This subsection and subsection (c)(2) of this section do not apply 
to any savings and loan holding company which acquired the 
control of a savings association or of a savings and loan holding 
company pursuant to a pledge or hypothecation to secure a 
loan, or in connection with the liquidation of a loan, made in the 
ordinary course of business. It shall be unlawful for any such 
company to retain such control for more than one year after 
February 14, 1968, or from the date on which such control was 
acquired, whichever is later, except that the Director may upon 
application by such company extend such one-year period from 
year to year, for an additional period not exceeding 3 years, if 
. 
j
C
r 
the Director finds such extension is warranted and would not be 
detrimental to the public interest. 
"(6) SHARES HELD BY INSURANCE AFFILIATES.—Shares described 
in clause (iii)(VII) of paragraph (1)(A) shall not be excluded for 
purposes of clause (iii) of such paragraph if— 
"(A) all shares held under such clause (iii)(Vn) by all 
' 
insurance company affiliates of such savings association or 
savings and loan holding company in the aggregate exceed 
5 percent of all outstanding shares or of the voting power of 
the savings association or savings and loan holding com-
pany; or 
"(B) such shares are acquired or retained with a view to 
acquiring, exercising, or transferring control of the savings 
association or savings and loan holding company. 
"(f) DECLARATION OF DIVIDEND.—Every subsidiary savings associa-
tion of a savings and loan holding company shall give the Director 
not less than 30 days' advance notice of the proposed declaration by 
its directors of any dividend on its guaranty, permanent, or other 
nonwithdrawable stock. Such notice period shall commence to run 
from the date of receipt of such notice by the Director. Any such 
dividend declared within such period, or without the giving of such 
notice to the Director, shall be invalid and shall confer no rights or 
benefits upon the holder of any such stock. 
"(g) ADMINISTRATION AND ENFORCEMENT.— 
"(1) IN GENERAL.—The Director is authorized to issue such 
regulations and orders as the Director deems necessary or appro-
priate to enable the Director to administer and carry out the 
purposes of this section, and to require compliance therewith and 
prevent evasions thereof. 
103 STAT. 328 
PUBLIC LAW 101-73—AUG. 9, 1989 
Records. 
District of 
Columbia. 
"(2) INVESTIGATIONS.—The Director may make such investiga-
tions as the Director deems necessary or appropriate to deter-
mine whether the provisions of this section, and regulations and 
orders thereunder, are being and have been complied with by 
savings and loan holding companies and subsidiaries and affili-
ates thereof. For the purpose of any investigation under this 
section, the Director may administer oaths and affirmations, 
issue subpenas, take evidence, and require the production of any 
books, papers, correspondence, memorandums, or other records 
which may be relevant or material to the inquiry. The attend-
ance of witnesses and the production of any such records may be 
required from any place in any State. The Director may apply to 
the United States district court for the judicial district (or the 
United States court in any territory) in which any witness or 
company subpenaed resides or carries on business, for enforce-
ment of any subpena issued pursuant to this paragraph, and 
such courts shall have jurisdiction and power to order and 
require compliance. 
"(3) PROCEEDINGS.—(A) In any proceeding under subsection 
(a)(2)(D) or under paragraph (5) of this section, the Director may 
administer oaths and affirmations, take or cause to be taken 
depositions, and issue subpenas. The Director may make regula-
tions with respect to any such proceedings. The attendance of 
witnesses and the production of documents provided for in this 
paragraph may be required from any place in any State or in 
any territory at any designated place where such proceeding is 
being conducted. Any party to such proceedings may apply to 
the United States District Court for the District of Columbia, or 
the United States district court for the judicial district or the 
United States court in any territory in which such proceeding is 
being conducted, or where the witness resides or carries on 
business, for enforcement of any subpena issued pursuant to 
this paragraph, and such courts shall have jurisdiction and 
power to order and require compliance therewith. Witnesses 
subpenaed under this section shall be paid the same fees and 
mileage that are paid witnesses in the district courts of the 
United States. 
"(B) Any hearing provided for in subsection (a)(2)(D) or under 
paragraph (5) of this section shall be held in the Federal judicial 
district or in the territory in which the principal office of the 
association or other company is located unless the party af-
forded the hearing consents to another place, and shall be 
conducted in accordance with the provisions of chapter 5 of title 
5, United States Code. 
"(4) INJUNCTIONS.—Whenever it appears to the Director that 
any person is engaged or has engaged or is about to engage in 
any acts or practices which constitute or will constitute a 
violation of the provisions of this section or of any regulation or 
order thereunder, the Director may bring an action in the 
proper United States district court, or the United States court of 
any territory or other place subject to the jurisdiction of the 
United States, to enjoin such acts or practices, to enforce 
compliance with this section or any regulation or order, or to 
require the divestiture of any acquisition in violation of this 
section, or for any combination of the foregoing, and such courts 
shall have jurisdiction of such actions. Upon a proper showing 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 329 
an injunction, decree, restraining order, order of divestiture, or 
other appropriate order shall be granted without bond. 
"(5) CEASE AND DESIST ORDERS.—(A) Notwithstanding any 
other provision of this section, the Director may, whenever the 
Director has reasonable cause to believe that the continuation 
by a savings and loan holding company of any activity or of 
ownership or control of any of its noninsured subsidiaries con-
stitutes a serious risk to the financial safety, soundness, or 
stability of a savings and loan holding company's subsidiary 
savings association and is inconsistent with the sound operation 
of a savings association or with the purposes of this section or 
section 8 of the Federal Deposit Insurance Act, order the sav-
ings and loan holding company or any of its subsidiaries, after 
due notice and opportunity for hearing, to terminate such 
activities or to terminate (within 120 days or such longer period 
as the Director directs in unusual circumstances) its ownership 
or control of any such noninsured subsidiary either by sale or by 
distribution of the shares of the subsidiary to the shareholders 
of the savings and loan holding company. Such distribution 
shall be pro rata with respect to all of the shareholders of the 
distributing savings and loan holding company, and the holding 
company shall not make any charge to its shareholders arising 
out of such a distribution. 
"(B) The Director may in the Director's discretion apply to the 
United States district court within the jurisdiction of which the 
principal office of the company is located, for the enforcement of 
any effective and outstanding order issued under this section, 
and such court shall have jurisdiction and power to order and 
require compliance therewith. Except as provided in subsection 
(j), no court shall have jurisdiction to affect by injunction or 
otherwise the issuance or enforcement of any notice or order 
under this section, or to review, modify, suspend, terminate, or 
set aside any such notice or order. 
"(h) PROHIBITED ACTS.—It shall be unlawful for— 
"(1) any savings and loan holding company or subsidiary 
thereof, or any director, officer, employee, or person owning, 
controlling, or holding with power to vote, or holding proxies 
representing, more than 25 percent of the voting shares, of such 
holding company or subsidiary, to hold, solicit, or exercise any 
proxies in respect of any voting rights in a savings association 
which is a mutual association; 
"(2) any director or officer of a savings and loan holding 
company, or any individual who owns, controls, or holds with 
power to vote (or holds proxies representing) more than 25 
percent of the voting shares of such holding company, to acquire 
control of any savings association not a subsidiary of such 
savings and loan holding company, unless such acquisition is 
approved by the Director pursuant to subsection (e)(4); or 
"(3) any individual, except with the prior approval of the 
Director, to serve or act as a director, officer, or trustee of, or 
become a partner in, any savings and loan holding company 
after having been convicted of any criminal offense involving 
dishonesty or breach of trust, 
"(i) PENALTIES.— 
"(1) CRIMINAL PENALTIES.—(A) Whoever knowingly violates 
any provision of this section, and any company which violates 
any regulation or order issued by the Director pursuant thereto. 
103 STAT. 330 
PUBLIC LAW 101-73—AUG. 9, 1989 
shall be fined not more than $100,000 per day for each day 
during which the violation continues, 
"(B) Any individual who knowingly violates any provision of 
this section shall be fined not more than $100,000 per day for 
each day during which the violation continues, imprisoned not 
more than 1 year, or both. 
"(C) Whoever knowingly violates any provision of this section 
with intent to deceive, to defraud, or to profit significantly shall 
be fined not more than $1,000,000 per day for each day during 
which the violation continues, imprisoned not more than 5 
years, or both. 
"(2) FALSE ENTRIES.—Every director, officer, partner, trustee, 
agent, or employee of a savings and loan holding company shall 
be subject to the same penalties for false entries in any book, 
report, or statement of such savings and loan holding company 
as are applicable to officers, agents, and employees of a savings 
association the accounts of which are insured by the Corpora-
tion for false entries in any books, reports, or statements of such 
association under section 1006 of title 18, United States Code. 
"(3) CIVIL MONEY PENALTY.— 
"(A) PENALTY.—Any company which violates, and any 
person who participates in a violation of, any provision of 
this section, or any regulation or order issued pursuant 
thereto, shall forfeit and pay a civil penalty of not more 
than $25,000 for each day during which such violation 
continues. 
"(B) ASSESSMENT.—Any penalty imposed under subpara-
graph (A) may be assessed and collected by the Director in 
the manner provided in subparagraphs (E), (F), (G), and (I) 
of section 8(i)(2) of the Federal Deposit Insurance Act for 
penalties imposed (under such section) and any such assess-
ment shall be subject to the provisions of such section. 
"(C) HEARING.—The company or other person against 
whom any civil penalty is assessed under this paragraph 
shall be afforded a hearing if such company or person 
submits a request for such hearing within 20 days after the 
issuance of the notice of assessment. Section 8(h) of the 
Federal Deposit Insurance Act shall apply to any proceed-
ing under this paragraph. 
"(D) 
DISBURSEMENT.—All 
penalties 
collected 
under 
authority of this paragraph shall be deposited into the 
Treasury. 
"(E) VIOLATE DEFINED.—For purposes of this section, the 
term 'violate' includes any action (alone or with another or 
others) for or toward causing, bringing about, participating 
in, counseling, or aiding or abetting a violation. 
"(F) REGULATIONS.—The Director shall prescribe regula-
tions establishing such procedures as may be necessary to 
carry out this paragraph. 
"(4) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERV-
ICE.—The resignation, termination of employment or participa-
tion, or separation of an institution-affiliated party (within the 
meaning of section 3(u) of the Federal Deposit Insurance Act) 
with respect to a savings and loan holding company or subsidi-
ary thereof (including a separation caused by the deregistration 
of such a company or such a subsidiary) shall not affect the 
jurisdiction and authority of the Director to issue any notice 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 331 
and 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 such a party with respect to 
such holding company or its subsidiary (whether such date 
occurs before, on, or after the date of the enactment of this 
paragraph). 
"(j) JUDICIAL REVIEW.—Any party aggrieved by an order of the 
District of 
Director under this section may obtain a review of such order by 
Columbia. 
fiUng in the court of appeals of the United States for the circuit in 
which the principal office of such party is located, or in the United 
States Court of Appeals for the District of Columbia Circuit, within 
30 days after the date of service of such order, a written petition 
praying that the order of the Director be modified, terminated, or 
set aside. A copy of the petition shall be forthwith transmitted by 
the clerk of the court to the Director, and thereupon the Director 
shall file in the court the record in the proceeding, as provided in 
section 2112 of title 28, United States Code. Upon the filing of such 
petition, such court shall have jurisdiction, which upon the filing of 
the record shall be exclusive, to affirm, modify, terminate, or set 
aside, in whole or in part, the order of the Director. Review of such 
proceedings shall be had as provided in chapter 7 of title 5, United 
States Code. The judgment and decree of the court shall be final, 
except that the same shall be subject to review by the Supreme 
Court upon certiorari as provided in section 1254 of title 28, United 
States Code. 
"(k) SAVINGS CLAUSE.—Nothing contained in this section, other 
than any transaction approved under subsection (e)(2) of this section 
or section 13 of the Federal Deposit Insurance Act, shall be inter-
preted or construed as approving any act, action, or conduct which is 
or has been or may be in violation of existing law, nor shall 
anything herein contained constitute a defense to any action, suit, 
or proceeding pending or hereafter instituted on account of any act,' 
action, or conduct in violation of the antitrust laws. 
"(1) TREATMENT OF F D I C INSURED STATE SAVINGS BANKS AND 
COOPERATIVE BANKS AS SAVINGS ASSOCIATIONS.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
law, a savings bank (as defined in section 3(g) of the Federal 
Deposit Insurance Act) and a cooperative bank that is an in-
sured bank (as defined in section 3(h) of the Federal Deposit 
Insurance Act) upon application shall be deemed to be a savings 
association for the purpose of this section, if the Director deter-
mines that such bank is a qualified thrift lender (as determined 
under subsection (m)). 
"(2) FAILURE TO MAINTAIN QUALIFIED THRIFT LENDER STATUS.— 
If any savings bank which is deemed to be a savings association 
under paragraph (1) subsequently fails to maintain its status as 
a qualified thrift lender, as determined by the Director, such 
bank may not thereafter be a qualified thrift lender for a period 
of 5 years, 
"(m) QUALIFIED THRIFT LENDER TEST.— 
"(1) IN GENERAL.—Except as provided in paragraphs (2) and 
(6), any savings association shall have the status of a qualified 
thrift lender i
f
— 
"(A) the qualified thrift investments of such savings 
association equal or exceed 60 percent of the total tangible 
assets of such association; and 
103 STAT. 332 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) the qualified thrift investments of such savings 
association continue to equal or exceed 60 percent of the 
total tangible assets of such association on an average basis 
in 3 out of every 4 quarters and 2 out of every 3 years. 
"(2) 
EXCEPTIONS GRANTED BY DIRECTOR.—Notwithstanding 
paragraph (1), the Director may grant such temporary and 
limited exceptions from the minimum actual thrift investment 
percentage requirement contained in such paragraph as the 
Director deems necessary i
f
— 
"(A) the Director determines that extraordinary cir-
cumstances exist, such as when the effects of high interest 
rates reduce mortgage demand to such a degree that an 
insufficient opportunity exists for a savings association to 
meet such investment requirements; or 
"(B) the Director determines that— 
"(i) the grant of any such exception will significantly 
facilitate an acquisition under section 13(c) or 13(k) of 
the Federal Deposit Insurance Act; 
"(ii) the acquired association will comply with the 
transition requirements of paragraph (6)(B), as if the 
date of the exemption were the starting date for the 
transition period described in that paragraph; and 
"(iii) the Director determines that the exemption will 
not have an undue adverse effect on competing savings 
associations in the relevant market and will further 
the purposes of this subsection. 
"(3) FAILURE TO BECOME AND REMAIN A QUALIFIED THRIFT 
LENDER.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(D), a savings association that fails to become or remain a 
qualified thrift lender shall either become one or more 
banks (other than a savings bank), or be subject to subpara-
graph (B). 
"(B) RESTRICTIONS APPUCABLE TO SAVINGS ASSOCIATIONS 
THAT ARE NOT QUALIFIED THRIFT LENDERS.— 
"(i) RESTRICTIONS EFFECTIVE IMMEDIATELY.—The fol-
lowing restrictions shall apply immediately to a sav-
ings association after the date on which the savings 
association should have become or ceases to be a quali-
fied thrift lender: 
"(I) ACTIVITIES.—The savings association shall 
not make any new investment (including an invest-
ment in a subsidiary) or engage, directly or in-
directly, in any other new activity unless that 
investment or activity would be permissible for the 
savings association if it were a national bank, and 
is also permissible for the savings association as a 
savings association. 
"(II) BRANCHING.—The savings association shall 
not establish any new branch office at any location 
at which a national bank located in the savings 
£issociation's home State may not establish a 
branch office. For purposes of this subclause, a 
savings association's home State is the State in 
which the savings association's total deposits were 
largest on the date on which the savings associa-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 333 
tion should have become or ceased to be a qualified 
thrift lender. 
"(Ill) ADVANCES.—The savings association shall 
not be eligible to obtain new advances from any 
Federal home loan bank. 
"(IV) DIVIDENDS.—The savings association shall 
be subject to all statutes and regulations governing 
the payment of dividends by a national bank in the 
same manner and to the same extent as if the 
savings association were a national bank, 
"(ii) ADDITIONAL RESTRICTIONS EFFECTIVE AFTER THREE 
YEARS.—The following additional restrictions shall 
apply to a savings association beginning 3 years after 
^ 
the date on which the savings association should have 
become or ceases to be a qualified thrift lender: 
"(I) ACTIVITIES.—The savings association shall 
not retain any investment (including an invest-
ment in any subsidiary) or engage, directly or in-
directly, in any activity unless that investment or 
activity would be permissible for the savings 
association if it were a national bank, and is also 
permissible for the savings association as a savings 
association. 
"(II) ADVANCES.—The savings association shall 
repay any outstanding advances from any Federal 
home loan bank as promptly as can be prudently 
done consistent with the safe and sound operation 
of the savings association. 
"(C) HOLDING COMPANY REGULATION.—Any company that 
controls a savings association that is subject to any provi- 
^ 
sion of subpars^aph (B) shall, within one year after the 
date on which the savings association should have become 
or ceases to be a qualified thrift lender, register as and be 
deemed to be a bank holding company subject to all of the 
provisions of the Bank Holding Company Act of 1956, sec-
tion 8 of the Federal Deposit Insurance Act, and other 
statutes applicable to bank holding companies, in the same 
manner and to the same extent as if the company were a 
bank holding company and the savings association were a 
bank, as those terms are defined in the Bank Holding 
Company Act of 1956. 
"(D) REQUALIFICATION.—A savings association that should 
have become or ceases to be a qualified thrift lender shall 
not be subject to subparagraph (B) or (C) if the savings 
association becomes a qualified thrift lender by meeting the 
qualified thrift lender requirement in paragraph (1) on an 
average basis in 3 out of every 4 quarters and 2 out of every 
3 years and thereafter remains a qualified thrift lender. If 
the savings association (or any savings association that 
acquired all or substantially all of its assets from that 
savings association) at any time thereafter ceases to be a 
qualified thrift lender, it shall immediately be subject to all 
provisions of subparagraphs (B) and (C) as if all the periods 
described in subparagraphs (BXii) and (C) had expired. 
"(E) DEPOSIT INSURANCE ASSESSMENTS.—Any bank char-
tered as a result of the requirements of this section shall be 
obligated until December 31, 1993, to pay to the Savings 
103 STAT. 334 
PUBLIC LAW 101-73—AUG. 9, 1989 
Association Insurance Fund the assessments assessed on 
savings associations under the Federal Deposit Insurance 
Act. Such association shall also be assessed, on the date of 
its change of status from a Savings Association Insurance 
Fund member, the exit fee and entrance fee provided in 
section 5(d) of the Federal Deposit Insurance Act. Such 
institution shall not be obligated to pay the assessments 
assessed on banks under the Federal Deposit Insurance Act 
until— 
"(i) December 31,1993, or 
"(ii) the institution's change of status from a Savings 
Association Insurance fund member to a Bank Insur-
"
^ ^ 
ance Fund member, 
whichever is later. 
"(F) SPECIAL RULE.—This paragraph shall not apply to 
savings associations headquartered and operating primarily 
in Puerto Rico or the Virgin Islands. 
"(G) EXEMPTION FOR CERTAIN FEDERAL SAVINGS ASSOCIA-
TIONS.—This paragraph shall not apply to any Federal sav-
' 
ings association 
in existence as a Federal 
savings 
, " ' 
association on the date of enactment of the Financial Insti-
tutions Reform Recovery, and Enforcement Act of 1989— 
"(i) that was chartered before October 15, 1982, as a 
savings bank or a cooperative bank under State law; or 
"(ii) that acquired its principal assets from an associa-
tion that was chartered before October 15, 1982, as a 
savings bank or a cooperative bank under State law. 
"(H) No CIRCUMVENTION OF EXIT MORATORIUM.—Subpara-
graph (A) of this paragraph shall not be construed as 
permitting any insured depository institution to engage in 
J 
any conversion transaction prohibited under section 5(d) of 
the Federal Deposit Insurance Act. 
"(I) EFFECTIVE DATE.—This paragraph shall take effect 
upon the expiration of 1 year after the date of enactment of 
the Fingmcial Institutions Reform, Recovery, and Enforce-
ment Act of 1989. 
"(4) DEFINITIONS.—For purposes of this subsection— 
"(A) ACTUAL THRIFT INVESTMENT PERCENTAGE.—The term 
'actual thrift investment percentage' means the percentage 
determined by dividing— 
"(i) the amount of the qualified thrift investments of 
a savings association, by 
"(ii) the total amount of tangible assets of such sav-
ings association. 
"(B) QUAUFIED THRIFT INVESTMENTS.—The term 'qualified 
thrift investments' means, with respect to any savings 
association, the sum of— 
• 
"(i) the aggregate amount of loans, equity positions, 
or securities held by the savings association (or any 
~ • 
/ 
subsidiary of such association) which are related to 
domestic residential real estate or manufactured hous-
ing; 
"(ii) the value of property used by such association or 
subsidiary in the conduct of the business of such 
association or subsidiary; 
"(iii) subject to paragraph (5), the liquid assets of the 
type required to be maintained under this Act; and 
"(iv) subject to paragraph (5), 50 percent of the dollar 
amount of the residential mortgage loans originated by 
such savings association or subsidiary and sold within 
90 days of origination. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 335 
"(5) LIMITATION ON TREATMENT OF CERTAIN ASSETS AS THRIFT 
INVESTMENTS.—The aggregate amount of the assets described in 
clauses (iii) and (iv) of paragraph (4)(B) which may be taken into 
account in determining the amount of the qualified thrift 
^ 
investments of any savings association shall not exceed the 
amount which is equal to 10 percent of the tangible assets of 
such association. 
"(6) TRANSITIONAL RULE FOR CERTAIN SAVINGS ASSOCIATIONS.— 
"(A) IN GENERAL.—If any Federal savings association in 
existence as a Federal savings association on the date of 
enactment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989— 
"(i) that was chartered as a savings bank or a co-
operative bank under State law before October 15, 
1982; or 
"(ii) that acquired its principal assets from an 
association that was chartered before October 15, 1982, 
as a savings bank or a cooperative bank under State 
law, 
meets the requirements of subparagraph (B), such savings 
association shall be treated as a qualified thrift lender 
during the 6-year period beginning on August 10, 1989. 
"(B) 
SUBPARAGRAPH 
(B) 
REQUIREMENTS.—A 
savings 
association meets the requirements of this subparagraph if, 
in the determination of the Director— 
"(i) the actual thrift investment percentage of such 
' 
association does not, after the date of enactment of the 
Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989, decrease below the actual thrift 
investment percentage of such association on July 15, 
1989; and 
"(ii) the amount by which— 
"(I) the actual thrift investment percentage of 
such association at the end of each period described 
in the following table, exceeds 
"(II) the actual thrift investment percentage of 
such association on July 15,1989, 
is equal to or greater than the applicable percentage (as 
determined under the following table) of the amount by 
which 70 percent exceeds the actual thrift investment 
percentage of such association on such date of enact-
ment: 
"For the following 
The applicable 
peried: 
percentage is: 
Prior to July 1, 1991 
25 percent 
July 1, 1991-December 31, 1992 
50 percent 
January 1, 1993-June 30, 1994 
75 percent 
Thereafter 
100 percent 
"(C) For purposes of this paragraph, the actual thrift 
investment percenteige of an association on July 15, 1989, 
shall be determined by applying the definition of 'actual ' 
thrift investment percentage that takes effect on July 1, 
1991. 
"(n) TYING RESTRICTIONS.—A savings and loan holding company 
and any of its affiliates shall be subject to section 5(q) and regula-
tions prescribed under such section, in connection with transactions 
involving the products or services of such company or affiliate and 
those of an affiliated savings association as if such company or 
affiliate were a savings association. 
"(o) MUTUAL HOLDING COMPANIES.— 
"(1) IN GENERAL.—A savings association operating in mutual 
form may reorganize so as to become a holding company by— 
103 STAT. 336 
PUBLIC LAW 101-73—AUG. 9, 1989 
5,*-,', 
"(A) chartering an interim savings association, the stock 
J j 
of which is to be wholly owned, except as otherwise pro-
vided in this section, by the mutual association; and 
, 
"(B) transferring the substantial part of its assets and 
liabilities, including all of its insured liabilities, to the 
interim savings association. 
"(2) DIRECTORS AND CERTAIN ACCOUNT HOLDERS' APPROVAL OF 
PLAN REQUIRED.—A reorganization is not authorized under this 
subsection unless— 
; 
"(A) a plan providing for such reorganization has been 
. 
approved by a majority of the board of directors of the 
mutual savings association; and 
"(B) in the case of an association in which holders of 
accounts and obligors exercise voting rights, such plan has 
been submitted to and approved by a majority of such 
,.^, 
individuals at a meeting held at the call of the directors in 
accordance with the procedures prescribed by the associa-
tion's charter and bylaws. 
"(3) NOTICE TO THE DIRECTOR; DISAPPROVAL PERIOD.— 
.,,.,, 
"(A) NOTICE REQUIRED.—At least 60 days prior to taking 
any action described in paragraph (1), a savings association 
seeking to establish a mutual holding company shall pro-
vide written notice to the Director. The notice shall contain 
such relevant information as the Director shall require by 
regulation or by specific request in connection with any 
, . 
particular notice. 
"(B) TRANSACTION ALLOWED IF NOT DISAPPROVED.—Unless 
the Director within such 60-day notice period disapproves 
., 
the proposed holding company formation, or extends for 
another 30 days the period during which such disapproval 
' 
may be issued, the savings association providing such notice 
may proceed with the transaction, if the requirements of 
paragraph (2) have been met. 
"(C) GROUNDS FOR DISAPPROVAL.—The Director may dis-
approve any proposed holding company formation only if— 
"(i) such disapproval is necessary to prevent unsafe 
or unsound practices; 
"(ii) the financial or management resources of the 
savings association involved warrant disapproval; 
"(iii) the savings association fails to furnish the 
/ 
, 
information required under subparagraph (A); or 
' '^ 
"(iv) the savings association fails to comply with the 
requirement of paragraph (2). 
"(D) RETENTION OF CAPITAL ASSETS.—In connection with 
the transaction described in paragraph (1), a savings 
association may, subject to the approval of the Director, 
retain capital assets at the holding company level to the 
extent that such capital exceeds the association's capital 
requirement established by the Director pursuant to sec-
tions 5 (s) and (t) of this Act. 
; 
"(4) OWNERSHIP.— 
"(A) IN GENERAL.—Persons having ownership rights in 
the mutual association pursuant to section 5(b)(1)(B) of this 
Act or State law shall have the same ownership rights with 
respect to the mutual holding company. 
,.' 
"(B) HOLDERS OF CERTAIN ACCOUNTS.—Holders of savings, 
. 
demand or other accounts of— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 337 
"(i) a savings association chartered as part of a trans-
action described in paragraph (1); or 
"(ii) a mutual savings association acquired pursuant 
to paragraph (5)(B), 
shall have the same ownership rights with respect to the 
mutual holding company as persons described in subpara-
graph (A) of this paragraph. 
"(5) PERMITTED ACTIVITIES.—A mutual holding company may 
engage only in the following activities: 
"(A) Investing in the stock of a savings association. 
"(B) Acquiring a mutual association through the merger 
of such Eissociation into a savings association subsidiary of 
such holding company or an interim savings association 
subsidiary of such holding company. 
"(C) Subject to paragraph (6), merging with or acquiring 
another holding company, one of whose subsidiaries is a 
savings association. 
"(D) Investing in a corporation the capital stock of which 
is available for purchase by a savings association under 
Federal law or under the law of any State where the 
subsidiary savings association or associations have their 
home offices. 
"(E) Engaging in the activities described in subsection 
(c)(2), except subparagraph (B). 
"(6) LIMITATIONS ON CERTAIN ACTIVITIES OF ACQUIRED HOLDING 
COMPANIES.— 
"(A) NEW ACTIVITIES.—If a mutual holding company ac-
quires or merges with another holding company under 
paragraph (5)(C), the holding company acquired or the hold-
ing company resulting from such merger or acquisition may 
only invest in assets and engage in activities which are 
authorized under paragraph (5). 
"(B) GRACE PERIOD FOR DIVESTING PROHIBITED ASSETS OR 
DISCONTINUING PROHIBITED ACTIVITIES.—Not later than 2 
years following a merger or acquisition described in para-
graph (5)(C), the acquired holding company or the holding 
company resulting from such merger or acquisition shall— 
"(i) dispose of any Eisset which is an asset in which a 
mutual holding company may not invest under para-
graph (5); and 
"(ii) cease any activity which is an activity in which a 
mutual holding company may not engage under para-
graph (5). 
"(7) REGULATION.—A mutual holding company shall be char-
tered by the Director and shall be subject to such regulations as 
the Director may prescribe. Unless the context otherwise re-
quires, a mutual holding company shall be subject to the other 
requirements of this section regarding regulation of holding 
companies. 
"(8) CAPITAL IMPROVEMENT.— 
"(A) PLEDGE OF STOCK OF SAVINGS ASSOCIATION SUBSIDI-
ARY.—This section shall not prohibit a mutual holding 
company from pledging all or a portion of the stock of a 
savings association chartered as part of a transaction de-
scribed in paragraph (1) to raise capital for such savings 
association. 
103 STAT. 338 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) ISSUANCE OF NONVOTING SHARES.—This section shall 
not prohibit a savings association chartered as part of a 
transaction described in paragraph (1) from issuing any 
nonvoting shares or less than 50 percent of the voting 
shares of such association to any person other than the 
mutual holding company. 
"(9) INSOLVENCY AND UQUIDATION.— 
"(A) IN GENERAL.—Notwithstanding any provision of law, 
upon— 
"(i) the default of any savings association— 
"(I) the stock of which is owned by any mutual 
holding company; and 
"(II) which was chartered in a transaction de-
scribed in paragraph (1); 
"(ii) the default of a mutual holding company; or 
"(iii) a foreclosure on a pledge by a mutual holding 
company described in paragraph (8)(A), 
a trustee shall be appointed receiver of such mutual holding 
company and such trustee shall have the authority to 
liquidate the Eissets of, and satisfy the liabilities of, such 
mutual holding company pursuant to title 11, United States 
Code. 
"(B) DISTRIBUTION OF NET PROCEEDS.—Except as provided 
in subparagraph (C), the net proceeds of any liquidation of 
any mutual holding company pursuant to subparagraph (A) 
shall be transferred to persons who hold ownership in-
terests in such mutual holding company. 
"(C) RECOVERY BY CORPORATION.—If the Corporation 
incurs a loss as a result of the default of any savings 
association subsidiary of a mutual holding company which 
is liquidated pursuant to subparagraph (A), the Corporation 
shall succeed to the ownership interests of the depositors of 
such savings association in the mutual holding company, to 
the extent of the Corporation's loss. 
"(10) DEFINITIONS.—For purposes of this subsection— 
"(A) MUTUAL HOLDING COMPANY.—The term 'mutual 
holding company' means a corporation organized as a hold-
ing company under this subsection. 
"(B) MUTUAL ASSOCIATION.—The term 'mutual associa-
tion' means a savings association which is operating in 
mutual form. 
"(C) DEFAULT.—The term 'default' means an adiudication 
or other official determination of a court of competent 
jurisdiction or other public authority pursuant to which a 
conservator, receiver, or other legal custodian is appointed. 
"(p) HOLDING COMPANY ACTIVITIES CONSTITUTING SERIOUS RISK TO 
SUBSIDIARY SAVINGS ASSOCIATION.— 
"(1) DETERMINATION AND IMPOSITION OF RESTRICTIONS.—If the 
Director determines that there is reasonable cause to believe 
that the continuation by a savings and loan holding company of 
any activity constitutes a serious risk to the financial safety, 
soundness, or stability of a savings and loan holding company's 
subsidiary savings association, the Director may impose such 
restrictions as the Director determines to be necessary to ad-
dress such risk. Such restrictions shall be issued in the form of a 
directive to the holding company and any of its subsidiaries, 
limiting— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 339 
"(A) the payment of dividends by the savings association; 
"(B) transactions between the savings association, the 
holding company, and the subsidiaries or affiliates of either; 
and 
"(C) any activities of the savings association that might 
create a serious risk that the liabilities of the holding 
company and its other affiliates may be imposed on the 
savings association. 
Such directive shall be effective as a cease and desist order that 
has become final. 
"(2) REVIEW OF DIRECTIVE.— 
"(A) ADMINISTRATIVE REVIEW.—After a directive referred 
to in paragraph (1) is issued, the savings and loan holding 
company, or any subsidiary of such holding company sub-
ject to the directive, may object and present in writing its 
reasons why the directive should be modified or rescinded. 
Unless within 10 days after receipt of such response the 
Director affirms, modifies, or rescinds the directive, such 
directive shall automatically lapse. 
"(B) JUDICIAL REVIEW.—If the Director affirms or modi- District of 
fies a directive pursuant to subparagraph (A), any affected 
Columbia, 
party may immediately thereafter petition the United 
States district court for the district in which the savings 
and loan holding company has its main office or in the 
United States District Court for the District of Columbia to 
stay, modify, terminate or set aside the directive. Upon a 
showing of extraordinary cause, the savings and loan hold-
ing company, or any subsidiary of such holding company 
subject to a directive, may petition a United States district 
court for relief without first pursuing or exhausting the 
administrative remedies set forth in this paragraph. 
"(q) QUALIFIED STOCK ISSUANCE BY UNDERCAPITALIZED SAVINGS 
ASSOCIATIONS OR HOLDING COMPANIES.— 
"(1) IN GENERAL.—For purposes of this section, any issue of 
shares of stock shall be treated as a qualified stock issuance if 
the following conditions are met: 
"(A) The shares of stock are issued by— 
"(i) an undercapitalized savings association; or 
"(ii) a savings and loan holding company which is not 
a bank holding company but which controls an 
undercapitalized savings association if, at the time of 
issuance, the savings and loan holding company is 
legally obligated to contribute the net proceeds from 
the issuance of such stock to the capital of an 
undercapitalized savings association subsidiary of such 
holding company. 
"(B) All shares of stock issued consist of previously 
unissued stock or treasury shares. 
"(C) All shares of stock issued are purchased by a savings 
and loan holding company that is registered, as of the date 
of purchase, with the Director in accordance with the provi-
sions of subsection (b)(1) of this section. 
"(D) Subject to paragraph (2), the Director approved the 
purchase of the shares of stock by the acquiring savings and 
loan holding company. 
»«r. 
"(E) The entire consideration for the stock issued is paid 
in cash by the acquiring savings and loan holding company. 
103 STAT. 340 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(F) At the time of the stock issuance, each savings 
association subsidiary of the acquiring savings and loan 
holding company (other than an association acquired in a 
transaction pursuant to subsection (c) or (k) of section 13 of 
the Federal Deposit Insurance Act or section 408(m) of the 
National Housing Act) has capital (after deducting any 
subordinated 
debt, 
intangible 
assets, 
and 
deferred, 
unamortized gains or losses) of not less than 6V2 percent of 
the total assets of such savings association. 
"(G) Immediately after the stock issuance, the acquiring 
savings and loan holding company holds not more than 15 
percent of the outstanding voting stock of the issuing 
undercapitalized savings association or savings and loan 
holding company. 
"(H) Not more than one of the directors of the issuing 
association or company is an officer, director, employee, or 
other representative of the acquiring company or any of its 
affiliates. 
"(I) Transactions between the savings association or sav-
ings and loan holding company that issues the shares 
pursuant to this section and the acquiring company and 
any of its affiliates shall be subject to the provisions of 
section 11. 
"(2) APPROVAL OF ACQUISITIONS.— 
"(A) ADDITIONAL CAPITAL COMMITMENTS NOT REQUIRED.— 
The Director shall not disapprove any application for the 
purchase of stock in connection with a qualified stock issu-
ance on the grounds that the acquiring savings and loan 
holding company has failed to undertake to make subse-
quent additional capital contributions to maintain the cap-
ital of the undercapitalized savings association at or above 
the minimum level required by the Director or any other 
Federal agency having jurisdiction. 
"(B) 
OTHER CONDITIONS.—Notwithstanding subsection 
(a)(4), the Director may impose such conditions on any 
approval of an application for the purchase of stock in 
connection with a qualified stock issuance as the Director 
determines to be appropriate, including— 
"(i) a requirement that any savings association 
subsidiary of the acquiring savings and loan holding 
company limit dividends paid to such holding company 
for such period of time as the Director may require; and 
"(ii) such other conditions as the Director deems 
necessary or appropriate to prevent evasions of this 
section. 
"(C) APPLICATION DEEMED APPROVED IF NOT DISAPPROVED 
WITHIN 90 DAYS.—An application for approval of a purchase 
of stock in connection with a qualified stock issuance shall 
be deemed to have been approved by the Director if such 
application has not been disapproved by the Director before 
the end of the 90-day period beginning on the date such 
application has been deemed sufficient under regulations 
issued by the Director. 
"(3) No LIMITATION ON CLASS OF S
T
O
C
K ISSUED.—The shares of 
stock issued in connection with a qualified stock issuance may 
be shares of any class. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 341 
"(4) 
UNDERCAPITALIZED SAVINGS ASSOCIATION DEFINED.—For 
purposes of this subsection, the term 'undercapitaHzed savings 
association' means any savings association— 
"(A) the assets of which exceed the Habilities of such 
association; and 
"(B) which does not comply with one or more of the 
capital standards in effect under section 5(t). 
"(r) PENALTY FOR FAILURE TO PROVIDE TIMELY AND ACCURATE 
REPORTS.— 
"(1) FIRST TIER.—Any savings and loan holding company, and 
any subsidiary of such holding company, which— 
"(A) maintains procedures reasonably adapted to avoid 
any inadvertent and unintentional error and, as a result of 
such an error— 
"(i) fails to submit or publish any report or informa-
tion 
required 
under 
this section 
or 
regulations 
prescribed by the Director, within the period of time 
specified by the Director; or 
"(ii) submits or publishes any false or misleading 
report or information; or 
"(B) inadvertently transmits or publishes any report 
which 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. Such holding company or 
subsidiary shall have the burden of proving by a preponderence 
of the evidence that an error was inadvertent and unintentional 
and that a report was inadvertently transmitted or published 
late. 
"(2) SECOND TIER.—Any savings and loan holding company, 
and any subsidiary of such holding company, which— 
"(A) fails to submit or publish any report or information 
required under this section or under regulations prescribed 
by the Director, within the period of time specified by the 
Director; 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.—If any savings and loan holding company or 
any subsidiary of such a holding company 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 Director may assess a 
penalty of not more than $1,000,000 or 1 percent of total assets 
of such company or subsidiary, whichever is less, per day for 
each day during which such failure continues or such false or 
misleading information is not corrected. 
"(4) ASSESSMENT.—Any penalty imposed under paragraph (1), 
(2), or (3) shall be assessed and collected by the Director in the 
manner provided in subparagraphs (E), (F), (G), and (I) of section 
8(i)(2) of the Federal Deposit Insurance Act (for penalties im-
posed under such section) and any such assessment (including 
the determination of the amount of the penalty) shall be subject 
to the provisions of such subsection. 
103 STAT. 342 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(5) HEARING.—Any savings and loan holding company or any 
subsidiary of such a holding company against which any pen-
alty is assessed under this subsection shall be afforded a hearing 
if such savings and loan holding company or such subsidiary, as 
the case may be, submits a request for such hearing within 20 
days after the issuance of the notice of assessment. Section 8(h) 
of the Federal Deposit Insurance Act shall apply to any proceed-
ing under this subsection. 
12 u s e 1468. 
"SEC. 11. TRANSACTIONS WITH AFFILIATES; EXTENSIONS OF CREDIT TO 
EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHARE-
HOLDERS. 
"(a) AFFILIATE TRANSACTIONS.— 
"(1) IN GENERAL.—Sections 23A and 23B of the Federal Re-
serve Act shall apply to every savings association in the same 
manner and to the same extent as if the savings association 
were a member bank (as defined in such Act), except that— 
"(A) no loan or other extension of credit may be made to 
any affiliate unless that affiliate is engaged only in activi-
ties described in section 10(c)(2)(F)(i); and 
"(B) no savings association may enter into any trans-
action described in section 23A03)(7)(B) of the Federal Re-
serve Act with any affiliate other than with respect to 
shares of a subsidiary. 
"(2) SISTER BANK EXEMPTION MADE AVAILABLE TO SAVINGS 
ASSOCIATIONS.— 
"(A) SAVINGS ASSOCIATIONS CONTROLLED BY BANK HOLDING 
COMPANIES.—Every savings association more than 80 per-
cent of the voting stock of which is owned by a company 
described in section 10(c)(8) shall be treated as a bank for 
purposes of section 23A(d)(l) and section 23B of the Federal 
Reserve Act, if every savings association and bank con-
trolled by such company complies with all applicable capital 
requirements on a fully phased-in basis and without reli-
ance on goodwill. 
"(B) SAVINGS ASSOCIATIONS GENERALLY.—Effective on and 
after January 1, 1995, every savings association shall be 
treated as a bank for purposes of section 23A(d)(l) and 
section 23B of the Federal Reserve Act. 
"(3) AFFILIATES DESCRIBED.—Any company that would be an 
affiliate (as defined in sections 23A and 23B of the Federal 
Reserve Act) of any savings association if such savings associa-
tion were a member bank (as such term is defined in such Act) 
shall be deemed to be an affiliate of such savings association for 
purposes of paragraph (1). 
"(4) 
ADDITIONAL RESTRICTIONS AUTHORIZED.—The Director 
may impose such additional restrictions on any transaction 
between any savings association and any affiliate of such sav-
ings association as the Director determines to be necessary to 
protect the safety and soundness of the savings association. 
"Ot)) EXTENSIONS OF CREDIT TO EXECUTIVE OFFICERS, DIRECTORS, 
AND PRINCIPAL SHAREHOLDERS.— 
"(1) IN GENERAL.—Section 22(h) of the Federal Reserve Act 
shall apply to every savings association in the same manner and 
to the same extent as if the savings association were a member 
bank (as defined in such Act). 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 343 
"(2) 
ADDITIONAL RESTRICTIONS AUTHORIZED.—The Director 
may impose such additional restrictions on loans or extensions 
of credit to any director or executive officer of any savings 
association, or any person who directly or indirectly owns, 
controls, or has the power to vote more than 10 percent of any 
class of voting securities of a savings association, as the Director 
determines to be necessary to protect the safety and soundness 
of the savings association. 
"(c) ADMINISTRATIVE ENFORCEMENT.—The Director may take 
enforcement action with respect to violations of this section pursu-
ant to section 8 or 18(j) of the Federal Deposit Insurance Act, as 
appropriate. 
"SEC. 12. ADVERTISING. 
12 USC 1468a. 
"No savings association shall carry on any sale, plan, or practices, 
or any advertising, in violation of regulations promulgated by the 
Director. 
"SEC. 13. POWERS OF EXAMINERS. 
12 USC 1468b. 
"For the purposes of this Act, examiners appointed by the Direc-
tor shall— 
"(1) be subject to the same requirements, responsibilities, and 
penalties as are applicable to examiners under the Federal 
Reserve Act and title LXII of the Revised Statutes; and 
"(2) have, in the exercise of functions under this Act, the same 
powers and privileges as are vested in such examiners by law. 
"SEC. 14. SEPARABILITY PROVISION. 
"If any provision of this Act, or the application thereof to any 
person or circumstances, is held invalid, the remainder of the Act, 
and the application of such provision to other persons or cir-
cumstances, shall not be affected thereby.". 
SEC. 302. SAVINGS PROVISIONS. 
Notwithstanding the amendment made by this title to section 10 
of the Home Owners' Loan Act and the repeal of section 416 of the 
National Housing Act— 
(1) any plan approved by the Federal Home Loan Bank Board 
under such section 10 for any Federal savings association shall 
continue in effect as long as such association adheres to the plan 
and continues to submit to the Director of the Office of Thrift 
Supervision regular and complete reports on the association's 
progress in meeting the association's goals under the plan; and 
(2) any plan approved by the Federal Savings and Loan 
Insurance Corporation under such section 416 for any State 
savings association shall continue in effect as long as such 
association adheres to the plan and continues to submit to the 
Federal Deposit Insurance Corporation regular and complete 
reports on the association's progress in meeting the savings 
association's goals under the plan. 
SEC. 303. QUALIFIED THRIFT LENDER TEST. 
12 USC 1467a. 
(a) IN GENERAL.—Section 10(m) of the Home Owners' Loan Act is 
amended to read as follows: 
"(m) QUALIFIED THRIFT LENDER TEST.— 
"(1) IN GENERAL.—Except as provided in paragraphs (2) and 
(7), any savings association is a qualified thrift lender if— 
12 USC 1468c. 
12 USC 1467a 
note. 
103 STAT. 344 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(A) the savings association's qualified thrift investments 
equal or exceed 70 percent of the savings association's 
portfolio assets; and 
"(B) the savings association's qualified thrift investments 
continue to equal or exceed 70 percent of the savings 
association's portfolio assets, as measured by a daily or 
weekly average of such qualified thrift investments and 
such portfolio assets, for the 2-year period beginning on 
July 1,1991, and for each 2-year period thereafter. 
"(2) 
EXCEPTIONS GRANTED BY DIRECTOR.—Notwithstanding 
paragraph (1), the Director may grant such temporary and 
limited exceptions from the minimum actual thrift investment 
percentage requirement contained in such paragraph as the 
Director deems necessary if— 
"(A) the Director determines that extraordinary cir-
cumstances exist, such as when the effects of high interest 
rates reduce mortgage demand to such a degree that an 
insufficient opportunity exists for a savings association to 
meet such investment requirements; or 
"(B) the Director determines that— 
"(i) the grant of any such exception will significantly 
facilitate an acquisition under section 13(c) or 13(k) of 
the Federal Deposit Insurance Act; 
"(ii) the acquired association will comply with the 
transition requirements of paragraph (7XB), as if the 
date of the exemption were the starting date for the 
transition period described in that paragraph; and 
"(iii) the Director determines that the exemption will 
not have an undue adverse effect on competing savings 
associations in the relevant market and will further 
the purposes of this subsection. 
"(3) FAILURE TO BECOME AND REMAIN A QUALIFIED THRIFT 
LENDER.— 
"(A) IN GENERAL.—A savings association that fails to 
become or remain a qualified thrift lender shsdl either 
become one or more banks (other than a savings bank) or be 
subject to subparagraph (B), except as provided in subpara-
graph (D). 
"(B) RESTRICTIONS APPUCABLE TO SAVINGS ASSOCIATIONS 
THAT ARE NOT QUAUFIED THRIFT LENDERS.— 
"(i) RESTRICTIONS EFFECTIVE IMMEDIATELY.—The fol-
lowing restrictions sh£ill apply to a savings association 
beginning on the date on which the savings association 
should have become or ceases to be a qualified thrift 
lender: 
"(I) ACTIVITIES.—The savings association shall 
not make any new investment (including an invest-
ment in a subsidiary) or engage, directly or in-
directly, in any other new activity unless that 
investment or activity would be permissible for the 
savings association if it were a national bank, and 
is also permissible for the savings association as a 
savings association. 
"(II) BRANCHING.—The savings association shall 
not establish any new branch office at any location 
at which a national bank located in the savings 
association's home State may not establish a 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 345 
branch office. For purposes of this subclause, a 
savings association's home State is the State in 
which the savings association's total deposits were 
largest on the date on which the savings associa-
tion should have become or ceased to be a qualified 
thrift lender. 
"(Ill) ADVANCES.—The savings association shall 
not be eligible to obtain new advances from any 
Federal home loan bank. 
"(IV) DIVIDENDS.—The savings association shall 
be subject to all statutes and regulations governing 
the payment of dividends by a national bank in the 
same manner and to the same extent as if the 
savings association were a national bank. 
"(ii) ADDITIONAL RESTRICTIONS EFFECTIVE AFTER THREE 
YEARS.—The following additional restrictions shall 
apply to a savings association beginning 3 years after 
the date on which the savings association should have 
become or ceases to be a qualified thrift lender: 
"(I) ACTIVITIES.—The savings association shall 
not retain any investment (including an invest-
ment in any subsidiary) or engage, directly or in-
directly, in any activity unless that investment or 
activity would be permissible for the savings 
association if it were a national bank, and is also 
permissible for the savings association as a savings 
\ 
association. 
"(II) ADVANCES.—The savings association shall 
repay any outstanding advances from any Federal 
home loan bank as promptly as can be prudently 
done consistent with the safe and sound operation 
of the savings association. 
"(C) HOLDING COMPANY REGULATION.—Any company that 
controls a savings association that is subject to any provi-
sion of subparagraph (B) shall, within one year after the 
date on which the savings association should have become 
or ceases to be a qualified thrift lender, register as and be 
deemed to be a bank holding company subject to all of the 
provisions of the Bank Holding Company Act of 1956, sec-
tion 8 of the Federal Deposit Insurance Act, and other 
statutes applicable to bank holding companies, in the same 
manner and to the same extent as if the company were a 
bank holding company and the savings association were a 
bank, as those terms are defined in the Bank Holding 
Company Act of 1956. 
"(D) REQUAUFICATION.—A savings association that should 
have become or ceases to be a qualified thrift lender shall 
not be subject to subparagraph (B) or (C) if the savings 
association becomes a qualified thrift lender by meeting the 
qualifted thrift lender requirement in paragraph (1) for the 
preceding 2-year period and remains a qualified thrift 
lender. If the savings association (or any savings association 
that acquired all or substantially all of its assets from that 
savings association) at any time thereafter ceases to be a 
qualified thrift lender, it shall immediately be subject to all 
provisions of subparagraphs (B) and (C) as if all the periods 
described in subparagraphs (B)(ii) and (C) had expired. 
103 STAT. 346 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(E) DEPOSIT INSURANCE ASSESSMENTS.—Any bank char-
tered as a result of the requirements of this section shall be 
obligated until December 31, 1993, to pay to the Savings 
Association Insurance Fund the assessments £issessed on 
savings associations under the Federal Deposit Insurance 
Act. Such association shall also be assessed, on the date of 
its change of status from a Savings Association Insurance 
Fund member, the exit fee and entrance fee provided in 
section 5(d) of the Federal Deposit Insurance Act. Such 
institution shall not be obligated to pay the assessments 
assessed on banks under the Federal Deposit Insurance Act 
until— 
t 
"(i) December 31,1993, or 
. ;. - 
"(ii) the institution's change of status from a Savings 
Association Insurance Fund member to a Bank Insur-
ance Fund member, 
whichever is later. 
"(F) EXEMPTION FOR SPECIALIZED SAVINGS ASSOCIATION 
SERVING TRANSIENT MILITARY PERSONNEL.—Subparagraph 
(A) shall not apply to a savings association subsidiary of a 
savings and loan holding company i
f
— 
"(i) the savings and loan holding company is a recip-
rocal interinsurance exchange that acquired control of 
the insured institution before January 1, 1984; and 
"(ii) at least 90 percent of the customers of the 
savings and loan holding company and its subsidiaries 
and affiliates are active or former officers in the United 
States military services or the widows, widowers, di-
vorced spouses, or current or former dependents of 
such officers. 
"(G) EXEMPTION FOR CERTAIN FEDERAL SAVINGS ASSOCIA-
TIONS.—This paragraph shall not apply to any Federal 
savings association in existence as a Federal savings 
association on the date of enactment of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989— 
"(i) that was chartered before October 15, 1982, as a 
savings bank or a cooperative bank under State law; or 
"(ii) that acquired its principal assets from an 
association that was chartered before October 15, 1982, 
as a savings bank or a cooperative bank under State 
law. 
"(H) No CIRCUMVENTION OF EXIT MORATORIUM.—Subpara-
graph (A) of this paragraph shall not be construed as 
permitting any insured depository institution to engage in 
any conversion transaction prohibited under section 5(d) of 
the Federal Deposit Insurance Act. 
"(4) DEFINITIONS.—For purposes of this subsection— 
^ 
"(A) ACTUAL THRIFT INVESTMENT PERCENTAGE.—The term 
'actual thrift investment percentage' means the percentage 
determined by dividing— 
"(i) the amount of a savings association's qualified 
thrift investments, by 
"(ii) the amount of the savings association's portfolio 
assets. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 347 
"(B) PoRTFOUO ASSETS.—The term 
'portfolio 
assets' 
means, with respect to any savings association, the total 
assets of the savings association, minus the sum of— 
"(i) goodwill Euid other intangible assets; 
"(ii) the value of property used by the savings associa-
tion to conduct its business; and 
"(iii) liquid assets of the type required to be main-
tained under section 6 of the Home Owners' Loan Act, 
in an amount not exceeding the amount equal to 10 
percent of the savings association's total eissets. 
"(C) QUAUFIED THRIFT INVESTMENTS.— 
"(i) IN GENERAL.—The term 'qualified thrift invest-
ments' means, with respect to any savings association, 
the assets of the savings association that are described 
in clauses (ii) and (iii). 
"(ii) ASSETS INCLUDIBLE WITHOUT UMIT.—The follow-
ing assets are described in this clause for purposes of 
claused): 
"(I) The aggregate amount of loans held by the 
savings association that were made to purchase, 
refinance, construct, improve, or repair domestic 
residential housing or manufactured housing. 
"(II) Home-equity loans. 
"(Ill) Securities backed by or representing an 
interest in mortgages on domestic residential hous-
ing or manufactured housing. 
(IV) 
EXISTING OBUGATIONS OF DEPOSIT INSUR-
ANCE AGENCIES.—Direct or indirect obligations of 
the Federal Deposit Insurance Ck)rporation or the 
Federal Savings and Loan Insurance Corporation 
issued in accordance with the terms of agreements 
entered into prior to July 1, 1989, for the 10-year 
period beginning on the date of issuance of such 
obligations. 
"(V) 
NEW OBUGATIONS OF DEPOSIT INSURANCE 
AGENCIES.—Obligations of the Federal Deposit 
Insurance Corporation, the Federal Savings and 
Loan Insurance Corporation, the FSLIC Resolution 
Fund, and the Resolution Trust (Corporation issued 
in accordance with the terms of agreements en-
tered into on or after July 1, 1989, for the 5-year 
period beginning on the date of issuance of such 
obligations, 
"(iii) ASSETS INCLUDIBLE SUBJECT TO PERCENTAGE 
RESTRICTION.—The following assets are described in this 
clause for purposes of clause (i): 
"(I) 50 percent of the dollar amount of the resi-
dential mortgage loans originated by such savings 
association and sold within 90 days of origination. 
"(II) Investments in the capital stock or obliga-
tions of, and any other security issued by, any 
service corporation if such service corporation de-
rives at least 80 percent of its annual gross reve-
nues from activities directly related to purchasing, 
refinancing, constructing, improving, or repairing 
domestic residential real estate or manufactured 
housing. 
103 STAT. 348 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(III) 200 percent of the dollar amount of loans 
and investments made to acquire, develop, and 
construct 1- to 4-family residences the purchase 
price of which is or is guaranteed to be not greater 
than 60 percent of the median value of comparable 
newly constructed 1- to 4-family residences within 
the local community in which such real estate is 
located, except that not more than 25 percent of 
the amount included under this subclause may 
consist of commercial properties related to the 
development if those properties are directly related 
to providing services to residents of the develop-
ment. 
"(IV) 200 percent of the dollar amount of loans 
. u' 
for the acquisition or improvement of residential 
real property, churches, schools, and nursing 
homes located within, and loans for any other 
purpose to any small businesses located within any 
area which has been identified by the Director, in 
connection with any review or examination of 
community reinvestment practices, as a geographic 
area or neighborhood in which the credit needs of 
:'•- • 
the low- and moderate-income residents of such 
area or neighborhood are not being adequately 
met. 
' 
"(V) Loans for the purchase or construction of 
•
^ 
churches, schools, nursing homes, and hospitals, 
other than those qualifying under clause (IV), and 
loans for the improvement and upkeep of such 
properties. 
"(VI) Loans for personal, family, household, or 
educational purposes, but the dollar amount treat-
ed as qualified thrift investments under this 
subclause may not exceed the amount which is 
equal to 5 percent of the savings association's port-
folio assets. 
"(iv) PERCENTAGE RESTRICTION APPLICABLE TO CERTAIN 
ASSETS.—The aggregate amount of the Eissets described 
' 
- 
' 
in clause (iii) which may be taken into account in 
determining the amount of the qualified thrift invest-
ments of any savings association shall not exceed the 
amount which is equal to 15 percent of a savings 
association's portfolio assets. 
"(v) The term 'qualified thrift investments' ex-
• 
• ^ 
eludes— 
"(I) except for home equity loans, that portion of 
any loan or investment that is used for any pur-
pose other than those expressly qualifying under 
any subparagraph of clause (ii) or (iii); or 
"(II) goodwill or any other intangible asset. 
"(5) CONSISTENT ACCOUNTING REQUIRED.— 
"(A) In determining the amount of a savings association's 
portfolio assets, the assets of any subsidiary of the savings 
association shall be consolidated with the assets of the 
savings association if— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 349 
"(i) Assets of the subsidiary are consolidated with the 
assets of the savings association in determining the 
savings association's qiiaUfied thrift investments; or 
"(ii) Residential mortgage loans originated by the 
subsidiary are included 
pursuant to paragraph 
(4)(C)(iii)(I) in determining the savings association's 
qualified thrift investments. 
"(B) In determining the amount of a savings association's 
portfolio assets and qualified thrift investments, consistent 
accounting principles shall be applied. 
"(6) SPECIAL RULES FOR PUERTO RICO AND VIRGIN ISLANDS SAV-
INGS ASSOCIATIONS.— 
"(A) PUERTO RICO SAVINGS ASSOCIATIONS.—With respect to 
any savings association headquartered and operating pri-
marily in Puerto Rico— 
"(i) the term 'qualified thrift investments' includes, 
in addition to the items specified in paragraph (4)— 
"(I) the aggregate amount of loans for personal, 
family, educational, or household purposes made to 
persons residing or domiciled in the Common-
wealth of Puerto Rico; and 
"(II) the aggregate amount of loans for the ac-
quisition or improvement of churches, schools, or 
nursing homes, and of loans to small businesses, 
located within the Commonwealth of Puerto Rico; 
and 
"(ii) the aggregate amount of loans related to the 
purchase, acquisition, development and construction of 
1- to 4-family residential real estate— 
"(I) which is located within the Commonwealth 
of Puerto Rico; and 
"(II) the value of which (at the time of acquisi-
tion or upon completion of the development and 
construction) is below the median value of newly 
constructed 1- to 4-family 
residences in the 
Commonwealth of Puerto Rico, which may be 
taken into account in determining the amount of 
the qualified thrift investments and of such sav-
ings association shall be doubled. 
"(B) VIRGIN ISLANDS SAVINGS ASSOCIATIONS.—With respect 
to any savings association headquartered and operating 
primarily in the Virgin Islands— 
"(i) the term 'qualified thrift investments' includes, 
in addition to the items specified in paragraph (4)— 
"(I) the aggregate amount of loans for personal, 
family, educational, or household purposes made to 
persons residing or domiciled in the Virgin Islands; 
and 
"(II) the aggregate amount of loans for the ac-
quisition or improvement of churches, schools, or 
nursing homes, and of loans to small businesses, 
located within the Virgin Islands; and 
"(ii) the aggregate amount of loans related to the 
purchase, acquisition, development and construction of 
1- to 4-family residential real estate— 
"(I) which is located within the Virgin Islands; 
and 
103 STAT. 350 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(11) the value of which (at the time of acquisi-
tion or upon completion of the development and 
construction) is below the median value of newly 
constructed 1- to 4-family residences in the Virgin 
Islands, which may be taken into account in deter-
mining the amount of the qualified thrift invest-
ments and of such savings association shall be 
doubled. 
"(7) TRANSITIONAL RULE FOR CERTAIN SAVINGS ASSOCIATIONS.— 
"(A) IN GENERAL.—If any Federal savings association in 
existence as a Federal savings association on the date of 
enactment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989— 
"(i) that was chartered as a savings bank or a co-
operative bank under State law before October 15, 
1982; or 
"(ii) that acquired its principal assets from an 
association that was chartered before October 15, 1982, 
as a savings bank or a cooperative bank under State 
law, 
meets the requirements of subparagraph (B), such savings 
association shall be treated as a qualified thrift lender 
during period ending on September 30,1995. 
"(B) 
SUBPARAGRAPH 
(B) 
REQUIREMENTS.—A 
savings 
association meets the requirements of this subparagraph if, 
in the determination of the Director— 
"(i) the actual thrift investment percentage of such 
association does not, after the date of enactment of the 
Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989, decrease below the actual thrift 
investment percentage of such association on July 15, 
1989; and 
"(ii) the amount by which— 
"(I) the actual thrift investment percentage of 
such association at the end of each period described 
in the following table, exceeds 
"(II) the actual thrift investment percentage of 
such association on July 15,1989, 
is equal to or greater than the applicable percentage (as 
determined under the following table) of the amount by 
which 70 percent exceeds the actual thrift investment 
percentage of such association on such date of enact-
ment: 
"For the following 
The applicable 
period: 
percentage is: 
July 1, 1991-September 30, 1992 
25 percent 
October 1, 1992-March 31, 1994 
50 percent 
April 1, 1994-September 30, 1995 
75 percent 
Thereafter 
100 percent 
"(C) For purposes of this paragraph, the actual thrift 
investment percentage of an association on July 15, 1989, 
shall be determined by applying the definition of 'actual 
thrift investment percentage' that takes effect on July 1, 
1991.". 
12 use 1467a 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
"°^- 
shall take effect on July 1, 1991. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 351 
(c) ASSOCIATIONS THAT HAVE PREVIOUSLY FAILED TO REMAIN 
12 use I467a 
QuAUFiED THRIFT LENDERS.—If, as of June 30, 1991, any savings 
"°^-
association is subject to any provision of section 10(m)(3) of the 
Home Owners' Loan Act as in effect on that date, the amendment to 
this subsection made by section 303 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, shall not be con-
strued as reducing the period specified in section 10(mX3) of such 
Act. 
SEC. 304. TRANSITIONAL RULE FOR CERTAIN TRANSACTIONS WITH 
12 USC 1468 
AFFILIATES. 
note. 
(a) CONSISTENCY OF CERTAIN REGULATIONS WITH SECTION 23A OF 
THE FEDERAL RESERVE ACT.—Not later than 6 months after the date 
of enactment of this Act, the Director of the Office of Thrift Super-
vision shall revise the Director's conflicts regulations so as not to 
prohibit a thrift institution from purchasing mortgages from a 
mortgage-banking affiliate to the same extent as a member bank 
may do so under section 250.250 of title 12, Code of Federal Regula-
tions. 
O
t
)
) TRANSITIONAL PERIOD.—Notwithstanding section 11(a) of the 
Home Owners' Loan Act (as added by section 301 of this Act), a 
thrift institution that, before May 1, 1989, had received approval 
from the Federal Savings and Loan Insurance Corporation pursuant 
to section 408(d)(6) of the National Housing Act as then in effect to 
purchase mortgages from a mortgage-banking affiliate may, during 
the 6-month period following the date on which final regulations are 
prescribed pursuant to subsection (a), continue to engage in trans-
actions for which it had received such approval. Any savings associa-
tion that engages in such transactions pursuant to this subsection 
shall comply with the standards that wfere applicable under section 
408(d)(6) as in effect on May 1,1989. 
(c) AUTHORITY TO EXTEND REGULATORY APPROVALS THAT WOULD 
OTHERWISE LAPSE DURING THE TRANSITIONAL PERIOD.—The Director 
of the Office of Thrift Supervision may extend until the expiration 
of the 6-month period described in subsection (b) any approval 
granted by the Federal Savings and Loan Insurance Corporation 
that expires or would expire before the expiration of that 6-month 
period. In determining whether to grant such exemptions, the Direc-
tor shall apply the standards that were applicable under section 
408(dX6) of the National Housing Act as in effect on May 1, 1989. 
SEC. 305. TRANSITIONAL RULES REGARDING CERTAIN LOANS AND EFFEC-
TIVE DATES. 
(a) DIVESTITURE OF CERTAIN LOANS AND INVESTMENTS NOT RE- 12 use 1464 
QUIRED.—The limitations on lo£ins and investments contained in ^°^-
section 5(c) of the Home Owners' Loan Act, as amended by section 
301, do not require the divestiture of any loan or investment that 
was lawful when made under the provisions of such section as those 
provisions were in effect at the time such loan or investment was 
made. 
(b) LOANS SECURED BY NONRESIDENTIAL REAL PROPERTY.— 
12 use 1464 
(1) IN GENERAL.—The Director of the Office of Thrift Super- "°*®-
vision may, by order, permit a Federal savings association to 
exceed the limitation set forth in section 5(c)(2XBXi) of the Home 
Owners' Loan Act during the period beginning on the date of 
enactment of this Act and ending on June 1, 1991, if the 
Director determines that— 
103 STAT. 352 
PUBLIC LAW 101-73—AUG. 9, 1989 
(A) there is a reasonable prospect that the savings 
association can be in compliance, not later than June 1, 
1991, with the capital standards prescribed under section 
5(t) of the Home Owners' Loan Act; and 
(B) the increased authority— 
(i) is consistent with prudent operating practices, and 
(ii) is in accordance with a plan submitted by the 
savings association for— 
(I) an orderly transition to compliance with sec-
tion 5(c)(2)(B)(i), or 
(II) an orderly conversion to a bank charter. 
(2) OTHER EXEMPTIVE AUTHORITY NOT AFFECTED.—The author-
ity granted by paragraph (1) is in addition to any authority of 
the Director under section 5(c)(2)(B)(ii) of the Home Owners' 
Loan Act. 
12 use 1461 
(c) EFFECTIVE DATE.—The amendments made by section 301 relat-
^°^- 
ing to civil penalties shall apply with respect to violations commit-
ted and activities engaged in after the date of the enactment of this 
Act, except that the increased maximum civil penalties of $5,000 
and $25,000 per violation or per day may apply to such violations or 
activities committed or engaged in before such date with respect to 
an institution if such violations or activities— 
(1) are not already subject to a notice issued by the appro-
priate Federal banking agency or the Board (initiating an 
administrative proceeding); and 
(2) occurred after the completion of the last report of exam-
ination of the institution by the appropriate Federal banking 
agency (as defined in section 3 of the Federal Deposit Insurance 
Act) occurring before the date of the enactment of this Act. 
SEC. 306. AMENDMENT OF ADDITIONAL POWERS OF DIRECTOR. 
(a) Section 502(c) of the Housing Act of 1948 (12 U.S.C. 1701c(c)) is 
amended by striking out "Federal Home Loan Bank Board (which 
term as used in this section shall also include and refer to the 
Federal Savings and Loan Insurance Corporation, the Home Owners 
Loan Corporation, and the Chairman of the Federal Home Loan 
Bank Board)," and inserting in lieu thereof the following: "Director 
of the Office of Thrift Supervision,". 
OD) Section 502(c)(1) of the Housing Act of 1948 (12 U.S.C. 
1701c(b)(l)) is amended by striking out "of any State" and inserting 
in lieu thereof "of any Federal, State,". 
SEC. 307. AMENDMENT TO TITLE 31, UNITED STATES CODE. 
(a) OFFICE ESTABLISHED AS AN OFFICE WITHIN THE DEPARTMENT.— 
(1) IN GENERAL.—Subchapter I of chapter 3 of title 31, United 
' 
States Code, is amended by redesignating section 309 as section 
310 and by inserting after section 308 the following new section: 
"§ 309. Office of Thrift Supervision 
"The Office of Thrift Supervision established under section 2A(a) 
of the Home Owners' Loan Act shall be an office in the Department 
of the Treasury.". 
(2) CLERICAL AMENDMENT.—The table of chapters for sub-
chapter I of chapter 3 of title 31, United States Code, is amended 
by redesignating the item relating to section 309 as section 310 
and by inserting after the item relating to section 308 the 
following new item: 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 353 
"309. Office of Thrift Supervision.". 
(b) CONFORMING AMENDMENT.—Section 821(c) of title 31, United 
States Code, is amended— 
(1) by adding at the end thereof the following new paragraph: 
"(3) of the Director of the Office of Thrift Supervision;"; 
(2) by striking out "and" at the end of paragraph (1); and 
(3) by striking out the period at the end of paragraph (2) and 
inserting in lieu thereof ; and". 
(c) GAO AUDIT AUTHORITY.—Section 714(a) of title 31, United 
States Code, is amended— 
(1) by inserting ", and the Office of Thrift Supervision" before 
the period; and 
(2) by striking out "and" after "Corporation,". 
(d) CERTAIN REORGANIZATION PROHIBITED.—Section 321 of title 31, 
United States Code, is amended by adding at the end thereof the 
following new subsection: 
"(e) CERTAIN REORGANIZATION PROHIBITED.—The Secretary of the 
Treasury may not merge or consolidate the Office of Thrift Super-
vision, or any of the functions or responsibilities of the Office or the 
Director of such office, with the Office of the Comptroller of the 
Currency or the Comptroller of the Currency.". 
(e) TECHNICAL AND CONFORMING AMENDMENT TO GOVERNMENT 
CONTROL ACT.—Section 9101(3) of title 31, United States Code, is 
amended by striking out subparagraph (E). 
SEC. 308. PRESERVING MINORITY OWNERSHIP OF MINORITY FINANCIAL 
12 USC 1463 
INSTITUTIONS. 
^°^-
(a) (CONSULTATION ON METHODS.—The Secretary of the Treasury 
shall consult with the Director of the Office of Thrift Supervision 
and the Chairperson of the Board of Directors of the Federal Deposit 
Insurance (Corporation on methods for best achieving the following 
goals: 
(1) Preserving the present number of minority depository 
institutions. 
(2) Preserving their minority character in cases involving 
mergers or acquisition of a minority depository institution by 
using general preference guidelines in the following order: 
(A) Same type of minority depository institution in the 
same city. 
(B) Same type of minority depository institution in the 
same State. 
(C) Same type of minority depository institution nation-
wide. 
(D) Any tjrpe of minority depository institution in the 
same city. 
(E) Any type of minority depository institution in the 
same State. 
(F) Any type of minority depository institution nation-
wide. 
(G) Any other bidders. 
(3) Providing technical assistance to prevent insolvency of 
P 
institutions not now insolvent. 
(4) Promoting and encouraging creation of new minority 
depository institutions. 
(5) Providing for training, technical assistance, and edu-
cational programs. 
(b) DEFINITIONS.—For purposes of this section— 
103 STAT. 354 
PUBLIC LAW 101-73—AUG. 9, 1989 
(1) MINORITY FINANCIAL INSTITUTION.—The term "minority 
depository institution" means any depository institution that— 
(A) if a privately owned institution, 51 percent is owned 
by one or more socially and economically disadvantaged 
individuals; 
(B) if publicly owned, 51 percent of the stock is owned by 
one or more socially and economically disadvantaged 
individuals; and 
Oi J 
(C) in the case of a mutual institution where the majority 
of the Board of Directors, account holders, and the commu-
^ 
nity which it services is predominantly minority. 
(2) MINORITY.—The term 'minority" means any black Amer-
ican, Native American, Hispanic American, or Asian American. 
1
2 use 1
4
3
7 
TITLE IV—TRANSFER OF FUNCTIONS, 
PERSONNEL, AND PROPERTY 
employees. 
Government 
SEC. 401. FSLIC AND FEDERAL HOME LOAN BANK BOARD ABOLISHED. 
organization and 
/ \ T 
fimnlovfifis 
(a) I N GENERAL.— 
(1) FSLIC.—Effective on the date of the enactment of this Act, 
the Federal Savings and Loan Insurance Corporation estab-
lished under section 402 of the National Housing Act is abol-
ished. 
(2) FHLBB.—Effective at the end of the 60-day period begin-
ning on the date of the enactment of this Act, the Federal Home 
Loan Bank Board and the position of Chairman of the Federal 
Home Loan Bank Board are abolished. 
(b) DISPOSITION OF AFFAIRS.— 
(1) IN GENERAL.—During the 60-day period beginning on the 
date of the enactment of this Act, the Chairman of the Federal 
Home Loan Bank Board— 
(A) shall, solely for the purpose of winding up the affairs 
of the Federal Savings and Loan Insurance Corporation and 
the Federal Home Loan Bank Board— 
(i) manage the employees of the Board and provide 
for the payment of the compensation and benefits of 
any such employee which accrue before the effective 
• ' 
date of the transfer of such employee pursuant to 
section 403; and 
' 
(ii) manage any property of the Board and the Cor-
poration until such property is transferred pursuant to 
section 405; and 
(B) may take any other action necessary for the purpose 
of winding up the affairs of the Corporation and the Board. 
(2) AVAILABILITY OF FUNDS IN FSLIC RESOLUTION FUND ON A 
REIMBURSABLE BASIS.— 
(A) AvAiLABiUTY OF FUNDS.—Notwithstanding any provi-
sion of section 11A of the Federal Deposit Insurance Act {as 
added by section 215 of this Act), funds in the FSLIC 
Resolution Fund shall be available to the Chairman of the 
' I 
Federal Home Loan Bank Board to pay any expense in-
curred in carrying out the requirements of paragraph (1). 
&-' 
(B) PAYMENT BY FDIC.—Upon the request of the Chairman 
of the Federal Home Loan Bank Board, the Federal Deposit 
Insurance Corporation shall pay to the Chairman from the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 355 
FSLIC Resolution Fund the amounts requested for expenses 
described in subparagraph (A). 
(C) EXCLUSIVE SOURCE OF FUNDS.—No funds or other prop-
erty of the Federal Home Loan Bank Board or the Federal 
Savings and Loan Insurance Corporation (other than the 
FSLIC Resolution Fund) may be used by the Chairman of 
the Federal Home Loan Bank Board to pay any expense 
incurred in carrying out any provision of this title. 
(D) REIMBURSEMENT BY SUCCESSOR AGENCIES.—Disburse-
ments from the FSLIC Resolution Fund pursuant to 
subparagraph (A) which are attributable to employees de-
scribed in paragraph (IXAXi) and property described in 
pargigraph (IXAXii) shall be reimbursed by the agency to 
which any such employee or property is transferred. 
(c) AUTHORITY AND STATUS OF CHAIRMAN OF THE FEDERAL HOME 
LOAN BANK BOARD.— 
(1) IN GENERAL.—Notwithstanding the repeal of section 17 of 
the Federal Home Loan Bank Act by section 703 of this Act, the 
repeal of section 402(c) of the National Housing Act by section 
407 of this title, the abolishment of the Federal Savings and 
Loan Insurance Corporation under section 401 of this title, the 
Chairman of the Federal Home Loan Bank Board shall have 
any authority vested in the Chairman or the Board before such 
date of enactment which is necessary for the Chairman to carry 
out the requirements of this section, paragraphs (1) and (2) of 
section 403(b), and section 405(a) during the 60-day period begin-
ning on such date. 
(2) OTHER PROVISIONS.—For purposes of paragraph (1), the 
Chairman of the Federal Home Loan Bank Board shall continue 
to be— 
(A) treated as an officer of the United States during the 
60-day period referred to in such subparagraph; and 
(B) entitled to compensation at the annual rate of basic 
^ 
pay payable for level III of the Executive Schedule. 
(3) No ADDITIONAL COMPENSATION IF APPOINTED DIRECTOR.— 
During the 60-day period beginning on the date of the enact-
ment of this Act, the Chairman of the Federal Home Loan Bank 
Board shall not be entitled to any additional compensation by 
reason of his appointment as Director of the Office of Thrift 
Supervision. 
(d) STATUS OF EMPLOYEES BEFORE TRANSFER.— 
" 
(1) EMPLOYEES OF FSUC.—Any employee of the Federal Sav-
ings and Loan Insurance (Corporation shall be treated eis an 
employee of the Federal Home Loan Bank Board for purposes of 
subsection (bXlXAXi). 
(2) RULE OF CONSTRUCTION.—The repeal of section 17 of the 
Federal Home Loan Bank Act by section 703 of this Act, the 
repeal of section 402(c) of the National Housing Act by section 
407 of this title, and the abolishment of the Federal Savings and 
Loan Insurance (Corporation under section 401 of this title, shall 
not be construed as affecting the status of employees of such 
(Corporation or of the Federal Home Loan Bank Board as 
^ 
employees of an agency of the United States for purposes of any 
other provision of law before the effective date of the transfer of 
any such employee pursuant to section 403. 
(e) (CONTINUATION OF SERVICES.— 
103 STAT. 356 
PUBLIC LAW 101-73—AUG. 9, 1989 
(1) IN GENERAL.—The Director of the Office of Thrift Super-
vision, the Chairperson of the Oversight Board of the Resolution 
Trust Corporation, the Chairperson of the Federal Deposit 
Insurance Corporation, and the Chairperson of the Federal 
Housing Finance Board may use the services of employees and 
other personnel and the property of the Federal Home Loan 
Bank Board and the Federal Savings and Loan Insurance Cor-
poration, on a reimbursable basis, to perform functions which 
have been transferred to such agencies for such time as is 
reasonable to facilitate the orderly transfer of functions trans-
ferred pursuant to any other provision of this Act or any 
amendment made by this Act to any other provision of law. 
(2) REIMBURSEMENT.—The reimbursement required under 
paragraph (1) with respect to employees, personnel, and prop-
V 
erty described in such paragraph shall be made to the FSLIC 
Resolution Fund and shall be taken into account in determining 
the amount of any reimbursement required under subsection 
(bX2)(D). 
(3) AGENCY SERVICES.—Any agency, department, or other 
instrumentality of the United States (including any Federal 
home loan bank), and any successor to any such agency, depart-
ment, or instrumentality, which was providing supporting serv-
ices to the Federal Home Loan Bank Board or the Federal 
Savings and Loan Insurance Corporation before the enactment 
of this Act in connection with functions that are transferred to 
. the Office of Thrift Supervision, the Resolution Trust Corpora-
tion, the Federal Deposit Insurance Corporation, or the Federal 
Housing Finance Board shall— 
(A) continue to provide such services, on a reimbursable 
basis, until the transfer of such functions is complete; and 
(B) consult with any such agency to coordinate and facili-
tate a prompt and reasonable transition. 
(f) SAVINGS PROVISIONS RELATING T
O FSLIC.— 
(1) EXISTING RIGHTS, DUTIES, AND OBUGATIONS NOT AFFECTED.— 
Subsection (a) shall not affect the validity of any right, duty, or 
obligation of the United States, the Federal Savings and Loan 
Insurance Corporation, or any other person, which— 
(A) arises under or pursuant to any section of title IV of 
the National Housing Act; and 
' 
(B) existed on the day before the date of the enactment of 
this Act. 
(2) CONTINUATION OF SUITS.—No action or other proceeding 
commenced by or against the Federal Savings and Loan Insur-
ance Corporation, or any Federal home loan bank with respect 
to any function of the Corporation which was delegated to 
employees of such bank, shall abate by reason of the enactment 
of this Act, except that the appropriate successor to the in-
terests of such Corporation shall be substituted for the Corpora-
tion or the Federal home loan bank as a party to any such 
action or proceeding. 
(g) SAVINGS PROVISIONS RELATING TO F H L B B . — 
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED.— 
Subsection (a) shall not affect the validity of any right, duty, or 
obligation of the United States, the Federal Home Loan Bank 
Board, or any other person, which— 
(A) arises under or pursuant to the Federal Home Loan 
Bank Act, the Home Owners' Loan Act of 1933, or any other 
PUBLIC LAW 101-73—AUG. 9,1989 
103 STAT. 357 
provision of law applicable with respect to such Board 
(other than title IV of the National Housing Act); and 
(B) existed on the day before the date of the enactment of 
this Act. 
(2) CONTINUATION OF SUITS.— 
(A) IN GENERAL.—No action or other proceeding com-
menced by or against the Federal Home Loan Bank Board, 
or any Federal home loan bank with respect to any function 
of the Board which was delegated to employees of such 
bank, shall abate by reason of the enactment of this Act, 
except that the appropriate successor to the interests of 
such Board shall be substituted for the Board or the Federal 
. 
home loan bank as a party to any such action or proceeding, 
(h) CONTINUATION OF ORDERS, RESOLUTIONS, DETERMINATIONS, AND 
REGULATIONS.—Subject to section 402, all orders, resolutions, deter-
minations, and regulations, which— 
(1) have been issued, made, prescribed, or allowed to become 
effective by the Federal Savings and Loan Insurance Corpora-
tion or the Federal Home Loan Bank Board (including orders, 
resolutions, determinations, and regulations which relate to the 
conduct of conservatorships and receiverships), or by a court of 
competent jurisdiction, in the performance of functions which 
are transferred by this Act; and 
(2) are in effect on the date this Act takes effect, 
shall continue in effect according to the terms of such orders, 
resolutions, determinations, and regulations and shall be enforce-
able by or against the Director of the Office of Thrift Supervision, 
the Federal Deposit Insurance Corporation, the Federal Housing 
Finance Board, or the Resolution Trust Corporation, as the case may 
be, until modified, terminated, set aside, or superseded in accord-
ance with applicable law by the Director of the Office of Thrift 
Supervision, the Federal Deposit Insurance Corporation, the Federal 
Housing Finance Board, or the Resolution Trust Corporation, as the 
case may be, by any court of competent jurisdiction, or by operation 
of law. 
(i) IDENTIFICATION OF REGULATIONS WHICH REMAIN IN EFFECT 
PURSUANT TO THIS SECTION.—Before the end of the 60-day period 
beginning on the date of the enactment of this Act, the Director of 
the Office of Thrift Supervision and the Chairperson of the Federal 
^ 
Deposit Insurance Corporation shall— 
(1) identify the regulations and orders which relate to the 
conduct of conservatorships and receiverships in accordance 
with the allocation of authority between them under this Act 
and the amendments made by this Act; and 
(2) promptly publish notice of such identification in the Fed- Federal 
eral Register. 
Register, 
SEC. 402. CONTINUATION AND COORDINATION OF CERTAIN REGULATIONS. 
(a) REGULATIONS RELATING TO INSURANCE FUNCTIONS.—All regula-
tions and orders of the Federal Savings and Loan Insurance Cor-
poration, or the Federal Home Loan Bank Board (in such Board's 
capacity as the board of trustees of such Corporation), which are in 
effect on the date of the enactment of this Act and relate to— 
(1) the provision, rates, or cancellation of insurance of ac-
counts; or 
(2) the administration of the insurance fund of the Federal 
Savings and Loan Insurance Corporation, 
publication. 
103 STAT. 358 
PUBLIC LAW 101-73—AUG. 9, 1989 
Federal 
Register, 
publication. 
Regulations. 
shall remain in effect according to the terms of such regulations and 
orders and shall be enforceable by the Federal Deposit Insurance 
Corporation unless determined otherwise by such Corporation after 
consultation with the Director of the Office of Thrift Supervision 
and, with respect to regulations and orders relating to the scope of 
deposit insurance coverage, pursuant to subsection (c). 
(b) IDENTIFICATION OF REGULATIONS WHICH REMAIN IN EFFECT 
PURSUANT TO THIS SECTION.—Before the end of the 60-day period 
beginning on the date of the enactment of this Act, the Director of 
the Office of Thrift Supervision and the Chairperson of the Federal 
Deposit Insurance Corporation shall— 
(1) identify the regulations and orders referred to in subsec-
tion (a) of this section in accordance with the allocation of 
authority between them under this Act and the amendments 
made by this Act; and 
(2) promptly publish notice of such identification in the Fed-
eral Register. 
(c) PROCEDURE FOR DIFFERENCES IN DEPOSIT INSURANCE COVERAGE 
BETWEEN F S L I C AND F D I C — 
(1) TRANSITION RULE.—Until the effective date of regulations 
prescribed under paragraph (3XB), any determination of the 
amount of any insured deposit in any depository institution 
which becomes an insured depository institution as a result of 
the amendment made to section 4(a) of the Federal Deposit 
Insurance Act by section 205(1) of this Act shall be made in 
accordance with the regulations and interpretations of the Fed-
eral Savings and Loan Insurance Corporation for determining 
the amount of an insured account which were in effect on the 
day before the date of the enactment of this Act. 
(2) LIMITATION ON EXTENT OF COVERAGE.—During the period 
beginning on the date of the enactment of this Act and ending 
on the effective date of regulations prescribed under paragraph 
(3XB), the amount of any insured account which is required to 
be treated £is an insured deposit pursuant to parsigraph (1) shall 
not exceed the amount of insurance to which such insured 
account would otherwise have been entitled pursuant to the 
regulations and interpretations of the Federal Savings and Loan 
Insurance Corporation which were in effect on the day before 
the date of the enactment of this Act. 
(3) UNIFORM TREATMENT OF INSURED DEPOSITS.—The Federal 
Deposit Insurance (Dorporation shall— 
(A) review its regulations, principles, and interpretations 
for deposit insurance coverage and those established by the 
Federal Savings and Loan Insurance Corporation; and 
(B) on or before the end of the 270-day period beginning 
on the date of the enactment of this Act, prescribe a 
uniform set of regulations which shall be applicable to all 
^-sv 
insured deposits in insured depository institutions (except 
,.; 
to the extent any provision of this Act, any amendment 
made by this Act to the Federal Deposit Insurance Act, or 
/^ 
any other provision of law requires or explicitly permits the 
Federal Deposit Insurance Corporation to treat insured 
deposits of Savings Association Insurance Fund members 
differently than insured deposits of Bank Insurance Fund 
members). 
(4) FACTORS REQUIRED TO BE CONSIDERED.—In prescribing regu-
lations providing for the uniform treatment of deposit insurance 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 359 
coverage, the Federal Deposit Insurance Corporation shall con-
sider all relevant factors necessary to promote safety and sound- 
? 
ness, depositor confidence, and the stability of deposits in in-
sured depository institutions. 
(5) NOTICE; EFFECTIVE DATE.—Regulations prescribed under 
this subsection shall— 
(A) provide for effective notice to depositors in insured 
depository institutions of any change in deposit insurance 
coverage which would result under such regulations; and 
(B) take effect on or before the end of the 90-day period 
beginning on the date such regulations become final. 
(6) DEFINITIONS.—For purposes of this subsection— 
(A) INSURED ACCOUNT.—The term "insured account" has 
the meaning given to such term in section 401(c) of the 
National Housing Act (as in effect before the date of the 
enactment of this Act). 
(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. 
(d) INTERIM TREATMENT OF CUSTODIAL ACCOUNTS.— 
(1) IN GENERAL.—Subject to paragraph (2) and notwithstand-
ing subsection (a) or any limitation contained in the Federal 
Deposit Insurance Act relating to the amount of deposit insur-
ance available to any 1 borrower, amounts held in custodial 
accounts in insured depository institutions (as defined in section 
3(c)(2) of such Act) for the payment of principal, interest, tax, 
and insurance payments for mortgage borrowers, shall be in-
sured under the Federal Deposit Insurance Act in the amount of 
$100,000 per mortgage borrower. 
(2) TREATMENT AFTER EFFECTIVE DATE OF NEW REGULATIONS.— 
After the effective date of the regulations prescribed under 
subsection (c)— 
(A) the amount of deposit insurance available for custo-
dial accounts shall be determined in accordance with such 
regulations; and 
(B) paragraph (1) shall cease to apply with respect to such 
accounts. 
(e) TREATMENT OF REFERENCES IN ADJUSTABLE RATE MORTGAGE 
INSTRUMENTS.— 
(1) IN GENERAL.—For purposes of adjustable rate mortgage 
instruments that are in effect as of the date of enactment of this 
Act, any reference in the instrument to the Federal Savings and 
Loan Insurance Corporation, the Federal Home Loan Bank 
Board, or institutions insured by the Federal Savings and Loan 
' 
, 
Insurance Corporation before such date shall be treated as a 
' 
reference to the Federal Deposit Insurance Corporation, the 
Federal Housing Finance Board, the Office of Thrift Super-
vision, or institutions which are members of the Savings 
Association Insurance Fund, as appropriate on the basis of the 
transfer of functions pursuant to this Act, unless the context of 
the reference requires otherwise. 
(2) SUBSTITUTION FOR INDEXES.—If any index used to calculate 
the applicable interest rate on any adjustable rate mortgage 
instrument is no longer calculated and made available as a 
direct or indirect result of the enactment of this Act, any 
index— 
103 STAT. 360 
PUBLIC LAW 101-73—AUG. 9, 1989 
(A) made available by the Director of the Office of Thrift 
Supervision, the Chairperson of the Federal Deposit Insur-
ance Corporation, or the Chairperson of the Federal Hous-
ing Finance Board pursuant to paragraph (3); or 
(B) determined by the Director of the Office of Thrift 
Supervision, the Chairperson of the Federal Deposit Insur-
ance Corporation, or the Chairperson of the Federal Hous-
ing Finance Board, pursuant to paragraph (4), to be 
substantially similar to the index which is no longer cal-
culated or made available, 
may be substituted by the holder of any such adjustable rate 
mortgage instrument upon notice to the borrower. 
(3) AGENCY ACTION REQUIRED TO PROVIDE CONTINUED AVAIL-
ABILITY OF INDEXES.—Promptly after the enactment of this 
subsection, the Director of the Office of Thrift Supervision, the 
"
^
^ Chairperson of the Federal Deposit Insurance Corporation, and 
the Chairperson of the Federal Housing Finance Board shall 
take such action as may be necessary to assure that the indexes 
_ prepared by the Federal Savings and Loan Insurance Corpora-
tion, the Federal Home Loan Bank Board, and the Federal 
home loan banks immediately prior to the enactment of this 
' subsection and used to calculate the interest rate on adjustable 
rate mortgage instruments continue to be available. 
(4) REQUIREMENTS RELATING TO SUBSTITUTE INDEXES.—If any 
agency can no longer make available an index pursuant to 
paragraph (3), an index that is substantially similar to such 
index may he substituted for such index for purposes of para-
• graph (2) if the Director of the Office of Thrift Supervision, the 
Chairperson of the Federal Deposit Insurance Corporation, or 
the Chairperson of the Federal Housing Finance Board, as the 
case may be, determines, after notice and opportunity for com-
ment, that— 
(A) the new index is based upon data substantially simi-
s 
lar to that of the original index; and 
(B) the substitution of the new index will result in an 
interest rate substantially similar to the rate in effect at 
?.: 
the time the original index became unavailable. 
SEC. 4
0
3
. 
DETERMINATION OF TRANSFERRED FUNCTIONS AND EM-
PLOYEES. 
(a) ALL F H L B B AND F S L I C EMPLOYEES SHALL BE TRANSFERRED.— 
All employees of the Federal Home Loan Bank Board and the 
Federal Savings and Loan Insurance Corporation shall be identified 
for transfer under subsection (b) to the Federal Deposit Insurance 
Corporation, the Office of Thrift Supervision, or the Federal Hous-
ing Finance Board. 
(b) FUNCTIONS AND EMPLOYEES TRANSFERRED.— 
(1) IN GENERAL.—The Director of the Office of Thrift Super-
vision, the Chairperson of the Oversight Board of the Resolution 
Trust Corporation, the Chairperson of the Federal Deposit 
Insurance Corporation, the Chairperson of the Federal Housing 
Finance Board, and the Chairman of the Federal Home Loan 
Bank Board (as of the day before the date of the enactment of 
this Act) shall jointly determine the functions or activities of 
the Federal Home Loan Bank Board and the Federal Savings 
and Loan Insurance Corporation, and the number of employees 
of such Board and Corporation necessary to perform or support 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 361 
such functions or activities, which are transferred from the 
Federal Home Loan Bank Board and the Federal Savings and 
Loan Insurance Corporation to the Office of Thrift Supervision, 
the Resolution Trust Corporation, the Federal Deposit Insur-
ance Corporation, or the Federal Housing Finance Board, as the 
case may be. 
(2) ALLOCATION OF EMPLOYEES.—The Director of the Office of 
Thrift Supervision, the Chairperson of the Oversight Board of 
the Resolution Trust Corporation, the Chairperson of the Fed-
eral Deposit Insurance Corporation, and the Chairperson of the 
Federal Housing Finance Board shall allocate the employees of 
the Federal Home Loan Bank Board and the Federal Savings 
and Loan Insurance Corporation consistent with the number 
determined pursuant to paragraph (1) in a manner which such 
Director, Chairman, and Chairpersons, in their sole discretion, 
deem equitable, except that, within work units, the agency 
preferences of individual employees shall be accommodated as 
far as possible. 
(c) FEDERAL HOME LOAN BANK PERSONNEL.—Employees of the 
Federal home loan banks or the joint offices of such banks who, on 
the day before the date of the enactment of this Act, are performing 
functions or activities on behalf of the Federal Home Loan Bank 
Board or the Federal Savings and Loan Insurance Corporation shall 
be treated as employees of the Federal Home Loan Bank Board or 
the Federal Savings and Loan Insurance Corporation for purposes of 
determining, pursuant to subsection (b)(1), the number of employees 
performing or supporting functions or activities of such Board or 
Corporation to the extent such functions or activities are trans-
ferred to the Federal Deposit Insurance Corporation, the Office of 
Thrift Supervision, the Resolution Trust Corporation, or the Federal 
Housing Finance Board. 
(d) FSLIC EMPLOYEES ENGAGED IN CONSERVATORSHIP OR RECEIVER-
SHIP FUNCTIONS.—Individuals who, on the day before the date of the 
enactment of this Act, are employed by the Federal Savings and 
Loan Insurance Corporation in such Corporation's capacity as con-
servator or receiver of any insured depository institution shall be 
treated as employees of the Federal Savings and Loan Insurance 
Corporation for purposes of determining, pursuant to subsection 
(b)(1), the number of employees performing or supporting functions 
or activities of such Corporation if such conservatorship or receiver-
ship is transferred to the Federal Deposit Insurance Corporation or 
the Resolution Trust Corporation. 
SEC. 404. RIGHTS OF EMPLOYEES OF ABOLISHED AGENCIES. 
All employees identified for transfer under subsection (b) of sec-
tion 403 (other than individuals described in subsection (c) or (d) of 
such section) shall be entitled to the following rights: 
(1) Each employee so identified shall be transferred to the 
appropriate agency or entity for employment no later than 60 
days after the date of the enactment of this Act and such 
transfer shall be deemed a transfer of function for the purpose 
of section 3503 of title 5, United States Code. 
(2) Each transferred employee shall be guaranteed a position 
with the same status, tenure, and pay as that held on the day 
immediately preceding the transfer. Each such employee hold-
ing a permanent position shall not be involuntarily separated or 
103 STAT. 362 
PUBLIC LAW 101-73—AUG. 9, 1989 
reduced in grade or compensation for 1 year after the date of 
transfer, except for cause. 
(3XA) In the case of employees occupying positions in the 
excepted service or the Senior Executive Service, any appoint-
ment authority established pursuant to law or regulations of 
the Office of Personnel Management for filling such positions 
shall be transferred, subject to subparagraph (B). 
(B) An agency or entity may decline a transfer of authority 
under subparagraph (A) (and the employees appointed pursuant 
thereto) to the extent that such authority relates to positions 
excepted from the competitive service because of their confiden-
tial, policy-making, policy-determining, or policy-advocating 
character, and noncareer positions in the Senior Executive 
Service (within the meaning of section 3132(aX7) of title 5, 
United States Code). 
(4) If any agency or entity to which employees are transferred 
determines, after the end of the 1-year period beginning on the 
date the transfer of functions to such agency or entity is com-
pleted, that a reorganization of the combined work force is 
required, that reorganization shall be deemed a "major reorga-
nization" for purposes of affording affected employees retire-
ment under section 8336(d)(2) or 8414(bXlXB) of title 5, United 
States Code. 
(5) Any employee accepting emplojrment with any agency or 
entity (other than the Office of Thrift Supervision) as a result of 
such transfer may retain for 1 year after the date such transfer 
occurs membership in any employee benefit program of the 
Federal Home Loan Bank Board, including insurance, to which 
such employee belongs on the date of the enactment of this Act 
if— 
(A) the employee does not elect to give up the benefit or 
membership in the program; and 
(B) the benefit or program is continued by the Director of 
the Office of Thrift Supervision. 
The difference in the costs between the benefits which would 
have been provided by such agency or entity and those provided 
by this section shall be paid by the Director of the Office of 
Thrift Supervision. If any employee elects to give up member-
ship in a health insurance program or the health insurance 
program is not continued by the Director of the Office of Thrift 
Supervision, the employee shall be permitted to select an alter-
nate Federal health insurance program within 30 days of such 
election or notice, without regard to any other regularly sched-
uled open season. 
(6) Any employee employed by the Office of Thrift Supervision 
as a result of the transfer may retain membership in any 
employee benefit program of the Federal Home Loan Bank 
Board, including insurance, which such employee has on the 
date of enactment of this Act, if such employee does not elect to 
give up such membership and the benefit or program is contin-
ued by the Director of the Office of Thrift Supervision. If any 
employee elects to give up membership in a health insurance 
program or the health insurance program is not continued by 
the Director of the Office of Thrift Supervision, such employee 
shall be permitted to select an alternate Federal health insur-
ance program within 30 days of such election or discontinuance, 
without regard to any other regularly scheduled open season. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 363 
(7) A transferring employee in the Senior Executive Service 
shall be placed in a comparable position at the agency or entity 
to which such employee is transferred. 
(8) Transferring employees shall receive notice of their posi-
tion assignments not later than 120 days after the effective date 
of their transfer. 
(9) Upon the termination of the Resolution Trust Corporation 
pursuant to section 21A(m) of the Federal Home Loan Bank Act, 
any employee of such Corporation shall be transferred to the 
Federal Deposit Insurance Corporation in accordance with the 
provisions of paragraphs (2) and (4) through (7) of this subsec-
tion, except that the liability for any difference in the costs of 
benefits described in paragraph (5) shall be a liability of the 
Resolution Trust Corporation and not the Office of Thrift 
Supervision. 
SEC. 405. DIVISION OF PROPERTY AND FACILITIES. 
Before the end of the 60-day period beginning on the date of the 
enactment of this Act, the Director of the Office of Thrift Super-
vision, the Chairperson of the Oversight Board of the Resolution 
Trust Corporation, the Chairperson of the Federal Deposit Insur-
ance Corporation, and the Chairperson of the Federal Housing 
Finance Board shall jointly divide all property of the Federal Sav-
ings and Loan Insurance Corporation and the Federal Home Loan 
Bank Board used to perform functions and activities of the Federal 
Home Loan Bank Board among the Office of Thrift Supervision, the 
Resolution Trust Corporation, the Federal Deposit Insurance Cor-
poration, and the Federal Housing Finance Board in accordance 
with the division of responsibilities, functions, and activities effected 
by this Act. Any disagreement between them in so doing shall be 
resolved by the Director of the Office of Management and Budget. 
SEC. 406. REPORT. 
Before the end of the 60-day period beginning on the date of the 
enactment of this Act, the Chairman of the Federal Home Loan 
Bank Board shall provide by written report to the Secretary of the 
Treasury, the Director of the Office of Management and Budget, and 
the Congress, a final accounting of the finances and operations of 
the Federal Savings and Loan Insurance Corporation. 
SEC. 407. REPEALS. 
Title 4 of the National Housing Act (1724 et seq.) is hereby 12USC1724 
repealed. 
«' »«9-
TITLE V—FINANCING FOR THRIFT 
RESOLUTIONS 
Subtitle A—Oversight Board and Resolution 
Trust Corporation 
SEC. 501. OVERSIGHT BOARD AND RESOLUTION TRUST CORPORATION 
ESTABLISHED. 
(a) IN GENERAL.—The Federal Home Loan Bank Act (12 U.S.C. 
1421 et seq.) is amended by inserting after section 21 the following 
new section: 
103 STAT. 364 
PUBLIC LAW 101-73—AUG. 9, 1989 
12 use 1441a. 
"SEC. 21A. OVERSIGHT BOARD AND RESOLUTION TRUST CORPORATION. 
"(a) OVERSIGHT BOARD ESTABLISHED.— 
"(1) IN GENERAL.—There is hereby established the Oversight 
Board as an instrumentality of the United States with the 
powers and authorities herein provided. 
"(2) STATUS.—The Oversight Board shall oversee and be 
accountable for the Resolution Trust Corporation (hereinafter 
referred to in this section as the 'Corporation'). The Oversight 
Board shall be an 'agency' of the United States for purposes of 
subchapter 11 of chapter 5 and chapter 7 of title 5, United States 
Code. 
"(3) MEMBERSHIP.— 
"(A) IN GENERAL.—The Oversight Board shall consist of 5 
members— 
"(i) the Secretary of the Treasury; 
"(ii) the Chairman of the Board of Governors of the 
Federal Reserve System; 
"(iii) the Secretary of Housing and Urban Develop-
ment; and 
"(iv) two independent members appointed by the 
President, with the advice and consent of the Senate. 
Such nominations shall be referred to the Committee 
on Banking, Housing, and Urban Affairs of the Senate. 
"(B) POLITICAL AFFILIATION.—The independent members 
shall not be members of the same political party. No 
independent member of the Oversight Board shall hold any 
other appointed office during his or her term as a member. 
"(C) CHAIRPERSON.—The Chairperson of the Oversight 
Board shall be the Secretary of the Treasury. 
"(D) TERM OF OFFICE.—The term of each member (other 
than the independent members) of the Oversight Board 
shall expire when such member has fulfilled all of his or 
her responsibilities under this section and section 21B. The 
term of each independent member shall be 3 years. 
"(E) QUORUM REQUIRED.—A quorum shall consist of 3 
<
; 
members of the Oversight Board and all decisions of the 
Board shall require an aftirmative vote of at least a major-
ity of the members voting. 
"(4) COMPENSATION AND EXPENSES.— 
"(A) EXPENSES.—Members of the Oversight Board shall 
receive allowances in accordance with subchapter I of chap-
ter 57 of title 5, United States Code, for necessary expenses 
of travel, lodging, and subsistence incurred in attending 
meetings and other activities of the Oversight Board, as set 
forth in the bylaws issued by the Oversight Board. 
"(B) No ADDITIONAL COMPENSATION FOR UNITED STATES 
OFFICERS OR EMPLOYEES.—Members of the Oversight Board 
(other than independent members) shall receive no addi-
tional pay by reason of service on such Board. 
"(C) 
COMPENSATION FOR INDEPENDENT MEMBERS.—The 
independent members of the Oversight Board shall be paid 
at a rate equal to the daily equivalent of the rate of basic 
pay for level II of the Executive Schedule for each day 
(including travel time) during which such member is en-
gaged in the actual performance of duties of the Oversight 
Board. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 365 
"(5) POWERS.—The Oversight Board shall be a body corporate 
that shall have the power to— 
"(A) adopt, alter, and use a corporate seal; 
"(B) provide for a principal or executive officer and such 
other officers and employees as may be necessary to per-
form the functions of the Oversight Board, define their 
duties, and require surety bonds or make other provisions 
against losses occasioned by acts of such persons; 
"(C) fix the compensation and number of, and appoint, 
employees for any position established by the Oversight 
Board; 
"(D) set and adjust rates of basic pay for employees of the 
Oversight Board without regard to the provisions of chapter 
51 or subchapter III of chapter 53 of title 5, United States 
Code; 
"(E) provide additional compensation and benefits to 
employees of the Oversight Board if the same type of 
compensation or benefits are then being provided by any 
other Federal bank regulatory agency or, if not then being 
provided, could be provided by such an agency under ap-
plicable provisions of law, rule, or regulation; in setting and 
adjusting the total amount of compensation and benefits for 
employees of the Oversight Board, the Oversight Board 
v 
shall consult with and seek to maintain comparability with 
the other Federal bank regulatory agencies, except that the 
Oversight Board shall not in any event exceed the com-
pensation and benefits provided by the Federal Deposit 
Insurance (Corporation with respect to any comparable 
position; 
"(F) with the consent of any executive agency, depart-
ment, or independent agency utilize the information, serv-
ices, staff, and facilities of such department or agency, on a 
reimbursable (or other) basis, in carrying out this section; 
"(G) prescribe bylaws that are consistent with law to 
^ 
provide for the manner in which— 
"(i) its officers and employees are selected, and 
"(ii) its general operations are to be conducted; 
"(H) enter into contracts and modify or consent to the 
modification of any contract or agreement; 
"(I) sue and be sued in courts of competent jurisdiction; 
and 
"(J) exercise any and all powers established under this 
section and such incidental powers as are necessary to 
carry out its powers, duties, and functions under this Act. 
"(6) OVERSIGHT BOARD DUTIES AND AUTHORITIES.—The Over-
sight Board shall have the following duties and authorities with 
respect to the Corporation: 
"(A) To develop and establish overall strategies, policies, 
and goals for the Corporation's activities in consultation 
with the Corporation, including such items as— 
"(i) general policies and procedures for case resolu-
tions, the mansigement and disposition of assets, the 
use of private contractors, and the use of notes, guaran-
tees or other obligations by the Corporation; 
"(ii) overall financial goals, plans, and budgets; and 
"(iii) restructuring agreements described in subsec-
tion (bXll)(B). 
103 STAT. 366 
PUBLIC LAW 101-73—AUG. 9, 1989 
,. ,
^ 
"(B) To approve prior to implementation periodic financ-
ing requests developed by the Corporation. 
"(C) To review all rules, regulations, principles, proce-
dures, and guidelines that may be adopted or announced by 
the Corporation. After consultation with the Corporation, 
the Oversight Board may require the modification of any 
such rules, regulations, principles, procedures, or guidelines 
except that the rules, regulations, principles, procedures, 
and guidelines relating to the Corporation's powers and 
activities as a conservator or receiver shall be consistent 
with the Federal Deposit Insurance Act. The provisions of 
this subparagraph shall not apply to internal administra-
tive policies and procedures, and determinations or actions 
i^ 
described in paragraph (8) of this subsection. 
"(D) To review the overall performance of the Corpora-
;: . 
tion on a periodic basis, including its work, management 
activities, and internal controls, and the performance of the 
Corporation relative to approved budget plans. 
"(E) To require from the Corporation any reports, docu-
ments, and records it deems necessary to carry out its 
oversight responsibilities. 
"(F) To establish a national advisory board and regional 
advisory boards. 
"(G) To authorize the use of proceeds from any funds 
~
^ 
provided by the Treasury to the Corporation and from any 
financing by the Resolution Funding (Dorporation estab-
- 
lished pursuant to section 21B of this Act consistent with 
the approved budget and financial plans of the (Corporation 
and to oversee the collection of funds by the Resolution 
Funding C!orporation. 
"(H) To evaluate audits by the Inspector General and 
- 
other congressionally required audits. 
• 
"(I) To have general oversight over the Resolution Fund-
ing Corporation as provided under section 21B of this Act. 
"(J) To authorize, as appropriate, the Corporation's sale 
of capital certificates to the Resolution Funding CJorpora-
tion. 
"(7) TRANSITION POLICIES.—Until such time as the Oversight 
Board and the Corporation (consistent with paragraph (6) and 
subsection (bX12)) adopt strategies, policies, goals, regulations, 
rules, operating principles, procedures, or guidelines, the Cor-
poration may carry out its duties in accordance with the strate-
gies, policies, goals, regulations, rules, operating principles, 
procedures, or guidelines of the Federal Deposit Insurance (Cor-
poration, notwithstanding the provisions of section 553 of title 5, 
United States (Code. 
"(8) LIMITATION ON AUTHORITY.— 
„ . 
"(A) IN GENERAL.—The (Corporation shall have the 
authority, without any prior review, approval, or dis-
approval by the Oversight Board, to make such determina-
tions and take such actions as it deems appropriate with 
respect to case-specific matters (i) involving individual case 
* 
resolutions, (ii) asset liquidations, or (iii) day-to-day oper-
ations of the (Corporation. The preceding sentence in no way 
limits the authority of the Oversight Board to provide 
general policies and procedures. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 367 
"(B) FEDERAL DEPOSIT INSURANCE CORPORATION.—Nothing 
contained in this section shall give the Oversight Board 
authority over the activities, powers, or functions of the 
Federal Deposit Insurance Corporation except to the extent 
provided in this section and only with respect to the activi-
ties of the Federal Deposit Insurance Corporation in carry-
ing out the responsibilities of the Corporation. The Federal * 
Deposit Insurance Corporation shall be subject to the 
obligations, responsibilities, duties, and restrictions im- 
, 
posed by this section only to the extent it is carrying out the 
functions of the Corporation. 
"(9) DELEGATION.—Except with respect to the meetings re-
quired by paragraph (10), nothing in this section shall preclude 
a member of the Oversight Board who is a public official from 
delegating his or her authority to an employee or officer of such 
member's agency or organization, if such employee or officer 
has been appointed by the President with the advice and con-
sent of the Senate. For purposes of the preceding sentence, the 
Chairman of the Board of Governors of the Federal Reserve 
System may delegate his or her authority to another member of 
the Board of Governors. 
"(10) QUARTERLY MEETINGS.—Not less than 4 times each year, 
the Oversight Board shall conduct open meetings to establish 
and review the general policy of the Corporation and to consider 
such other standards, policies, and procedures necessary to 
carry out its functions under this Act. 
"(11) POWER TO REMOVE; JURISDICTION.—Notwithstanding any 
other provision of law, any civil action, suit, or proceeding to 
which the Oversight Board is a party shall be deemed to arise 
under the laws of the United States, and the United States 
district courts shall have original jurisdiction. The Oversight 
Board may, without bond or security, remove any such action, 
suit, or proceeding from a State court to a United States District 
Court or to the United States District Court for the District of 
Columbia. 
"(12) 
ADMINISTRATIVE 
EXPENSES.—The administrative 
ex-
penses of the Oversight Board shall be paid by the Corporation, 
upon request of the Oversight Board. 
"(13) 
STANDARDS, POLICIES, PROCEDURES, GUIDELINES, AND 
STATEMENTS.—The Oversight Board may issue rules, regula-
tions, 
standards, 
policies, 
procedures, 
guidelines, 
and 
statements as the Oversight Board considers necessary or 
appropriate to carry out its authorities and duties under this 
Act which shall be promulgated pursuant to subchapter II of 
chapter 5 of title 5, United States Code. 
"(14) STRATEGIC PLAN FOR CORPORATION OPERATIONS.— 
"(A) IN GENERAL.—The Oversight Board shall, subject to 
paragraph (6), develop a strategic plan for conducting the 
Corporation's functions and activities. The Oversight Board 
shall submit the strategic plan to the Congress not later 
than December 31,1989. 
"(B) PROVISIONS OF PLAN.—The strategic plan and im-
plementing policies and procedures required under this 
paragraph shall at a minimum contain the following: 
"(i) Factors the Corporation shall consider in decid-
ing the order in which failed institutions or categories 
of failed institutions will be resolved. 
103 STAT. 368 
PUBLIC LAW 101-73—AUG. 9, 1989 
Discrimination, 
prohibition. 
Women. 
Minorities. 
Disadvcmtaged 
persons. 
Homeless 
persons. 
Children and 
youth. 
"(ii) Standards the Corporation shall use to select the 
appropriate resolution action for a failed institution. 
"(iii) With respect to assisted acquisitions, factors the 
Corporation shall consider in deciding whether non-
performing assets of the failed institution will be trans-
ferred to the acquiring institution rather than retained 
by the Corporation for management and disposal. 
"(iv) Plans for the disposition of assets. 
"(v) Management objectives by which the Corpora-
tion's progress in carrying out its duties under this 
section can be measured. 
"(vi) A plan for the organizational structure and 
staffing of the Corporation, including an assessment of 
the extent to which the Corporation will perform asset 
management functions and other duties through con-
tracts with public and private entities. 
"(vii) Consideration of whether incentives should be 
included in asset management contracts to promote 
active and efficient asset management. 
"(viii) Standards for adequate competition and fair 
and consistent treatment of offerors. 
"(ix) Standards that prohibit discrimination on the 
basis of race, sex, or ethnic group in the solicitation and 
consideration of offers. 
"(x) Procedures for the active solicitation of offers 
from minorities and women. 
"(xi) Procedures requiring that unsuccessful offerors 
be notified in writing of the decision within 30 days 
after the offer has been rejected. 
"(xii) Procedures for establishing the market value of 
assets based upon standard market analysis, valuation, 
and appraisal practices. 
"(xiii) Procedures requiring the timely evaluation of 
purchase offers for an institution. 
"(xiv) Procedures for bulk sales and auction market-
ing of assets. 
"(xv) Guidelines for determining if the value of an 
asset has decreased so that no reasonable recovery is 
anticipated. In such cases, the Corporation may con-
sider potential public uses of such asset including 
providing housing for lower income families (including 
the homeless), day care centers for the children of low-
and moderate-income families, or such other public 
purpose designated by the Secretary of Housing and 
Urban Development. 
"(xvi) Guidelines for the conveyance of assets to units 
of general local government. States, and public sigen-
cies designated by a unit of general local government or 
a State, for use in connection with urban homesteading 
programs approved by the Secretary of Housing and 
Urban Development under section 810 of the Housing 
and Community Development Act of 1974. 
"(xvii) Policies and procedures for avoiding politi-
cal favoritism and undue influence in contracts and 
decisions made by the Oversight Board and the 
Corporation. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 369 
"(15) TERMINATION.—The Oversight Board shall terminate 
not later than 60 days after the Oversight Board fulfills all of its 
responsibilities under this Act. 
'(b) RESOLUTION TRUST CORPORATION ESTABUSHED.— 
"(1) ESTABUSHMENT.— 
"(A) IN GENERAL.—There is hereby established a Corpora-
tion to be known as the Resolution Trust Corporation which 
shall be an instrumentality of the United States. 
"(B) STATUS.—The Corporation shall be deemed to be an 
agency of the United States for purposes of subchapter II of 
chapter 5 and chapter 7 of title 5, United States (Dode, when 
it is acting as a corporation. The (Dorporation, when it is 
acting as a conservator or receiver of an insured depository 
institution, shall be deemed to be an agency of the United 
States to the same extent as the Federal Deposit Insurance 
(Dorporation when it is acting as a conservator or receiver of 
an insured depository institution. 
"(C) FDIC AS EXCLUSIVE MANAGER.—Immediately upon 
enactment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989, the Federal Deposit Insur-
ance (Dorporation shall be authorized to and shall perform 
all responsibilities of the (Dorporation, and shall continue to 
do so unless removed pursuant to subsection (m). 
"(2) GOVERNMENT CORPORATION.—Notwithstanding the fact 
that no Government funds may be invested in the Corporation, 
the (Dorporation shall be treated, for purposes of sections 9105, 
9107, and 9108 of title 31, United States Code, as a mixed-
ownership Government corporation which has capital of the 
Government. 
"(3) DUTIES.—The duties of the (Dorporation shall be to carry 
out a program, under the general oversight of the Oversight 
Board and through the Federal Deposit Insurance Corporation 
(or any replacement authorized pursuant to subsection (m)), 
including: 
"(A) To manage and resolve all cases involving depository 
institutions— 
"(i) the accounts of which were insured by the Fed-
eral Savings and Loan Insurance Corporation before 
the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989; and 
"(ii) for which a conservator or receiver— 
"(I) had been appointed at any time during the 
period beginning on January 1, 1989, and ending 
on the date of the enactment of such Act (including 
any institution described in paragraph (6)); or 
"(II) is appointed within the 3-year period begin-
ning on the date of the enactment of such Act. 
"(B) To manage the Federal Asset Disposition Associa-
tion, subject to the provisions of subsection (f). 
"(C) To conduct the operations of the (Dorporation in a 
manner which— 
"(i) maximizes the net present value return from the 
sale or other disposition of institutions described in 
subparagraph (A) or the assets of such institutions; 
"(ii) minimizes the impact of such transactions on 
local real estate and financial markets; 
103 STAT. 370 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(iii) makes efficient use of funds obtained from the 
Funding Corporation or from the Treasury; 
"(iv) minimizes the amount of any loss realized in the 
resolution of cases; and 
"(v) maximizes the preservation of the availability 
and affordability of residential real property for low-
and moderate-income individuals. 
"(D) To perform any other function authorized under this 
section. 
"(4) 
CONSERVATORSHIP, 
RECEIVERSHIP, 
AND ASSISTANCE 
POWERS.—Except as provided in paragraph (5) and in addition to 
any other provision of this section, the Corporation shall have 
the same powers and rights to carry out its duties with respect 
to institutions described in paragraph (3)(A) as the Federal 
Deposit Insurance Corporation has under sections 11, 12, and 13 
of the Federal Deposit Insurance Act with respect to insured 
depository institutions (as defined in section 3 of the Federal 
Deposit Insurance Act). 
"(5) LIMITATION ON PARAGRAPH (4) POWERS.—The Corpora-
tion— 
"(A) may not obligate the Federal Deposit Insurance 
Corporation or any funds of the Federal Deposit Insurance 
Corporation; and 
"(B) in connection with providing assistance to an institu-
tion under this subsection, shall be subject to the limita-
tions contained in section 13(c)(4) of the Federal Deposit 
1 
Insurance Act. 
"(6) SUCCESSOR TO FSLIC AS CONSERVATOR OR RECEIVER.—As of 
the date of enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, the Corporation shall 
succeed the Federal Savings and Loan Insurance Corporation as 
conservator or receiver with respect to any institution for which 
the Federal Savings and Loan Insurance Corporation was ap-
pointed conservator or receiver during the period beginning on 
January 1,1989 and ending on such date of enactment. 
"(7) 
OBUGATIONS 
AND GUARANTEES.—The 
Corporation's 
authority to issue obligations and guarantees shall be subject to 
general supervision by the Oversight Board under subsection (a) 
and shall be consistent with subsection (j). 
"(8) BOARD OF DIRECTORS.— 
"(A) IN GENERAL.—Except as provided in subsection (m), 
the Board of Directors of the Federal Deposit Insurance 
Corporation shall serve as the Board of Directors of the 
Corporation. 
"(B) CHAIRPERSON.—Except as provided in subsection (m), 
the Chairperson of the Board of Directors of the Federal 
Deposit Insurance Corporation shall serve as the Chair-
person of the Board of Directors of the Corporation. 
"(C) COMPENSATION.—Members of the Board of Directors 
of the Corporation shall receive no pay, allowances, or 
benefits from the Corporation by reason of their service on 
the Board of Directors, but shall receive allowances in 
accordance with subchapter I of chapter 57 of title 5, United 
States Code, for necessary expenses of travel, lodging, and 
subsistence incurred in attending meetings and other 
activities of the Board of Directors, as set forth in the 
bylaws issued by the Board of Directors. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 371 
"(9) STAFF — 
"(A) IN GENERAL.—Unless the Oversight Board exercises 
its authority under subsection (m), the Corporation itself 
shall have no employees. 
"(B) 
UTILIZATION OF PERSONNEL OF OTHER AGENCIES.— 
"(i) FDIC.—The Federal Deposit Insurance Corpora-
tion, when acting as the exclusive manager of the 
Corporation, shall (subject to subsection (a)(6)) receive 
reimbursement from the Corporation for all services 
performed for the Corporation. Such reimbursement 
may not exceed the actual and reasonable cost incurred 
by the Federal Deposit Insurance Corporation in 
performing such services. 
"(ii) OTHER AGENCIES.—With the agreement of 
any 
executive department or agency, the Corporation may 
utilize the personnel of any such executive department 
or agency on a reimbursable basis to cover actual and 
reasonable expenses. 
"(10) CORPORATE POWERS.—The Corporation shall have the 
following powers: 
"(A) To adopt, alter, and use a corporate seal. 
"(B) In the event the Oversight Board exercises its 
authority under subsection (m), the Corporation shall pro-
vide for a chief executive officer, 1 or more vice presidents, 
a secretary, a general counsel, a treasurer, and such other 
officers, employees, attorneys, and agents as the Corpora-
tion may determine to be necessary, define the duties of 
such officers or employees, and require surety bonds or 
make other provisions against losses occasioned by acts of 
such individuals. 
"(C) To enter into contracts and modify, or consent to the 
modification of, any contract or agreement to which the 
Corporation is a party or in which the Corporation has an 
interest under this section. 
"(D) To make advance, progress, or other payments. 
"(E) To acquire, hold, lease, mortgage, maintain, or dis-
pose of, at public or private sale, real and personal prop-
erty, and otherwise exercise all the usual incidents of 
ownership of property necessary and convenient to the 
operations of the Corporation. 
"(F) To sue and be sued in its corporate capacity in any 
court of competent jurisdiction. 
"(G) To deposit any securities or funds held by the Cor-
poration in any facility or depositary described in section 
13(b) of the Federal Deposit Insurance Act under the terms 
and conditions applicable to the Federal Deposit Insurance 
Corporation under such section 13(b) and pay fees thereof 
and receive interest thereon. 
"(H) To take warrants, voting and nonvoting equity, or 
other participation interests in institutions or assets or 
properties of institutions described in paragraph (3XA) and 
paragraph (llXAXiv). 
"(I) To use the United States mails in the same manner 
and under the same conditions as other departments and 
agencies of the United States. 
"(J) To prescribe through its Board of Directors bylaws 
that shall be consistent with law. 
103 STAT. 372 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(K) To make loans. 
"(L) To prepare reports and provide such reports, docu-
ments, and records to the Oversight Board as required by 
this section. 
"(M) To issue capital certificates to the Resolution Fund-
ing Corporation consistent with the provisions of section 
21B of this Act in the following manner: 
"(i) AUTHORIZATION TO ISSUE.—The Corporation is 
hereby authorized to issue to the Resolution Funding 
. ^ 
Corporation nonvoting capital certificates. 
"(ii) REQUIREMENT RELATING TO THE AMOUNT OF CER-
TIFICATES.—The amount of certificates issued by the 
Corporation under clause (i) shall be equal to the aggre-
. gate amount of funds provided by the Resolution Fund-
ing Corporation to the Corporation under section 21B, 
"(iii) CERTIFICATES MAY BE ISSUED ONLY TO THE RESO-
LUTION 
FUNDING CORPORATION.—Capital 
certificates 
issued under clause (i) may be issued only to the Reso-
lution Funding Corporation in the manner and to the 
extent provided in section 21B and this section. 
"(iv) No DIVIDENDS.—The Corporation shall not pay 
dividends on any capital certificates issued under this 
section. 
"(N) To exercise any other power established under this 
section and such incidental powers as are necessary to 
carry out its duties and functions under this section. 
"(11) SPECIAL POWERS.— 
"(A) IN GENERAL.—In addition to the powers of the Cor-
poration described in paragraph (10), the Corporation shall 
have the following powers: 
"(i) CONTRACTS.—The Corporation may enter into 
contracts with any person, corporation, or entity, 
including State housing finance authorities (as such 
term is defined in section 1301 of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989) 
and insured depository institutions, which the Corpora-
tion determines to be necessary or appropriate to carry 
out its responsibilities under this section. Such con-
tracts shall be subject to the procedures adopted pursu-
ant to paragraph (12). 
"(ii) UTILIZATION OF PRIVATE SECTOR.—In carrying out 
the Corporation's duties under this section, the 
Corporation and the Federal Deposit Insurance Cor-
poration shall utilize the services of private persons, 
, 
including real estate and loan portfolio asset manage-
ment, property management, auction marketing, and 
brokerage services, if such services are available in the 
private sector and the Corporation determines utiliza-
tion of such services are practicable and efficient. 
"(iii) MERGERS AND CONSOLIDATIONS.—The Corpora-
tion may require a merger or consolidation of an 
institution or institutions over which the Corporation 
has jurisdiction, if such merger or consolidation is 
consistent with section 13(cX4) of the Federal Deposit 
Insurance Act. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 373 
"(iv) ORGANIZATION OF SAVINGS ASSOCIATIONS.—The 
Corporation may organize 1 or more Federal savings 
associations— 
"(I) which shall be chartered by the Director of 
the Office of Thrift Supervision, 
L. 
"(11) the deposits of which, if any, shall be in-
sured by the Federal Deposit Insurance Corpora-
tion through the Savings Association Insurance 
Fund, and 
"(III) which shall operate in accordance with 
subsection (e). 
"(v) ORGANIZATION OF BRIDGE BANKS.—The Corpora-
tion may organize 1 or more bridge banks pursuant to 
subsection (i) of section 11 of the Federal Deposit Insur-
ance Act with respect to any institution described in 
paragraph (3XA) which becomes a bank. Such bridge 
bank shall be subject to subsection (e), 
"(B) REVIEW OF PRIOR CASES.—The Corporation shall— 
"(i) review and analyze all insolvent institution cases 
resolved by the Federal Savings and Loan Insurance 
Corporation between January 1, 1988, and the date of 
enactment of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989, and actively review 
all means by which it can reduce costs under existing 
Federal Savings and Loan Insurance Corporation 
agreements relating to such cases, including restructur-
ing such agreements; 
(ii) evaluate the costs under existing Federal Sav-
ings and Loan Insurance Corporation agreements with 
regard to the following— 
"(I) capital loss coverage, 
"(II) yield maintenance guarantees, 
• 
"(III) forbearances, 
"(IV) tax consequences, and 
"(V) any other relevant cost consideration; 
"(iii) review the bidding procedures used in resolving 
such cases in order to determine whether the bidding 
and negotiating processes were sufficiently competitive; 
and 
"(iv) report to the Oversight Board and the Congress 
Reports, 
pursuant to subsection (k). 
The C!orporation shall exercise any and all legal rights to 
< 
modify, renegotiate, or restructure such agreements where 
savings would be realized by such actions. The cost or 
income of any modification shall be a liability or an asset of 
the Corporation or the FSLIC Resolution Fund as deter-
mined by the Oversight Board. Nothing in this paragraph 
( 
shall be construed as granting the Corporation any legal 
rights to modify, renegotiate, or restructure agreements 
between the Federal Savings and Loan Insurance Corpora-
tion and any other party, which did not exist prior to the 
date of enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989. 
'(12) REGULATIONS, POUCIES, AND PROCEDURES.— 
"(A) IN GENERAL.—Subject to the review of the Oversight 
Board, the Corporation shall adopt the rules, regulations, 
standards, policies, procedures, guidelines, and statements 
103 STAT. 374 
PUBLIC LAW 101-73—AUG. 9, 1989 
necessary to implement the strategic plan established by 
the Oversight Board under subsection (aX14). The Corpora-
tion may issue such rules, regulations, standards, policies, 
procedures, guidelines, and statements as the Corporation 
considers necessary or appropriate to carry out this section. 
"(B) REVIEW, ETC.—Such rules, regulations, standards, 
policies, procedures, guidelines, and statements— 
"(i) shall be provided by the Corporation to the Over-
sight Board promptly or prior to publication or 
announcement to the extent practicable; 
"(ii) shall be subject to the review of the Oversight 
> 
Board as provided in subsection (aX6XC); and 
"(iii) shall be promulgated pursuant to subchapter II 
of chapter 5 of title 5, United States Code. 
"(C) PREPARATION AND MAINTENANCE OF RECORDS RELAT-
ING TO SOUCITATION AND ACCEPTANCE OF OFFERS.—The Cor-
poration shall— 
"(i) document decisions made in the solicitation and 
selection process and the reasons for the decisions; and 
"(ii) maintain such documentation in the offices of 
the Corporation, as well as any other documentation 
relating to the solicitation and selection process. 
Real property. 
"(D) DISTRESSED AREAS.— 
"(i) IN GENERAL.—In developing its implementing 
policies, the Corporation shall take the action described 
in clause (ii) to avoid adverse economic impact for those 
real estate markets that are distressed. 
"(ii) VALUATION AND DISPOSITION.—The Corporation 
shall establish an appraisal or other valuation method 
for determining the market value of real property. 
With respect to a real property asset with a market 
vedue in excess of a certain dollar limit (such limit to be 
determined by the Board of Directors of the (Corpora-
tion), consideration shall be given to the volume of 
assets above such limit and the potential impact of 
sales in such distressed areas. The (Corporation shall 
not sell a real property asset located in a distressed 
area without obtaining at least the minimum disposi-
tion price, unless a determination has been made that 
such a transaction furthers the objectives set forth in 
paragraph (3XC). 
"(iii) EXCEPTION.—The provisions of this subpara-
graph shall not apply to any property as long as such 
property is subject to the requirements of subsection 
(0. 
"(E) DEFINITIONS.—For the purposes of this subsection— 
"(i) The term 'minimum disposition price' means 95 
percent of the market value established by the (Corpora-
tion. The Board of Directors, in its discretion, may 
change the percentage set forth in this definition from 
time to time if the Board of Directors determines that 
such change does not adversely impact the objectives 
set forth in paragraph (3XC). 
"(ii) The term 'sell a real property asset' means to 
convey all title and interest in a piece of tangible real 
property in which the Corporation has a fee simple or 
equivalent interest. The term 'real property' does not 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 375 
include loans secured by real property, joint ventures, 
participation interests, options, or other similar in-
terests. In addition, the term 'sell' does not include 
hjrpothecation of assets, issuance of asset backed securi-
ties, issuance of joint ventures, or participation in-
terests, or other similar activities. 
"(iii) The term 'distressed area' means the geographic 
areas in those political subdivisions designated from 
time to time by the Board of Directors as having de-
pressed real estate markets. Until the Board of Direc-
tors designates otherwise, such distressed areas shall be 
the States of Arkansas, Colorado, Louisiana, New 
Mexico, Oklahoma, and Texas. 
"(iv) The term 'market value' means the most prob-
able price which a property should bring in a competi-
tive and open market if— 
"(I) all conditions requisite to a fair sale are 
present, 
"(II) the buyer and seller are acting prudently 
and are knowledgable, and 
"(III) the price is not affected by any undue 
stimulus. 
"(F) REAL ESTATE ASSET DIVISION.—The Corporation shall 
establish a Real Estate Asset Division to assist and advise 
the Corporation with respect to the management, sale, or 
other disposition of real property assets of institutions de-
scribed in paragraph (3)(A). The Real Estate Asset Division 
Public 
shall have such duties as the Corporation establishes, 
information, 
including the publication of an inventory of real property 
assets of institutions subject to the jurisdiction of the Cor-
poration. Such inventory shall be published before Janu-
ary 1, 1990 and updated semiannually thereafter and shall 
identify properties with natural, cultural, recreational, or 
scientific values of special significance. 
"(13) PERIODIC FINANCING REQUESTS.—The Corporation shall 
provide the Oversight Board with periodic financing requests 
which shall detail— 
"(A) anticipated funding requirements for operations, 
case resolution, and asset liquidation, 
"(B) anticipated payments on previously issued notes, 
guarantees, other obligations, and related activities, and 
"(C) any proposed use of notes, guarantees or other 
obligations. 
Such financing requests shall be submitted on a quarterly basis 
or such other period £is the Oversight Board determines nec-
essary. Following approval by the Oversight Board, such re-
quest^ shall form the basis for expending funds provided by the 
Treasury, for transferring funds from the Resolution Funding 
Corporation to the Corporation and the issuance of capital 
certificates by the Corporation in exchange therefor. 
"(14) FISCAL YEAR 1989 FUNDING.— 
"(A) FUNDS FROM TREASURY.—The Secretary of the Treas-
ury shall provide the Corporation with the sum of 
$18,800,000,000 in fiscal year 1989, and for such purpose the 
Secretary is authorized to use as a public debt transaction 
the proceeds of the sale of any securities hereafter issued 
under chapter 31 of title 31, United States Code. 
103 STAT. 376 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) FUNDS FROM RESOLUTION FUNDING CORPORATION.— 
The Resolution Funding Corporation shall provide the Cor-
poration with such sums authorized pursuant to section 
21B(e)(8) and the Corporation shall issue capital certificates 
in exchange therefor. 
Disadvantaged 
"(c) DISPOSITION OF EUGIBLE RESIDENTIAL PROPERTIES.— 
persons. 
"(1) PuRPOSE.—The purpose of this subsection is to provide 
homeownership and rental housing opportunities for very low-
income, lower-income, and moderate-income families. 
"(2) RULES GOVERNING DISPOSITION OF ELIGIBLE SINGLE FAMILY 
PROPERTIES.— 
"(A) NOTICE TO CLEARINGHOUSES.—Within a reasonable 
period of time after acquiring title to an eligible single 
family property, the (Dorporation 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 esti-
mated fair market value of the property. Each clearing-
^ 
house shall make such information available, upon request, 
to other public agencies, other nonprofit organizations, 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. 
"(B) OFFERS TO SELL SINGLE FAMILY PROPERTIES TO NON-
PROFIT ORGANIZATIONS, PUBUC AGENCIES, AND QUALIFYING 
HOUSEHOLDS.—For the 3-month period following the date on 
which the Corporation makes an eligible single family prop-
erty available for sale, the Corporation shall offer to sell the 
property to (i) qualifying households, or (ii) public agencies 
or nonprofit organizations that agree to (I) make the prop-
erty available for occupancy by and maintain it as afford-
able for lower-income families for the remaining useful life 
of such property, or (II) make the property available for 
purchEise by such families. The restrictions described in 
subclause (I) of the preceding sentence shall be contained in 
the deed or other recorded instrument. If upon the expira-
tion of such 3-month period, no qualifying household, public 
agency, or nonprofit organization has made a bona fide 
offer to purchase the property, the Corporation may offer to 
Marketing. 
sell the property to any purchaser. The Corporation shall 
actively market eligible single family properties for sale to 
lower-income families. 
"(3) RULES GOVERNING DISPOSITION OF EUGIBLE MULTIFAMILY 
HOUSING PROPERTIES.— 
"(A) NOTICE TO CLEARINGHOUSES.—Within a reasonable 
period of time after acquiring title to an eligible multifam-
ily 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 bed-
rooms), and information relating to the estimated fair 
, 
market value of the property. The clearinghouses shall 
make such information available, upon request, to qualify-
ing multifamily purchasers. The Corporation shall allow 
qualifying multifamily purchasers reasonable access to an 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 377 
eligible multifamily housing property for purposes of 
inspection. 
(B) EXPRESSION OF SERIOUS INTEREST.—Qualifjdng multi- 
j 
family purchasers may give written notice of serious in-
terest in a property during a period ending 90 days after the 
time the Corporation provides notice under subparagraph 
(A), or until the Corporation determines that a property is 
ready for sale, whichever occurs first. Such notice of serious 
^ 
interest shall be in such form and include such information 
^ 
as the Corporation may prescribe. 
"(C) NOTICE OF READINESS FOR SALE.—Upon determining 
that a property is ready for sale the Corporation shall 
provide written notice to any qualifying multifamily pur-
chaser that has expressed serious interest in the property. 
Such notice shall specify the minimum terms and condi-
tions for sale of the property. 
"(D) OFFERS TO PURCHASE,—A qualifying multifamily pur-
chaser receiving notice in accordance with subparagraph 
(C) shall have 45 days (from the date notice is received) to 
•^• 
make a bona fide offer to purchase a property. The Corpora-
tion shall accept an offer that complies with the terms and 
conditions established by the Corporation. 
"(E) LOWER-INCOME OCCUPANCY REQUIREMENTS.—Not less 
than 35 percent of sdl dwelling units purchased by a qualify-
ing multifamily purchaser under subparagraph (D) shall be 
made available for occupancy by and maintained £is afford-
able for lower-income families during the remaining useful 
life of the property in which the units are located, provided 
that not less than 20 percent of all units shall be made 
available for occupancy by and maintained as affordable for 
very low-income families during the remaining useful life of 
such property. If a single entity purchases more than 1 
eligible property as part of the same negotiation, the 
requirements of this subparagraph shall apply in the aggre- 
C 
gate to the properties so purchased. The requirements of 
this subparagraph shall be contained in the deed or other 
recorded instrument. 
^ 
"(F) 
SALE OF MULTIFAMILY PROPERTIES TO OTHER PUR-
CHASERS.— 
"(i) If, upon the expiration of the period referred to in 
subparagraph (B), no qualifying multifamily purchaser 
has expressed serious interest in a property, the Cor-
poration may offer to sell the property, individually or 
in combination with other properties, to any purchaser, 
"(ii) The Corporation may not sell in combination 
with other properties any property which a qualifying 
multifamily purchaser has expressed serious interest in 
purchasing individually. 
"(iii) If, upon the expiration of the period referred to 
in subparagraph (D), no qualifying multifamily pur-
chaser has made an offer to purchase the property, the 
Corporation may sell the property, individually or in 
combination with other properties, to any purchaser. 
"(G) EXEMPTIONS.— 
"(i) CONTINUED OCCUPANCY OF CURRENT RESIDENTS.— 
No purchaser of an eligible multifamily housing prop-
erty may terminate the occupancy of any person resid-
103 STAT. 378 
PUBLIC LAW 101-73—AUG. 9, 1989 
ing in the property on the date of purchase for purposes 
of meeting the lower-income occupancy requirement 
applicable to the property under subparagraph (E). The 
purchaser shall be in compliance with this paragraph if 
each newly vacant dwelling unit is reserved for lower-
income occupancy until the lower-income occupancy 
requirement is met. 
* 
(ii) FINANCIAL INFEASIBIUTY.—The Secretary of 
Housing and Urban Development or the State housing 
finance agency for the State in which the property is 
4 
located may temporarily reduce the lower-income occu-
pancy requirements applicable to any property under 
subparagraph (E), if the Secretary or the applicable 
State housing finance agency determines that an 
'^ 
owner's compliance with such requirements is no 
longer financially feasible. The owner of the property 
shall make a good-faith effort to return lower-income 
occupancy to the level required by subparagraph (E), 
and the Secretary of Housing and Urban Development 
or the State housing finance agency, as appropriate, 
shall review the reduction annually to determine 
whether financial infeasibility continues to exist. 
"(4) RENT UMITATIONS.— 
"(A) IN GENERAL.—With respect to properties under 
subparagraph (B), 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 
available for occupancy by lower-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. 
"(B) APPUCABIUTY.—The rent limitations under this 
paragraph shall apply to any eligible single-family property 
sold pursuant to paragraph (2XBXii)(I) and to any multifam-
ily housing property sold pursuant to paragraph (3). 
"(5) PREFERENCE FOR SALES.—When selling any eligible multi-
family housing property or combinations of eligible residential 
properties, the Corporation 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 families and lower-income families and 
would retain such affordability for the longest term. 
"(6) FINANCING OF SALE.— 
"(A) ASSISTANCE BY CORPORATION.— 
"(i) SALE PRICE.—The Corporation shall establish a 
market value for each eligible residential property. The 
Corporation shall sell eligible residential property at 
the net realizable market value. The Corporation may 
J 
agree to sell an eligible single family property at a 
price below the net realizable market value to the 
extent necessary to facilitate an expedited sale of the 
property and enable a lower-income family to purchase 
the property. The Corporation may agree to sell eligible 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 379 
residential 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 
lower-income occupancy requirements applicable to 
such property under paragraphs (2) and (3). 
"(ii) PURCHASE LOAN.—The Corporation may provide 
a loan at market interest rates to the 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 such a loan at below market interest rates to 
the extent necessary to facilitate an expedited sale of 
eligible residential property and permit (I) a lower-
income family to purchase an eligible single family 
property under paragraph (2); or (II) a public agency or 
nonprofit organization to comply with the lower-
income occupancy requirements applicable to the 
purchase of an eligible residential property under para-
graph (2) or (3). The Corporation shall provide such 
loan in a form which would permit its sale or transfer 
to a subsequent holder. 
"(B) ASSISTANCE BY HUD.—The Secretary shall take such 
action as may be necessary to expedite the processing of 
applications 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, sec-
tion 810 of the Housing and Community Development Act 
of 1974, and the National Housing Act to enable any 
organization or individual to purchase eligible residential 
^ 
property. 
"(C) ASSISTANCE BY FMHA.—The Secretary of Agriculture 
shall take such actions 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 individ-
ual to purchase eligible residential property. 
"(7) CONTRACTING RULES.—Contracts entered into under this 
subsection shall not be subject to the requirements of subsection 
(b)(ll)(A). 
"(8) USE OF SECONDARY MARKET AGENCIES.— 
"(A) IN GENERAL.—In the disposition of eligible residen-
tial properties, the Corporation shall, in consultation *with 
the Secretary, explore opportunities to work with secondary 
market entities to provide housing for lower- and moderate-
income families. 
"(B) CREDIT ENHANCEMENT.—With respect to such Cor-
poration properties, the Secretary may, consistent with 
statutory authorities, work through the Federal Housing 
Administration, 
the 
Government 
National 
Mortgage 
Association, the Federal National Mortgage Association, 
the Federal Home Loan Mortgage Corporation, and other 
secondary market entities to develop risk sharing struc-
tures, mortgage insurance, and other credit enhancements 
to assist in the provision of property ownership, rental, and 
cooperative housing opportunities for lower- and moderate-
income families. 
103 STAT. 380 
PUBLIC LAW 101-73—AUG. 9, 1989 
' 
"(C) REPORT.—In the annual report submitted by the 
Secretary to the Congress, the Secretary shall include a 
detailed description of his activities under this paragraph, 
including recommendations for such additional authoriza-
tion as he deems necessary to implement the provisions of 
this subsection. 
"(9) DEFINITIONS.—For purposes of this subsection— 
"(A) ADJUSTED INCOME.—The term 'adjusted income' has 
the same meaning as such term has under section 3 of the 
United States Housing Act of 1937. 
"(B) 
CLEARINGHOUSES.—The 
term 
'clearinghouses' 
means— 
"(i) the State housing finance agency for the State in 
which an eligible residential property is located, 
"(ii) the Office of Community Investment (or other 
comparable division) within the Federal 
Housing 
Finance Board, and 
"(iii) any national nonprofit organizations (including 
any nonprofit entity established by the corporation 
established under title IX of the Housing and Commu-
nity Development Act of 1968) that the Corporation 
determines has the capacity to act as a clearinghouse 
for information. 
"(C) CORPORATION.—The term 'Corporation' means the 
Resolution Trust Corporation either in its corporate capac-
ity or as receiver, but does not include the Corporation in 
ite capacity as an operating conservator. 
"(D) 
ELIGIBLE MULTIFAMILY HOUSING PROPERTY.—The 
term 'eligible multifamily housing property' means a prop-
. 
erty consisting of more than 4 dwelling units— 
"(i) to which the Corporation acquires title; and 
"(ii) 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 (without regard to any increase of such 
amount for high-cost areas). 
"(E) ELIGIBLE RESIDENTIAL PROPERTY.—The term 'eligible 
residential property' includes eligible single family prop-
erties and eligible multifamily housing properties. 
"(F) ELIGIBLE SINGLE FAMILY PROPERTY.—The term 'eli-
gible single family property' means a 1- to 4-family resi-
dence (including a manufactured home)— 
^ 
"(i) to which the Corporation acquires title; and 
"(ii) that has an appraised value that does not exceed 
the applicable dollar amount set forth in the first 
. 
sentence of section 208(bX2) of the National Housing 
* 
•' 
Act (without regard to any increase of such amount for 
• 
high-cost areas). 
"(G) LOWER-INCOME FAMILIES.—The term 'lower-income 
families' means families and individuals whose incomes do 
not exceed 80 percent of the median income of the area 
involved, as determined by the Secretary, with adjustment 
for family size. 
"(H) NET REALIZABLE MARKET VALUE.—The term 'net 
realizable market value' means a price below the market 
value that takes into account (i) any reductions in holding 
costs resulting from the expedited sale of a property, includ-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 381 
ing but not limited to foregone real estate taxes, insurance, 
maintenance costs, security costs, and loss of use of funds, 
and (ii) the avoidance, where applicable, of fees paid to real 
estate brokers, auctioneers, or other 
individuals 
or 
organizations involved in the sale of property owned by the 
Corporation. 
"(I) 
NONPROFIT 
ORGANIZATION.—The term 
'nonprofit 
organization' means a private organization (including a 
limited equity cooperative)— 
"(i) no part of the net earnings of which inures to the 
benefit of any member, shareholder, founder, contribu-
tor, or individual; and 
"(ii) that is approved by the Corporation as to finan-
cial responsibility. 
"(J) PuBUC AGENCY.—The term 'public agency'— 
"(i) means any Federal, State, local, or other govern-
mental entity; and 
"(ii) includes any public housing agency. 
"(K) QuAUFYiNG HOUSEHOLD.—'The term 
'qualifying 
household' means a household (i) who intends to occupy 
eligible single family property £is a principle residence; and 
(ii) whose adjusted income does not exceed 115 percent of 
the median income for the area, as determined by the 
Secretary, with adjustment for family size. 
"(L) QUALIFYING MULTIFAMILY PURCHASER.—The term 
'qualifjdng multifamily purchaser' means (i) a public 
agency, (ii) a nonprofit organization, or (iii) a for-profit 
entity which makes a commitment (for itself or any related 
entity) to satisfy the lower-income occupancy requirements 
specified under paragraph (3XE) for any eligible multifam-
ily property for which an offer to purchase is made during 
or after the periods specified under paragraph (3). 
"(M) RURAL AREA.—The term 'rural area' has the mean-
ing given such term in section 520 of the Housing Act of 
1949. 
"(N) SECRETARY.—The term 'Secretary' means the Sec-
retary of the Housing and Urban Development. 
"(O) STATE HOUSING FINANCE AGENCY.—The term 'State 
housing finance agency' means the public agency, author-
ity, corporation, or other instrumentality of a State that 
has the authority to provide residential mortgage loan 
financing throughout such State. 
"(P) VERY LOW-INCOME FAMILIES.—The term 'very-low 
income families' means families and individuals whose in-
comes do not exceed 50 percent of the median income of the 
area involved, as determined by the Secretary, with adjust-
ment for family size. 
"(10) EXCEPTION.—The provisions of this subsection shall not 
apply whenever the Corporation as receiver contracts to sell all 
or substantially all of the assets of a closed savings association 
to an insured depository institution (as defined in section 3 of 
the Federal Deposit Insurance Act). 
"(11) THIRD PARTY RIGHTS.— 
"(A) IN GENERAL.—The provisions of this subsection, or 
any failure by the Corporation to comply with such provi-
sions, may not be used by any person to attack or defeat 
any title to property once it is conveyed by the Corporation. 
103 STAT. 382 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) LOWER-INCOME OCCUPANCY.—The lower-income occu-
pancy requirements specified under paragraphs (2) and (3) 
shall be judicially enforceable against purchasers of prop-
erty under this subsection or their successors in interest by 
affected very low- and lower-income families. State housing 
finance agencies, and any agency, corporation, or authority 
of the United States Government. The parties specified in 
the preceding sentence shall be entitled to reasonable attor-
ney fees upon prevailing in any such judicial action. 
"(C) CLEARINGHOUSE.—A clearinghouse shall not be sub-
ject to suit for its failure to comply with the requirements 
of this subsection. 
"(d) NATIONAL AND REGIONAL ADVISORY BOARDS.— 
"(1) NATIONAL ADVISORY BOARD.— 
"(A) ESTABUSHMENT.—The Oversight Board shall estab-
lish a national advisory board to provide information to the 
Oversight Board, and to advise that Board on policies and 
programs for the sale or other disposition of real property 
assets of institutions which are described in subsection 
(bX3XA). 
"(B) MEMBERSHIP.—The national advisory board shall 
consist of— 
"(i) a chairperson appointed by the Oversight Board; 
and 
"(ii) the chairpersons of any regional advisory boards 
established pursuant to paragraph (2). 
"(C) MEETINGS.—The national advisory board shall meet 
4 times a year, or more frequently if requested by the 
Corporation. 
"(2) REGIONAL ADVISORY BOARDS.— 
"(A) ESTABLISHMENT.—The Oversight Board shall estab-
lish not less than 6 regional advisory boards to advise the 
Corporation on the policies and programs for the sale or 
other disposition of real property assets of institutions de-
scribed in subsection (bX3XA). Such regional advisory 
boards shall be established in any region where the Over-
sight Board determines that there exists a significsint port-
folio of real property assets of institutions which are 
described in subsection (bX3)(A). 
"(B) MEMBERSHIP.— 
"(i) APPOINTMENT.—Each regional advisory board 
shall consist of 5 members. Each member shall be 
appointed by the Oversight Board and shall serve at 
the pleasure of the Oversight Board. The members 
shall be selected from those residents of the region who 
will represent the views of low- and moderate-income 
consumers and small businesses, or who have knowl-
edge and experience regarding business, financial, and 
real estate matters. 
"(ii) TERMS.—Each member of a regional advisory 
board shall serve a term not to exceed 2 years, except 
that the Oversight Board may provide for classes of 
members so that the terms of not more than 3 members 
of any such board shall expire in any 1 year. 
"(C) MEETINGS.—Each regional advisory board shall meet 
4 times a year, or more frequently if requested by the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 383 
Corporation. A regional advisory board shall conduct its 
meetings in its region. 
"(3) PROHIBITION ON COMPENSATION.—Members of the 
na-
tional and regional advisory boards shall serve without com-
pensation, except that such members shall be entitled to receive 
allowances in accordance with subchapter I of chapter 57 of title 
5, United States Code, for necessary expenses of travel, lodging, 
and subsistence incurred in attending official meetings and 
other activities of the boards. 
"(4) TREATMENT AS ADVISORY COMMITTEE AND TERMINATION OF 
NATIONAL AND REGIONAL ADVISORY BOARDS.— 
"(A) FEDERAL ADVISORY COMMITTEE ACT.—The national 
and regional advisory boards shall be subject to the provi-
sions of the Federal Advisory Committee Act. 
"(B) TERMINATION.—Notwithstanding the provisions of 
the Federal Advisory Committee Act, the national advisory 
board and any regional advisory board established pursuant 
to this subsection which is in existence on the date on 
which the Corporation terminates shall also terminate on 
such date. 
"(e) INSTITUTIONS ORGANIZED BY THE CORPORATION.— 
"(1) LIMITATIONS ON CERTAIN ACTIVITIES.—All insured deposi-
tory institutions (as defined in section 3 of the Federal Deposit 
Insurance Act) organized by the Corporation under this section 
shall, during the period such institutions are within the control 
of the (Dorporation, be subject to such limitations, restrictions, 
and conditions as determined by the (Dorporation with respect to 
the following activities: 
, 
"(A) Growth of assets. 
"(B) Lending and borrowing activities. 
"(C) Asset acquisitions. 
' 
f; 
' "(D) Use of brokered deposits. 
"(E) Pa)rment of deposit rates. 
'^' 
"(F) Setting policy or credit standards. 
^ 
"(G) Capital standards. 
* 
"(2) APPLICABILITY OF OTHER PROVISIONS OF LAW.—Except as 
otherwise provided, all insured depository institutions (defined 
^ 
in section 3 of the Federal Deposit Insurance Act) organized by 
the (Dorporation shall— 
"(A) be subject to all laws and rules otherwise applicable 
to them £is insured depository institutions, and 
"(B) shall be subject to the supervision of the appropriate 
Federal banking £igency (as that term is defined in section 3 
of the Federal Deposit Insurance Act). 
"(f) FADA.—Before the end of the 180-day period beginning on the 
date of the enactment of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989, the (Dorporation shall liquidate 
the Federal Asset Disposition Association. 
"(g) EXEMPTION FROM STATE AND LOCAL TAXATION.—The Corpora-
tion and the Oversight Board, the capital, reserves, surpluses, and 
assets of the Corporation and the Oversight Board, and the income 
derived from such capital, reserves, surpluses, or assets shall be 
exempt from State, municipal, and local taxation except taxes on 
real estate held by the (Dorporation, according to its vahie as other 
similar property held by other persons is taxed. 
"(h) GUARANTEES OF F S L I C — 
103 STAT. 384 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(1) ASSUMPTION BY CORPORATION.—On the date of the enact-
ment of this section, the Corporation shall, by operation of law 
(and without further action by the Corporation, the Oversight 
Board, the Federal Housing Finance Board, the Federal Savings 
and Loan Insurance Corporation, or any court), assume all 
rights and obligations of the Federal Savings and Loan Insur-
ance Corporation with respect to any guarantee issued by the 
Federal Savings and Loan Insurance Corporation during the 
period beginning on January 1,1989, and ending on such date of 
enactment, in connection with any loan to any savings associa-
tion by any Federal Reserve bank or Federal Home Loan Bank 
(hereinafter in this subsection referred to as a 'lender'). 
"(2) PAYMENT BY CORPORATION.—Any obligation assumed by 
the Corporation for any guarantee described in paragraph (1) to 
any lender shall be paid by the Corporation before the end of 
the 1-year period beginning on the date of the enactment of this 
section. Payment shall be made from funds or assets available 
to the Corporation. 
"(3) PRIORITY OF CLAIMS OF LENDERS.—Any claim by a lender 
with respect to any obligation assumed by the Corporation for a 
guarantee described in paragraph (1) shall have priority over all 
other secured or unsecured obligations of the Corporation. 
"(4) TREASURY BACKUP.—If the resources of the Corporation 
are insufficient to pay all the obligations assumed by the Cor-
poration under paragraph (1) within the 1-year period, the 
Secretary of the Treasury shall pay the amount of any such 
deficiency. There are hereby appropriated to the Secretary for 
fiscal year 1989 and each fiscal year thereafter, such sums as 
may be necessary to pay such deficiency, 
"(i) BORROWING.— 
"(1) IN GENERAL.—The Corporation, upon approval of the 
Oversight Board, is authorized to borrow from the Treasury. 
Loans. 
The Secretary of the Treasury is authorized and directed to loan 
to the Corporation, on such terms as may be fixed by the 
Secretary of the Treasury, an amount not exceeding in the 
aggregate $5,000,000,000 outstanding at any one time. 
"(2) INTEREST RATE.—Each such loan shall bear interest at a 
rate determined by the Secretary of the Treasury, taking into 
consideration current market yields on outstanding marketable 
obligations of the United States of comparable maturities. 
"0*) MAXIMUM AMOUNT LIMITATIONS ON OUTSTANDING OBLIGA-
TIONS.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
this section, the amount which is equal to— 
"(A) the sum of— 
"(i) the total amount of contributions received from 
the Resolution Funding Corporation; and 
"(ii) the total amount of outstanding obligations of 
the Corporation; minus 
"(B) the sum of— 
"(i) the amount of cash held by the Corporation; and 
"(ii) the amount which is equal to 85 percent of the 
Corporation's estimate of the fair market value of other 
assets held by the Corporation, 
may not exceed $50,000,000,000. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 385 
"(2) OUTSTANDING OBUGATION DEFINED.—For purposes of this 
subsection (other than paragraph (3)), the term 'outstanding 
obligation' includes— 
"(A) any obligation or other liability assumed by the 
Corporation from the Federal Savings and Loan Insurance 
Corporation under this section or pursuant to any provision 
of the Financial Institutions Reform, Recovery, and 
J 
Enforcement Act of 1989; 
"(B) any guarantee issued by the Corporation; 
"(C) the total of the outstanding amounts borrowed from 
the Secretary of the Treasury pursuant to subsection (i); 
^ 
and 
i 
"(D) any other obligation for which the Corporation has a 
direct or contingent liability to pay any amount. 
"(3) FULL FAITH AND CREDIT.—The full faith and credit of the 
United States is pledged to the payment of any obligation issued 
by the Corporation, with respect to both principal and interest, 
if— 
"(A) the principal amount of such obligation is stated in 
the obligation; and 
"(B) the term to maturity or the date of maturity of such 
obligation is stated in the obligation. 
"(4) 
ESTIMATES 
OF 
COSTS 
OF 
CONTINGENT 
UABIUTIES 
REQUIRED.— 
"(A) IN GENERAL.—The Corporation shall— 
"(i) estimate the cost to such Corporation of any 
/, 
contingent liability of the Corporation; and 
"(ii) at least once each calendar quarter, make such 
adjustment as is appropriate in the estimate of such 
cost. 
"(B) INCLUSION IN FINANCIAL STATEMENTS AND OUTSTAND-
ING OBUGATiONS.—The estimated amount of the cost to the 
Corporation of any contingent liability of the Corporation 
(talung into account the most recent adjustment to such 
estimate pursuant to paragraph (AXii)) shall be— 
"(i) treated as an outstanding obligation of the Cor-
poration for purposes of this subsection; and 
"(ii) included in any financial statement of the Cor-
poration, 
"(k) REPORTING AND DISCLOSURE OBUGATIONS.— 
"(1) AUDITS.— 
"(A) ANNUAL AUDIT.—The Comptroller Greneral shall 
audit annually the financial statements of the Corporation 
in accordance with generally accepted Government auditing 
standards unless the Comptroller General notifies the Over-
sight Board not later than 180 days before the close of a 
fiscal year that the Comptroller General will not perform 
such audit for that fiscal year. In the event of such notifica- Contracts. 
^ 
tion, the Oversight Board shall contract with an independ-
ent certified public accountant to perform the annual audit 
of the Corporation's financial statement in accordance with 
generally accepted Government auditing standards. 
"(B) ACCESS TO BOOKS AND RECORDS.—All books, records, 
accounts, reports, files, and property belonging to or used 
by the Corporation, or the Oversight Board, or by an 
independent certified public accountant retained to audit 
103 STAT. 386 
PUBLIC LAW 101-73—AUG. 9, 1989 
the Corporation's financial statement, shall be made avail-
able to the Comptroller General. 
"(2) PUBUC DISCLOSURE OF TRANSACTIONS.— 
Public 
"(A) DISCLOSURE REQUIRED.—Except £is otherwise pro-
information. 
vided in this subsection, the Corporation shall make avail-
able to the public— 
"(i) any sigreement entered into by the Corporation 
relating to a transaction for which the Corporation 
provides assistance pursuant to section 13(c) of the 
• 
Federal Deposit Insurance Act, not later than 30 days 
after the first meeting of the Oversight Board after 
such agreement is entered into; and 
' 
. ' "
^ 
"(ii) all agreements relating to cases reviewed by the 
Corporation pursuant to subsection (bXUXB). 
"(B) EXCEPTION FOR DISCLOSURES AGAINST THE PUBLIC 
INTEREST.— 
"(i) IN GENERAL,—The Oversight Board may withhold 
from public disclosure any document or part of a docu-
ment if the Oversight Board determines, by a unani-
/ 
mous affirmative vote of the members of the Board, 
' ' 
that disclosure would be contrary to the public interest, 
"(ii) REPORT OF DETERMINATION.—A written report 
«'• 
shall be made of any determination by the Oversight 
Board to withhold any part of a document from public 
disclosure pursuant to clause (i). Such report shall 
contain a full explanation of the specific reasons for 
such determination. 
^ 
"(iii) PUBUCATION AND SUBMISSION OF REPORT.—The 
report prepared pursuant to clause (ii) shall be— 
Federal 
"(I) published in the Federal Register; and 
^S^cltion 
"^^^^ transmitted to the Committee on Banking, 
pu ica ion. 
Finance and Urban Affairs of the House of Rep-
resentatives and the Committee on Banking, Hous-
ing, and Urban Affairs of the Senate. 
"(C) AGREEMENT DEFINED.—For purposes of this subsec-
tion, the term'agreement'includes— 
"(i) all documents which effectuate the terms and 
^<'s 
i
U 
conditions of the assisted transaction; 
^ 
"(ii) a comparison, which the Corporation shall pre-
pare of— 
"(I) the estimated cost of the transaction, with 
"(II) the estimated cost of liquidating the insured 
institution; and 
"(iii) a description of any economic or statistical 
assumptions on which such estimates are based. 
"(3) DISCLOSURE TO CONGRESS OF TRANSACTIONS.— 
"(A) PROSPECTIVE TRANSACTIONS.—The Corporation shall 
"' 
make available to 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 any agreement entered into by the Corporation 
-- 
relating to a transaction for which the Corporation provides 
^ 
assistance pursuant to section 13(c) of the Federal Deposit 
Insurance Act not later than 25 days after the first meeting 
of the Oversight Board after such agreement is entered 
into. The foregoing requirement is in addition to the Cor-
/ 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 387 
poration's obligation to make such agreements publicly 
available pursuant to paragraph (2). 
"(B) PRIOR TRANSACTIONS.—The Corporation shall submit 
a report to the Oversight Board and the Congress contain- 
) 
ing the results and conclusions of the review of the 1988 
transactions conducted pursuant to subsection (bXUXB) and 
such recommendations for legislative action as the Corpora-
tion may determine to be appropriate. 
"(4) ANNUAL REPORTS.— 
"(A) IN GENERAL.—The Oversight Board and the Corpora-
tion shall annually submit a full report of their respective 
operations, activities, budgets, receipts, and expenditures 
for the preceding 12-month period. 
"(B) CONTENTS.—The report required under subpara-
graph (A) shall include— 
"(i) audited statements and such information as is 
necessary to make known the financial condition and 
operations of the Corporation in accordance with gen-
erally accepted accounting principles; 
"(ii) the Corporation's financial operating plans and 
forecasts (including budgets, estimates of actual and 
future spending, and estimates of actual and future 
cash obligations) taking into account the Corporation's 
financial commitments, guarantees, and other contin-
gent liabilities; 
"(iii) the number of minority and women investors 
participating in the bidding process for assisted acquisi-
tions and the disposition of assets and the number of 
successful bids by such investors; and 
"(iv) a list of the properties sold to State housing 
finance authorities (as such term is defined in section 
1301 of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989), the individusd purchase 
prices of such properties, and an estimate of the pre-
mium paid by such authorities for such properties. 
"(C) SUBMISSION TO CONGRESS AND THE PRESIDENT.—The 
Corporation shall submit each annual report required 
under this subsection to the CJongress and the President as 
soon as practicable after the end of the calendar year for 
which such report is made but not later than June 30 of the 
year following such calendar year. 
"(5) ADDITIONAL REPORTS.— 
"(A) REPORTS REQUIRED.—In addition to the annual report 
required under paragraph (4), the Oversight Board and the 
(Corporation shall submit to (Dongress not later than April 
30 and October 31 of each calendar year, a semiannual 
report on the activities and efforts of the (Corporation, the 
Federal Deposit Insurance Corporation, and the Oversight 
Board 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. 
"(B) (DONTENTS OF REPORT.—Each semiannual report re-
quired under subparagraph (A) shall include the following 
information with respect to the (Corporation's assets and 
~
^ , ^ . 
liabilities and to the assets and liabilities of institutions 
described in subsection (bX3XA): 
103 STAT. 388 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(i) 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. 
"(ii) 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. 
"(iii) The number of employees of the Corporation, 
the Federal Deposit Insurance Corporation, and the 
Oversight Board at the beginning and end of the 
reporting period. 
"(iv) The total amounts expended on employee wages, 
salaries, and overhead, during such period which are 
attributable to— 
"(I) contracting with, supervising, or reviewing 
the performance of private contractors, or 
"(II) managing or disposing of such assets, 
"(v) A statement of the total amount expended on 
private contractors for the management of such assets, 
"(vi) 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 poli-
_^ 
cies and procedures adopted to ensure adequate com-
petition and fair and consistent treatment of qualified 
third parties seeking to provide services to the Corpora-
tion or the Federal Deposit Insurance Corporation. 
"(vii) The total book value and total proceeds from 
such assets disposed of during the reporting period. 
"(viii) Summary data on discounts from book value at 
which such assets were sold or otherwise disposed of 
during the reporting period. 
"(ix) A list of all of the areas that carried a distressed 
area designation during the reporting period (including 
a justification for removal of areas from or addition of 
areas to the list of distressed areas). 
"(x) An evaluation of market conditions in distressed 
areas and a description of any changes in conditions 
, 
during the reporting period. 
"(xi) Any change adopted by the Oversight Board in a 
minimum disposition price and the reasons for such 
change. 
"(xii) The valuation method or methods adopted by 
the Oversight Board or the Corporation to value assets 
and the reasons for selecting such methods. 
"(6) A P P E A R A N C E S BEFORE CONGRESSIONAL COMMITTEES.— 
"(A) SEMIANNUAL APPEARANCE REQUIRED.—Not later than 
30 days after submission of the semiannual reports required 
by paragraph (5), the Oversight Board shall appear before 
the Committee on Banking, Finance and Urban Affairs of 
the House of Representatives and the Committee on Bank-
ing, Housing, and Urban Affairs of the Senate to— 
Reports. 
"(i) report on the progress made during such period 
in resolving cases involving institutions described in 
subsection (bX3XA); 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 389 
"(ii) provide an estimate of the short-term and long-
term cost to the United States Government of obliga-
tions issued or incurred during such period; 
"(iii) report on the progress made during such period Reports, 
in selling assets of institutions described in subsection 
Ot>)(3)(A) and the impact such sales are having on the 
local markets in which such assets are located; 
"(iv) describe the costs incurred by the Corporation in 
issuing obligations, managing and selling assets ac-
quired by the Corporation; 
"(v) provide an estimate of the income of the Corpora-
tion from assets acquired by the Corporation; 
"(vi) provide an assessment of any potential source of 
additional funds for the Corporation; and 
"(vii) provide an estimate of the remaining exposure 
of the United States Government in connection with 
institutions described in subsection (bX3XA) which, in 
the Oversight Board's estimation, will require assist-
ance or liquidation after the end of such period. 
"(T) APPEARANCES CONCERNING START-UP OF CORPORATION.— 
"(A) APPEARANCE REQUIRED.—Before January 31, 1990, 
the Oversight Board and the Corporation shall appear 
before 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 for 
the purposes described in subparagraph (B). 
"(B) PURPOSES OF APPEARANCE.—In connection with the 
appearance of the Oversight Board and the Corporation 
required by subparagraph (A), the Oversight Board and the 
Corporation shall— 
"(i) describe the strategic plan established for the 
operations of the Corporation; 
"(ii) describe the policies and procedures established 
or proposed to be established for the Corporation, 
including specific measures taken to avoid political 
favoritism or undue influence with respect to the 
activities of the Corporation; 
"(iii) provide any regulation proposed to be pre-
scribed by the Corporation; and 
"(iv) provide the proposed case resolution schedule. 
"(1) POWER TO REMOVE; JURISDICTION.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
law, any civil action, suit, or proceeding to which the Corpora-
tion is a party shall be deemed to arise under the laws of the 
United States, and the United States district courts shall have 
original jurisdiction over such action, suit, or proceeding. 
(2) CORPORATION AS PARTY.—The Corporation shall be sub-
stituted as a party in any civil action, suit, or proceeding to 
which its predecessor in interest was a party with respect to 
institutions which are subject to the management agreement 
dated February 7, 1989, among the Federal Savings and Loan 
Insurance Corporation, the Federal Home Loan Bank Board 
and the Federal Deposit Insurance Corporation. 
"(3) REMOVAL AND REMAND.—The Corporation may, without 
bond or security, remove any such action, suit, or proceeding 
v 
from a State court to the United States District Court for the 
District of Columbia, or if the action, suit, or proceeding arises 
103 STAT. 390 
( 
PUBLIC LAW 101-73—AUG. 9, 1989 
out of the actions of the Corporation with respect to an institu-
tion for which a conservator or a receiver has been appointed, 
the United States district court for the district where the 
,*i. ^
^ , 
institution's principal business is located. The removal of any 
action, suit, or proceeding shall be instituted— 
i 
"(A) not later than 90 days after the date the Corporation 
is substituted as a party, or 
"(B) not later than 30 days after the date suit is filed 
against the Corporation, if such suit is filed after the date of 
enactment of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989. 
The Corporation may appeal any order of remand entered by a 
United States district court, 
"(m) INTERVENTION BY OVERSIGHT BOARD IN EXTRAORDINARY CIR-
CUMSTANCES.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
law, the Oversight Board has the ultimate authority to super-
vise the Corporation and is ultimately accountable for the 
administration of the Corporation. The Oversight Board is au-
thorized to remove the Federal Deposit Insurance Corporation 
(or any replacement) from its position as exclusive manager of 
the Corporation and from all of its responsibilities and authori-
ties to act for the Corporation, in any case where the Oversight 
Board determines that any of the following extraordinary 
events has occurred: 
"(A) There has been a material failure of the Corporation 
to adhere to the strategic plan developed pursuant to 
subsection (aX14). 
"(B) There has been a material failure of the (Corporation 
to meet its financial goals, including over-commitment of 
financial resources. 
"(C) There is evidence of fraud, abuse, gross mismanage-
ment in the C!orporation's programs or activities, or willful 
violation of this Act or the (Dorporation's policies or proce-
] 
dures. 
"(D) There is a continuing failure to obtain consideration 
at least nearly equivalent to the market value of the assets 
sold or otherwise transferred by the (Corporation. 
/ 
"(2) PROCEDURE.—Any decisions made or action taken by the 
Oversight Board under parEigraph (1) shall be made or taken at 
an open meeting of the Oversight Board and the Oversight 
Board shall document its reasons for such actions or decisions. 
"(3) NOTIFICATION TO CONGRESS.—Within 30 days of the meet-
ing of the Oversight Board described in paragraph (2) and not 
. ft later than 90 days before the removal of the Federal Deposit 
Insurance Clorporation pursueint to paragraph (1), the Oversight 
Board shall notify Congress of any decision made or action 
taken pursuant to such paragraph and provide written docu-
mentation of its decision, including any supporting documenta-
tion relied on by the Oversight Board. 
"(n) 
OPERATION OF CORPORATION AFTER EXERCISE OF POWERS 
UNDER SUBSECTION (m).—If the Oversight Board exercises authority 
under subsection (m), the Oversight Board shall— 
"(1) develop an operations and management plan for the 
(Corporation, including a detailed description of the emplojonent 
and retention procedures for the (Corporation and the classifica-
tion standards for employment positions for the (Corporation 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 391 
and the compensation rates and benefits established for each 
class of positions, all of which shall be subject to the provisions 
of subsection (aX5); 
"(2) select a Board of Directors and a chief executive officer 
for the Corporation; and 
"(3) provide to Congress, not later than 60 days before the 
removal of the Federal Deposit Insurance Corporation, the oper-
ations and management plan developed pursuant to paragraph 
(1) and the identity of the Board of Directors and the chief 
executive officer selected pursuant to paragraph (2). 
*(o) TERMINATION.— 
"(1) IN GENERAL.—The Corporation shall terminate not later 
than December 31, 1996. If at the time of its termination, the 
Corporation is acting as a conservator or receiver, the Federed 
Deposit Insurance Corporation shall succeed the Corporation as 
conservator or receiver. 
"(2) CASE RESOLUTIONS TRANSFERRED.—Simultaneous with the 
termination of the Corporation as provided in paragraph (1), all 
assets and liabilities of the Corporation shall be transferred to 
the FSLIC Resolution Fund. Thereafter the FSLIC Resolution 
Fund shall transfer any net proceeds from the sale of assets to 
the Resolution Funding Corporation, 
'(p) CoNFucT OF INTEREST.— 
"(1) IN GENERAL.— 
"(A) The Oversight Board and the Corporation shall each 
be an 'agency' for purposes of title 18, United States Code. 
Any individual who, pursuant to a contract or any other 
arrangement, performs functions or activities of the Over-
sight Board or the Corporation, under the direct super-
vision of an officer or employee of the Oversight Board or 
the Corporation, shall be deemed to be an employee of the 
Oversight Board or the Corporation for the purposes of title 
j ^ 
18, United States Code and this Act. 
"(B) Any individual who, pursuant to a contract or any 
other agreement, acts for or on behalf of the Corporation 
shall be deemed to be a public official for the purposes of 
section 201 of title 18, United States Code. 
"(2) EsTABUSHMENT OF RULES.—The Oversight Board and the Regulations. 
Corporation shall, not later than 180 days after the date of 
enactment of this subsection, promulgate rules and regulations 
governing conflict of interest, ethical responsibilities, and post-
employment restrictions applicable to members, officers, and 
employees of the Oversight Board and the Corporation that 
shall be no less stringent than those applicable to the Federal 
Deposit Insurance Corporation. 
(3) USE OF CONFIDENTIAL INFORMATION.—The Oversight 
Regulations. 
Board and the Corporation shall, not later than 180 days after 
the date of enactment of this subsection, promulgate rules and 
regulations applicable to independent contractors governing 
conflicts of interest, ethical responsibilities, and the use of 
confidential information consistent with the goals and purposes 
of titles 18 and 41, United States Code. 
"(4) POST EMPLOYMENT.—The chief executive officer of the 
Corporation shall be prohibited for a period of 1 year after 
leaving the Corporation from holding giny office, position, or 
employment with, or receiving remuneration from, a company 
(other than the Corporation) which, during the time the chief 
• 
r 
• 
• 
: 
• • • • • . ; 
• 
-
103 STAT. 392 
PUBLIC LAW 101-73—AUG. 9, 1989 
( 
executive was employed by the Corporation, participated in any 
case resolution or contract with the Corporation for which such 
person was either responsible or in which such person was 
personally and substantially involved except that the chief 
executive officer may hold any office, position, or emplojonent 
so long as the chief executive officer does not, during the 1-year 
period, provide advice with respect to, participate in decisions 
relating to, or otherwise provide assistance to such entity on the 
enumerated matters or receive remuneration with respect 
thereto from such company. 
"(5) 
OTHER 
AGENCY EMPLOYEES.—Directors, officers, 
and 
employees of the Oversight Board and the Corporation who are 
also subject to the ethical rules of another agency or Govern-
ment Corporation shall file with the Corporation a copy of any 
financial disclosure statement required by such other agency or 
corporation. 
"(6) DISAPPROVAL OF CONTRACTORS.— 
Regulations. 
"(A) IN GENERAL.—The Oversight Board shall prescribe 
regulations establishing procedures for ensuring that any 
individual who is performing, directly or indirectly, any 
/ 
function or service on behalf of the Corporation meets 
minimum standards of competence, experience, integrity, 
and fitness. 
"(B) PROHIBITION FROM SERVICE ON BEHALF OF CORPORA-
TION.—The procedures established under subparagraph (A) 
shall provide that the Corporation shall prohibit any person 
' 
who does not meet the minimum standards of competence, 
experience, integrity, and fitness from— 
"(i) entering into any contract with the Corporation; 
or 
"(ii) being employed by the Corporation or any 
person performing any service for or on behalf of the 
Corporation. 
"(C) INFORMATION REQUIRED TO BE SUBMITTED.—The proce-
dures established under subparagraph (A) shall require 
that any offer submitted to the Corporation by any person 
under this section and any employment application submit-
ted to the Corporation by any person shall include— 
"(i) a list and description of any instance during the 
preceding 5 years in which the person or company 
under such person's control defaulted on a material 
obligation to an insured depository institution; and 
"(ii) such other information as the Board may pre-
,- s 
scribe by regulation. 
"(D) SUBSEQUENT SUBMISSIONS.—No offer submitted to the 
Corporation may be accepted unless the offeror agrees that 
no person will be employed, directly or indirectly, by the 
offeror under any contract with the Corporation unless all 
applicable information described in subparagraph (C) with 
respect to any such person is submitted to the Corporation 
and the Corporation does not disapprove of the direct or 
indirect emplojrment of such person. Any decision made by 
,, i 
the Corporation pursuant to this paragraph shall be in ite 
sole discretion and shall not be subject to review. 
"(E) PROHIBITION REQUIRED IN CERTAIN CASES.—The stand-
ards established under subparagraph (A) shall require the 
Corporation to prohibit any person who has— 
• • 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 393 
"(i) been convicted of any felony, 
"(ii) been removed from, or prohibited from partici-
pating in the affairs of, any insured depository institu-
tion pursuant to any final enforcement action by any 
appropriate Federal banking agency, 
"(iii) demonstrated a pattern or practice of defalca-
tion regarding obligations to insure depository institu-
, 
. 
tions, or 
"(iv) caused a substantial loss to Federal deposit 
insurance funds, 
from service on behalf of the Corporation. 
"(7) ABROGATION OF CONTRACTS.—The Oversight Board or the 
Corporation may rescind any contract with a person who— 
"(A) fails to disclose a material fact to the Oversight 
Board or the Corporation, 
"(B) would be prohibited under paragraph (6) from 
providing services to, receiving fees from, or contracting 
with the Corporation or the Oversight Board, or 
"(C) has been subject to a final enforcement action by any 
Federal bank regulatory agency. 
"(8) PRIORITY OF OVERSIGHT BOARD RULES.—To the extent that 
the rules established under this subsection conflict with rules of 
other Eigencies or Government corporations, officers, directors, 
employees, and independent contractors of the (Corporation or 
the Oversight Board, who are also subject to the conflict of 
interest or ethical rules of another agency or Government 
corporation, shall be governed by the rules and regulations 
established by the Oversight Board under this subsection when 
acting for or on behalf of the Corporation. 
"(9) DEFINITIONS.—For the purposes of this subsection— 
"(A) The term 'company' has the same meaning as in 
section 2(b) of the Bank Holding Company Act of 1956. 
"(B) The term 'control' has the same meaning given such 
term under regulations promulgated by the Federal Home 
Loan Bank Board with respect to savings and loan holding 
companies as in effect on the day before the date of enact-
ment of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989. 
"(C) The term '(IJorporation' includes the Resolution Trust 
Corporation, the national advisory board, and the regional 
advisory boards.", 
(b) INSPECTOR GENERAL OF THE CORPORATION.— 
(1) EsTABUSHMENT.—Scction 11 of the Inspector General Act 
of 1978 (5 U.S.C. App.) is amended— 
(A) in paragraph (1), by inserting "the Oversight Board 
and the Board of Directors of the Resolution Trust Corpora-
tion" before "; as the case may be,"; and 
(B) in paragraph (2), by inserting "the Resolution Trust 
CJorporation," after "the Railroad Retirement Board,". 
(2) POSITION AT LEVEL IV OF THE EXECUTIVE SCHEDULE.— 
(A) IN GENERAL.—Section 5315 of title 5, United States 
(Dode, is amended by adding at the end thereof: 
"Inspector General, Resolution Trust Corporation.". 
(B) APPROPRIATION.—There is hereby authorized to be 
appropriated such sums as may be necessary for the oper-
103 STAT. 394 
PUBLIC LAW 101-73—AUG. 9, 1989 
42 use 1487. 
Reports. 
12 use 1441a 
note. 
ation of the Office of Inspector General established by the 
amendment made by paragraph (1) of this subsection. 
(c) CONFORMING AMENDMENTS TO TITLE 5.—Section 5313 of title 5, 
United States Code, is amended by adding at the end thereof: 
"Independent Members, Oversight Board, Resolution Trust 
Corporation.". 
(d) 
MIXED-OWNERSHIP 
GOVERNMENT 
CORPORATION.—Section 
9101(2) of title 31, United States Code, is amended by adding at the 
end thereof: 
"(L) the Resolution Trust Corporation.". 
(e) CONFORMING AMENDMENTS TO URBAN HOMESTEADING PROGRAM 
AND HOUSING ACT OF 1949.— 
(1) URBAN HOMESTEADING.—Section 810(g) of the Housing and 
Community Development Act of 1974 (12 U.S.C. 1706eS)) is 
amended by adding at the end the following new paragraph: 
"(3) The Secretary is authorized to reimburse the Resolution Trust 
Corporation, in an amount to be agreed upon by the Secretary and 
the Corporation, for property that the Corporation conveys to a unit 
of general local government, State, or agency for use in connection 
with an urban homesteading program approved by the Secretary.". 
(2) HOUSING ACT OF 1949.—Section 517 of the Housing Act of 
1949 (42 U.S.C. 1987) is amended by adding after subsection (m) 
the following new subsection: 
"(n) The Secretary may guarantee and service loans made for the 
purchase of eligible residential properties under section 21A(c) of 
the Federal Home Loan Bank Act in accordance with subsection (d) 
of this section and the last sentence of section 521(a)(lXA).". 
(f) GAO EXAMINATION OF CERTAIN F S L I C RESOLUTIONS.—Notwith-
standing any other provision of this Act, the Comptroller General of 
the United States shall examine and monitor all insolvent institu-
tion cases resolved by the Federal Savings and Loan Insurance 
Corporation from January 1, 1988, through the date of the enact-
ment of this Act, and not later than April 30, 1990, shall report to 
Congress with an estimate of the costs of the agreements entered 
into by the Corporation pursuant to such resolutions. Not less than 
annually thereafter, the last report being due on April 30, 1992, the 
Comptroller General shall provide Congress with revisions to such 
estimates, to take into account any new information that he obtains 
with regard to such agreements. 
-
Subtitle B—Resolution Funding Corporation 
SEC. 511. RESOLUTION FUNDING CORPORATION ESTABLISHED. 
(a) IN GENERAL.—The Federal Home Loan Bank Act (12 U.S.C. 
1421 et seq.) is amended by inserting after section 21A the following 
new section: 
12 use 1441b. 
"SEC. 21B. RESOLUTION FUNDING CORPORATION ESTABLISHED. 
"(a) PURPOSE.—The purpose of the Resolution Funding Corpora-
tion is to provide funds to the Resolution Trust Corporation to 
enable the Resolution Trust Corporation to carry out the provisions 
of this Act. 
"(b) ESTABLISHMENT.—There is established a corporation to be 
known as the Resolution Funding Corporation. 
"(c) MANAGEMENT OF FUNDING CORPORATION.— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 395 
"(1) DIRECTORATE.—The Funding Corporation shall be under 
the management of a Directorate composed of 3 members £is 
follows: 
"(A) The director of the Office of Finance of the Federal 
Home Loan Banks (or the head of any successor office). 
"(B) 2 members selected by the Oversight Board from 
among the presidents of the Federal Home Loan Banks. 
"(2) TERMS.—Of the 2 members appointed under paragraph 
(IXB), 1 shall be appointed for an initial term of 2 years and 1 
shall be appointed for an initial term of 3 years. Thereafter, 
such members shall be appointed for a term of 3 years. 
"(3) VACANCY.—If any member leaves the office in which such 
member was serving when appointed to the Directorate— 
"(A) such member's service on the Directorate shall 
terminate on the date such member leaves such office; and 
"(B) the successor to the office of such member shall serve 
the remainder of such member's term. 
"(4) EQUAL REPRESENTATION OF BANKS.—No president of 
a 
Federal Home Loan Bank may be appointed to serve an addi-
tional term on the Directorate until such time as the presidents 
of each of the other Federal Home Loan Banks have served as 
many terms £is the president of such bank. 
"(5) CHAIRPERSON.—The Oversight Board shall select the 
chairperson of the Directorate from among the 3 members of 
the Directorate. 
"(6) STAFF.— 
"(A) No PAID EMPLOYEES.—The Funding Corporation shall 
have no paid employees. 
"(B) POWERS.—The Directorate may, with the approval of 
the Federal Housing Finance Board authorize the officers, 
employees, or agents of the Federal Home Loan Banks to 
act for and on behalf of the Funding Corporation in such 
manner as may be necessary to carry out the functions of 
the Funding Corporation. 
"(7) ADMINISTRATIVE EXPENSES.— 
"(A) IN GENERAL.—All administrative expenses of the 
Funding Corporation, including custodian fees, shall be 
paid by the Federal Home Loan Banks. 
"(B) PRO RATA DISTRIBUTION.—The amount each Federal 
Home Loan Bank shall pay under subparagraph (A) shall 
be determined by the Oversight Board by multiplying the 
total administrative expenses for any period by the percent-
age arrived at by dividing— 
"(i) the aggregate amount the Oversight Board re-
quired such b£ink to invest in the Funding Corporation 
(as of the time of such determination) under para-
graphs (4) and (5) of subsection (e) (computed without 
regard to paragraphs (3) or (6) of such subsection); by 
(ii) the aggregate amount the Oversight Board re-
quired all Federal Home Loan Banks to invest (as of 
the time of such determination) under such para-
graphs. 
"(8) REGULATION BY OVERSIGHT BOARD.—The Directorate of the 
Funding Corporation shall be subject to such regulations, 
orders, and directions as the Oversight Board may prescribe. 
"(9) NO COMPENSATION FROM FUNDING CORPORATION.—Mem-
bers of the Directorate of the Funding Corporation shall receive 
103 STAT. 396 
PUBLIC LAW 101-73—AUG. 9, 1989 
no pay, allowance, or benefit from the Funding Corporation for 
serving on the Directorate. 
"(d) POWERS OF THE FUNDING CORPORATION.—The Funding Cor-
poration shall have only the powers described in paragraphs (1) 
through (9), subject to the other provisions of this section and such 
regulations, orders, and directions as the Oversight Board may 
prescribe: 
"(1) ISSUE STOCK.—To issue nonvoting capital stock to the 
Federal Home Loan Banks. 
"(2) PURCHASE CAPITAL STOCK; TRANSFER AMOUNTS.—To pur-
chase capital certificates issued by the Resolution Trust Cor-
poration under section 21A, and to transfer amounts to the 
Resolution Trust Corporation pursuant to subsection (eX8) of 
this section. 
"(3) ISSUE OBLIGATIONS.—To issue debentures, bonds, or other 
f 
obligations, and to borrow, to give security for any amount 
borrowed, and to pay interest on (and any redemption premium 
with respect to) any such obligation or amount. 
"(4) IMPOSE ASSESSMENTS.—To impose assessments in accord-
ance with subsection (eX7). 
"(5) CORPORATE SEAL.—To adopt, alter, and use a corporate 
seal. 
"(6) SUCCESSION.—To have succession until dissolved. 
"(7) (CONTRACTS.—To enter into contracts. 
"(8) AUTHORITY TO SUE.—To sue and be sued in its corporate 
capacity, and to complain and defend in any action brought by 
or against the Funding Corporation in any State or Federal 
court of competent jurisdiction. 
"(9) INCIDENTAL POWERS.—To exercise such incidental powers 
not inconsistent with the provisions of this section and section 
21A as are necessary and appropriate to carry out the provi-
sions of this section. 
"(e) CAPITAUZATION OF FUNDING CJORPORATION, ETC.— 
"(1) IN GENERAL.— 
"(A) AMOUNT REQUIRED.—The Oversight Board shall 
9 
ensure that the aggregate of the amounts obtained under 
this subsection shall be sufficient so that— 
"(i) the Funding (]!orporation may transfer 
the 
amounts required under paragraph (8); and 
"(ii) the total of the face amounts (the amount of 
principal payable at maturity) of noninterest bearing 
instruments in the Funding Corporation Principal 
Fund are equal to the aggregate amount of principal on 
the obligations of the Funding Corporation. 
"(B) 
PURCHASES OF STOCK BY FEDERAL HOME LOAN 
BANKS.—Each Federal Home Loan Bank shall purchase 
stock in the Funding (Dorporation at times and in amounts 
prescribed by the Oversight Board. 
"(2) PAR VALUE; TRANSFERABILITY.—Each share of stock issued 
by the Funding Corporation to a Federal Home Loan Bank shall 
have a par value in an amount determined by the Oversight 
Board and shall be transferable at not less than par value only 
among the Federal Home Loan Banks in the manner and to the 
extent prescribed by the Oversight Board. 
"(3) MAXIMUM INVESTMENT AMOUNT UMITATION FOR EACH FED-
ERAL HOME LOAN BANK.—The Cumulative £imount of funds 
invested in nonvoting capital stock of the Funding Corporation 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 397 
by each Federal Home Loan Bank under paragraph (1) shall not 
at any time exceed the sum of the amounts calculated under 
subparagraphs (A) and (B), as adjusted in subparagraph (C), as 
follows: 
"(A) RESERVES AND UNDIVIDED PROFITS ON DECEMBER 3I, 
1988.—The sum on December 31,1988, of— 
"(i) the reserves maintained by such Bank pursuant 
to the reserve requirement contained in the first 2 
sentences of section 16 (as in effect on December 31, 
1988); and 
"(ii) the undivided profits of such Bank, minus the 
amounts invested in the capital stock of the Financing 
Corporation pursuant to section 21. 
"(B) SUBSEQUENT ADDITIONS TO RESERVES AND UNDIVIDED 
PROFITS.—The amount, calculated until £he date on which 
the Funding Corporation Principal Fund is fully funded, 
equal t o ^ 
"(i) the sum of^ 
"(I) the amounts added to reserves by such Bank 
after December 31, 1988, pursuant to the reserve 
requirement contained in the first 2 sentences of 
^ 
section 16 (as in effect on December 31, 1988); and 
"(II) the quarterly additions to undivided profits 
of the Bank after December 31,1988; minus 
"(ii) the amounts invested by such Bank in the cap-
ital stock of the Financing (Corporation after Decem-
ber 31, 1988, pursuant to the requirement contained in 
section 21. 
"(C) ANNUAL ADJUSTMENT.—The amounts in subpara-
graph (B) shall be adjusted as follows: 
"(i) INCREASE IN LIMIT.—If the aggregate amount for 
all Federal Home Loan Banks determined under 
subparagraph (BXi) is less than $300,000,000 per year, 
the limit for each Bank shall be increased by an 
£imount determined by the Oversight Board by mul-
tipljdng the aggregate deficiency by the percentage 
applicable to such Bank arrived at in the manner 
described in paragraph (5). 
"(ii) DECREASE IN UMIT.—If the aggregate amount for 
, 
all Federal Home Loan Banks determined under 
subparagraph (BXi) is more than $300,000,000 per year, 
the limit for each Bank shall be decreased by an 
amount determined by the Oversight Board by mul-
tiplying the aggregate excess by the percentage 
applicable to such Bank arrived at in the manner 
described in paragraph (5). 
"(4) PRO RATA DISTRIBUTION OF FIRST $1,000,000,000 INVESTED 
IN FUNDING CORPORATION BY FEDERAL HOME LOAN BANKS.—OF 
the first $1,000,000,000 of the aggregate that the Federal Hous-
ing Finance Board (pursuant to section 21) or the Oversight 
Board (under this section) may require the Federal Home Loan 
Banks collectively to invest in the capital stock of the Financing 
(Corporation or invest in the capital stock of the Funding (Cor-
poration, respectively, the amount which each Federal Home 
Loan Bank (or any successor to the Bank) shall invest shall be 
^ 
determined by the Federal Housing Finance Board or the Over-
sight Board (as the case may be) by multiplying the aggregate 
103 STAT. 398 
PUBLIC LAW 101-73—AUG. 9, 1989 
amount of such investment by all Banks by the percentage 
appearing in the following table for each such Bank: 
Bank 
Percentage 
Federal Home Loan Bank of Boston 
1.8629 
Federal Home Loan Bank of New York 
9.1006 
Federal Home Loan Bank of Pittsburgh 
4.2702 
Federal Home Loan Bank of Atlanta 
14.4007 
Federal Home Loan Bank of Cincinnati 
8.2653 
Federal Home Loan Bank of Indianapolis 
5.2863 
Federal Home Loan Bank of Chicago 
9.6886 
Federal Home Loan Bank of Des Moines 
6.9301 
Federal Home Loan Bank of Dallas 
8.8181 
Federal Home Loan Bank of Topeka 
5.2706 
Federal Home Loan Bank of San Francisco 
19.9644 
Federal Home Loan Bemk of Seattle 
6.1422 
\ 
"(5) 
PRO RATA DISTRIBUTION OP AMOUNTS REQUIRED TO BE 
INVESTED IN EXCESS OF $1,000,000,000.—Of any amount which the 
Oversight Board may require the Federal Home Loan Banks to 
invest in capital stock of the Funding Corporation under this 
_ 
subsection in excess of the $1,000,000,000 amount referred to in 
paragraph (4), the amount which each Federal Home Loan 
Bank (or any successor to such Bank) shall invest shall be 
determined by the Oversight Board by multipl3dng the excess 
amount by the percentage arrived at by dividing— 
"(A) the sum of the total assets (as of the most recent 
December 31) held by all Savings Association Insurance 
Fund members which are members of such Bank; by 
"(B) the sum of the total assets (as of such date) held by 
all Savings Association Insurance Fund members which are 
members of a Federal Home Loan Bank. 
"(6) 
SPECIAL PROVISIONS RELATING TO MAXIMUM AMOUNT 
UMITATIONS.— 
( 
"(A) IN GENERAL.—If the amount of any Federal Home 
Loan Bank's allocation under paragraph (5) exceeds the 
maximum amount applicable with respect to such Bank (in 
this paragraph referred to as a 'deficient Bank') under 
paragraph (3) at the time of such determination (in this 
paragraph referred to as the 'excess amount')— 
"(i) the Oversight Board shall require each Federal 
Home Loan Bank that is not allocated an amount 
under paragraph (5) that exceeds its maximum under 
paragraph (3) (in this paragraph referred to as a 
remaining Bank') to purchase stock in the Funding 
A 
^ 
Corporation (in addition to the amount determined 
.,1 
under paragraph (5) for such remaining Bank and sub-
ject to the maximum amount applicable with respect to 
such remaining Bank under paragraph (3) at the time 
of such determination) on behalf of the deficient Bank 
the amount determined under subparagraph (B); 
"(ii) the Oversight Board shall require the deficient 
Bank to subsequently reimburse the remaining Banks 
out of its net earnings (or reimbursements received 
from other Banks) in the manner described in subpara-
graphs (C) and (D); and 
"(iii) the requirements contained in subparagraph (D) 
relating to the use of net earnings shall apply to the 
deficient Bank until such Bank has reimbursed the 
remaining Banks for all of the excess amount. 
^^^ 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 399 
"(B) ALLOCATION OF EXCESS AMOUNT AMONG REMAINING 
FEDERAL HOME LOAN BANKS.— 
"(i) IN GENERAL.—The amount of stock each remain-
ing Federal Home Loan Bank shall be required to 
purchase under subparagraph (AXi) is the amount 
determined by the Oversight Board by multiplying the 
excess amount by the percentage arrived at by divid-
ing— 
(I) the cumulative amount of stock in the Fund-
ing Corporation purchased under this subsection 
by such remaining Bank at the time of such deter-
mination; by 
"(II) the aggregate of the cumulative amounts 
invested under this subsection by all remaining 
Banks at such time, 
"(ii) REALLOCATION.—If the allocation under this 
subparagraph results in a remaining Bank exceeding 
its maximum amount under paragraph (3), such excess 
amount shall be reallocated to the other remaining 
Bank in accordance with this subparagraph. 
"(C) REIMBURSEMENT PROCEDURE.— 
"(i) IN GENERAL.—A Bank on whose behalf stock is 
purchased under subparagraph (AXi) shall make pay-
ments annually from amounts, if any, in its reserve 
account (as described in subparagraph (D)) to each 
Bank that made pa3mients on its behalf until a full 
reimbursement has been completed. A full reimburse-
ment shall require repayment of the excess amounts 
invested by other Banks plus interest which shall 
accrue at a rate equal to the annual average cost of 
funds in the most recent year to all Federal Home Loan 
Banks and which shall begin to accrue 2 years after the 
investments under subparagraph (AXi) are made. 
"(ii) 
DETERMINATION OF AMOUNTS.—The Oversight 
Board shall annually determine the dollar amounts of 
such reimbursemente by distributing the amount avail-
able for such reimbursements (at the time of such 
determination) from the reimbursing Bank to the 
Banks that made purchases on its behalf according to 
' 
the shares of the reimbursing Bank's excess amount 
that the other Banks invested. 
"(D) 
TRANSFER TO ACCOUNT FOR REIMBURSEMENTS RE-
QUIRED.— 
"(i) IN GENERAL.—Of the net earnings for any year of 
a Bank on whose behalf a purchase is made under 
subparagraph (AXi) and any reimbursements received 
from other Banks, the amount necessary to make the 
reimbursements required under subparagraph (AXii) 
shall be placed in a reserve account (established in the 
' 
manner prescribed by the Oversight Board), which 
shall be available only for such reimbursements. 
"(ii) LIMITATION.—The total amount placed in such 
reserve account in any year by any Bank shall not 
exceed an amount equal to 20 percent of the net earn-
ings of such Bank for such year. 
"(7) ADDITIONAL SOURCES.—If each Federal Home Loan Bank 
has exhausted the amount applicable with respect to the Bank 
103 STAT. 400 
PUBLIC LAW 101-73—AUG. 9, 1989 
under paragraph (3) after purchases under paragraphs (4), (5), 
and (6), the amounts necessary to provide additional funding for 
the Funding Corporation Principal Fund shall be obtained from 
the following sources: 
"(A) ASSESSMENTS.—The Funding Corporation, with the 
approval of the Board of Directors of the Federal Deposit 
Insurance Corporation, shall assess £igainst each Savings 
Association Insurance Fund member an assessment (in the 
same manner as assessments are assessed against such 
members by the Federal Deposit Insurance Corporation 
pursuant to section 7 of the Federal Deposit Insurance Act) 
except that— 
"(i) the maximum amount of the aggregate amount 
assessed shall be the amount of additional funds nec-
essary to fund the Funding Corporation Principal 
' 
Fund; 
"(ii) the sum of— 
"(I) thie amount assessed under this subpara-
• ''" 
graph; and 
"(II) the amount assessed by the Financing Cor-
poration under section 21; 
shall not exceed the amount authorized to be assessed 
against Savings Association Insurance Fund members 
pursuant to section 7 of the Federal Deposit Insurance 
; > ^ 
Act; 
' 
"(iii) the Financing Corporation shall have first prior-
ity to make the assessment; and 
"(iv) the amount of the applicable assessment deter-
mined under such section 7 shall be reduced by the sum 
described in clause (ii) of this subparagraph. 
"(B) RECEIVERSHIP PROCEEDS.—To the extent the amounts 
available pursuant to subparagraph (A) are insufficient to 
fund the Funding Corporation Principal Fund, the Federal 
Deposit Insurance Corporation shall transfer amounts to 
the Funding Corporation from the liquidating dividends 
and payments made on claims received by the FSLIC Reso-
\ 
lution Fund from receiverships. 
"(8) TRANSFER TO RTC.—The Funding Corporation shall trans-
fer to the Resolution Trust Corporation $1,200,000,000 in fiscal 
year 1989. 
"(0 OBLIGATIONS OF FUNDING CORPORATION.— 
"(1) ISSUANCE.—The Funding Corporation may issue bonds, 
notes, debentures, and similar obligations in an aggregate 
amount not to exceed $30,000,000,000. No obligation may be 
issued under this paragraph unless, at the time of issuance, the 
face amounts (the amount of principal payable at maturity) of 
noninterest bearing instruments in the Funding Corporation 
Principal Fund are equal to the aggregate amount of principal 
on the obligations of the Funding Corporation that will be 
outstanding following such issuance. 
"(2) INTEREST PAYMENTS.—The Funding Corporation shall pay 
the interest due on such obligations from funds obtained for 
such interest payments from the following sources: 
"(A) EARNINGS ON CERTAIN ASSETS.—Earnings on assets of 
the Funding Corporation which are not invested in the 
Funding Corporation Principal Fund shall be used for in-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 401 
terest paymentB on outstanding debt of the Funding Cor-
poration. 
"(B) PROCEEDS FROM RESOLUTION TRUST CORPORATION.—To 
the extent the amounts available pursuant to subparagraph 
(A) are insufficient to cover the amount of interest pay-
ments, the Resolution Trust Corporation shall pay to the 
Funding Corporation— 
"(i) the liquidating dividends and payments made on 
claims received by the Resolution Trust Corporation 
from receiverships to the extent such proceeds are 
determined by the Oversight Board to be in excess of 
funds presently necessary for resolution costs; and 
"(ii) any proceeds from warrants and participations 
acquired by the Resolution Trust Corporation. 
"(C) PAYMENTS BY FEDERAL HOME LOAN BANKS.—To the 
extent the amounts available pursuant to subparagraphs 
(A) and (B) are insufficient to cover the amount of interest 
pajonents, the Federal Home Loan Banks shall pay to the 
Funding Corporation each calendar year the giggregate 
amount of $300,000,000 minus the amounts required in such 
year for Financing Corporation principal payments (pursu-
ant to section 21) and the amounts required in such year by 
the Funding Corporation pursuant to subsection (e). Each 
Bank's individual share of any amounts required to be paid 
by the Banks under this subparagraph shall be determined 
as follows: 
"(i) AMOUNTS UP TO 20 PERCENT OF NET EARNINGS.— 
Each Federal Home Loan Bank shall pay an equal 
percentage of its net earnings for the year for which 
such amount is required to be paid, up to a maximum 
of 20 percent of net earnings. 
"(ii) AMOUNTS IN EXCESS OF 20 PERCENT OF NET EARN-
INGS.—If the aggregate amount required to be paid by 
the Federal Home Loan Banks under this subpara-
graph for any year exceeds 20 percent of the aggregate 
net earnings of the Banks for such year, each Bank 
shall pay 20 percent of its net earnings for such year as 
provided in clause (i), and each Bank s individual share 
of the excess of the required amount over 20 percent of 
the aggregate net earnings of the Banks for such year 
shall be determined by dividing— 
"(I) the average month-end level in the prior 
year of advances outstanding by such Bank to 
Savings Associations Insurance Fund members; by 
"(II) the average month-end level in the prior 
year of advances outstanding by all such Banks to 
Savings Associations Insurance Fund members. 
"(D) PROCEEDS FROM SALE OF ASSETS.—To the extent the 
amounts available pursuant to subparagraphs (A), (B), and 
(C) are insufficient to cover the amount of interest pay-
ments, the FSLIC Resolution Fund shall transfer to the 
Funding Corporation any net proceeds from the sale of 
gissets received from the Resolution Trust Ck>rporation, 
which shall be used by the Funding Corporation to pay such 
interest. 
"(E) TREASURY BACKUP.— 
103 STAT. 402 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(i) IN GENERAL.—To the extent the amounts avail-
able pursuant to subparagraphs (A), (B), (C), and (D) are 
insufficient to cover the amount of interest payments, 
the Secretary of the Treasury shall pay to the Funding 
Corporation the additional amount due, which shall be 
used by the Funding Corporation to pay such interest, 
"(ii) LIABILITY OF FUNDING CORPORATION.—In each 
instance where the Secretary is required to make a 
pa3anent under this subparagraph to the Funding Cor-
poration, the amount of the payment shall become a 
liability of the Funding Corporation to be repaid to the 
Secretary upon dissolution of the Funding Corporation 
(to the extent the Funding Corporation may have any 
remaining assets), 
"(iii) APPROPRIATION OF FUNDS.—There are hereby 
, 
appropriated to the Secretary, for fiscal year 1989 and 
each fiscal year thereafter, such sums as may be nec-
essary to carry out clause (i). 
"(3) PRINCIPAL PAYMENTS.—On maturity of an obligation 
issued under this subsection, the obligation shall be repaid by 
the Funding Corporation from the liquidation of noninterest 
bearing instruments held in the Funding Corporation Principal 
Fund. 
"(4) PROCEEDS TO BE TRANSFERRED TO RESOLUTION TRUST COR-
PORATION.—Subject to terms and conditions approved by the 
Oversight Board, the proceeds (less any discount, plus any 
premium, net of issuance costs) of any obligation issued by the 
Funding Corporation shall be used to— 
"(A) purchase the capital certificates issued by the Reso-
lution Trust Corporation under section 21A; or 
"(B) refund any previously issued obligation the proceeds 
of which were transferred in the manner described in 
subparagraph (A). 
"(5) INVESTMENT OF UNITED STATES FUNDS IN OBUGATIONS.— 
Obligations issued under this section by the Funding Corpora-
tion, at the direction of the Oversight Board shall be lawful 
investments, and may be accepted as security, for all fiduciary, 
trust, and public funds the investment or deposit of which shall 
be under the authority or control of the United States or any 
officer of the United States. 
"(6) MARKET FOR OBUGATIONS.—All persons having the power 
to invest in, sell, underwrite, purchase for their own accounts, 
accept as security, or otherwise deal in obligations of the Fed-
eral Home Loan Banks shall also have the power to do so with 
respect to obligations of the Funding Corporation. 
(7) TAX EXEMPT STATUS.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), obligations of the Funding Corporation shall be exempt 
from ta^ both as to principal and interest to the same 
extent as any obligation of a Federal Home Loan Bank is 
exempt from tax under section 13 of this Act. 
"(B) EXCEPTION.—The Funding Corporation, like the Fed-
eral Home Loan Banks, shall be treated as an agency of the 
United States for purposes of the first sentence of section 
3124(b) of title 31, United States Code (relating to deter-
mination of tax status of interest on obligations). 
"(8) OBLIGATIONS NOT EXEMPT SECURITIES.— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 403 
"(A) IN GENERAL.—For purposes of the laws administered 
by the Securities and Exchange Commission, obUgations of 
the Funding Corporation— 
"(i) shall not be considered to be securities issued or 
guaranteed by a person controlled or supervised by, or 
acting £is an instrumentality of, the Government of the 
United States; and 
"(ii) shall not be considered to be 'exempted securi-
ties' within the meaning of section 3(a)(12)(A)(i) of the 
Securities Exchange Act of 1934, except that such 
- H 
^ 
obligations shall be considered to be exempted securi-
ties for purposes of section 15 of such Act. 
"(B) 
AUTHORITY 
OF 
COMMISSION.—Notwithstanding 
subparagraph (A), the Securities and Exchange Commission 
may, by rule or order, consistent with the public interest 
and the protection of investors, exempt securities issued by 
the Funding Corporation from the registration require-
ments of the Securities Act of 1933, subject to such terms 
and conditions as the Commission may prescribe. 
"(9) MINORITY PARTICIPATION IN PUBLIC OR NEGOTIATED OFFER-
INGS.—The Oversight Board and the Directorate shall ensure 
that minority owned or controlled commercial banks, invest-
ment banking firms, underwriters, and bond counsels through-
out the United States have an opportunity to participate to a 
significant degree in any public or negotiated offering of obliga-
tions issued under this section. 
"(10) N o FULL FAITH A N D CREDIT OF THE UNITED STATES.— 
Obligations of the Funding Corporation shall not be obligations 
of, or guaranteed as to principal by, the Federal Home Loan 
Bank System, the Federal Home Loan Banks, the United States, 
or the Resolution Trust Corporation and the obligations shall so 
plainly state. The Secretary shall pay interest on such obliga-
tions as required pursuant to this subsection. 
"(g) USE AND DISPOSITION OF ASSETS OF FUNDING CORPORATION NOT 
TRANSFERRED TO RESOLUTION TRUST CORPORATION.— 
"(1) IN GENERAL.—Subject to regulations, restrictions, and 
limitations prescribed by the Oversight Board, assets of the 
Funding Corporation which are not required to be invested in 
capital certificates issued by the Resolution Trust Corporation 
under section 21A and are not needed for current interest 
payments shall be invested in direct obligations of the United 
States issued by the Secretary. 
"(2) SEPARATE ACCOUNT FOR ZERO COUPON INSTRUMENTS HELD 
TO ENSURE PAYMENT OF PRINCIPAL.—Except as provided 
in 
subsection (eX8), the Funding Corporation shall invest amounts 
received pursuant to subsection (e) in, and hold in a separate 
account to be known as the Funding Corporation Principal 
Fund, noninterest bearing instruments— 
"(A) which are direct obligations of the United States 
issued by the Secretary; and 
"(B) the total of the face amounts (the amount of prin-
cipal payable at maturity) of which is approximately equal 
to the eiggregate amount of principal on the obligations of 
the Funding Corporation. 
"(h) MISCELLANEOUS PROVISIONS.— 
"(1) TREATMENT FOR CERTAIN PURPOSES.—Except as provided 
? 
in subsection (f)(7XB), the Funding Corporation shall be treated 
103 STAT. 404 
PUBLIC LAW 101-73—AUG. 9, 1989 
as a Federal Home Loan Bank for purposes of section 13 (to the 
extent such section relates to State, municipal, and local tax-
ation) and section 23. 
"(2) FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL 
AGENTS.—The Federal Reserve banks are authorized to act as 
depositaries for or fiscal agents or custodians of the Funding 
Corporation. 
"(3) 
APPUCABILITY OP CERTAIN PROVISIONS RELATING TO 
GOVERNMENT CORPORATIONS.—The Funding Corporation shsdl be 
treated, for purposes of sections 9105, 9107, and 9108 of title 31, 
United States Code, as a mixed-ownership Government corpora-
tion which has capital of the Grovemment. 
"(4) JURISDICTION AND POWER TO REMOVE.— 
» 
"(A) FEDERAL COURT JURISDICTION.—Notwithstanding any 
other provision of law, any civil action, suit, or proceeding 
to which the Funding Corporation is a party shall be 
deemed to arise under the laws of the United States, and 
the United States district courts shall have original juris-
diction over such action, suit, or proceeding. 
"(B) REMOVAL.—The Funding Corporation may, without 
bond or security, remove any such action, suit, or proceed-
ing from a State court to the United States District Court 
for the District of Columbia. 
"(i) ANNUAL REPORT.— 
"(1) IN GENERAL.—The Oversight Board shall annually submit 
a full report of the operations, activities, budget, receipts, and 
expenditures of the Funding Corporation for the preceding 12-
month period. 
"(2) CONTENTS.—The report required imder paragraph (1) 
shall include— 
"(A) audited statements and any information necessary 
to make known the financial condition and operations of 
the Funding Corporation in accordance with generally 
accepted accounting principles; 
"(B) the financial operating plans and forecasts (including 
estimates of actual and future spending, and estimates of 
actual and future cash obligations) of the Funding Corpora-
tion taking into account its financial commitments, guaran-
tees, and other contingent liabilities; and 
"(C) the results of the annual audit of the financial 
transactions of the Funding C!orporation conducted by the 
Comptroller General pursuant to section 9105(a) of title 31, 
a ' 
United States Code. 
"(3) SUBMISSION TO CONGRESS AND PRESIDENT.—The Oversight 
Board shedl submit each annual report required under this 
subsection to the Congress and the President as soon as prac-
ticable after the end of the calendar year for which the report is 
made, but not later than June 30 of the year following such 
calendar year. 
"(j) TERMINATION OF FUNDING (CORPORATION.— 
"(1) IN GENERAL.—The Funding Ck)rporation shall be dis-
solved, as soon as practicable, after the maturity and full pay-
ment of all obligations issued by the Funding (Corporation under 
this section. 
"(2) AUTHORITY OF OVERSIGHT BOARD TO CONCLUDE AFFAIRS OF 
FUNDING CORPORATION.—Effective on the date of the dissolution 
of the Funding CJorporation under paragraph (1), the Oversight 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 405 
Board may exercise on behalf of the Funding Corporation any 
power of the Funding Corporation which the Oversight Board 
determines to be necessary to settle and conclude the affairs of 
the Funding Corporation. 
"Gt) DEFINITIONS.—For purposes of this section: 
"(1) ADMINISTRATIVE EXPENSES.—The term 'administrative 
expenses' does not include— 
"(A) any interest on, or any redemption premium with 
respect to, any obligation of the Funding Corporation; or 
"(B) issuance costs. 
"(2) CUSTODIAN FEE.—The term 'custodian fee' means— 
"(A) any fee incurred by the Funding Corporation in 
connection with the transfer of any security to, or the 
maintenance of any security in, the segregated account 
established under subsection (g); and 
"(B) any other expense incurred by the Funding Ck)rpora-
tion in connection with the establishment or maintenance 
of such account. 
"(3) FUNDING CORPORATION.—The term 'Funding Corporation' 
means the Resolution Funding Corporation established in 
subsection (b). 
"(4) FUNDING CORPORATION PRINCIPAL FUND.—The term 'Fund-
ing Corporation Principal Fund' means the separate account 
established under subsection (gX2). 
"(5) ISSUANCE COSTS.—The term 'issuance costs'— 
"(A) means issuance fees and commissions incurred by 
the Funding Corporation in connection with the issuance or 
servicing of any obligation of the Funding Corporation; and 
"(B) includes legal and accounting expenses, trustee and 
fiscal and pa3dng agent charges, costs incurred in connec-
tion with preparing and printing offering materials, and 
advertising expenses, to the extent that any such cost or 
expense is incurred by the Funding Corporation in connec-
tion with issuing any obligation. 
"(6) NET EARNINGS.—'The term 'net earnings' means net earn-
ings without reduction for chargeoffs or expenses incurred by a 
Federal Home Loan Bank for the purchase of capital stock of 
the Financing Corporation or pa3mients relating to the Funding 
Corporation required by the Oversight Board under subsections 
(e) and (f). 
"(7) OVERSIGHT BOARD.—The term 'Oversight Board' means— 
"(A) the Oversight Board of the Resolution Trust Cor-
poration under section 21A; and 
"(B) after the termination of the Resolution Trust (Dor-
poration— 
"(i) the Secretary of the Treasury; 
"(ii) the Chairman of the Board of Governors of the 
Federal Reserve System; and 
"(iii) the Secretary of Housing and Urban Develop-
ment. 
"(8) 
SAVINGS ASSOCIATION INSURANCE FUND MEMBER.—The 
term 'Savings Association Insurance Fund member' means a 
Savings Association Insurance member as such term is defined 
by section 7(1) of the Federal Deposit Insurance Act. 
"(9) SECRETARY.—The term 'Secretary' means the Secretary of 
the "Treasury. 
103 STAT. 406 
PUBLIC LAW 101-73—AUG. 9, 1989 
r 
"(10) UNDIVIDED PROFITS.—The term 'undivided profits' means 
earnings retained after dividends have been paid minus the sum 
of— 
"(A) that portion required to be added to reserves main-
tained pursuant to the first 2 sentences of section 16; and 
,
? 
"(B) the dollar amounts held by the respective Federal 
Home Loan Banks in special dividend stabilization reserves 
on December 31, 1985, as determined by the table set forth 
in section 21(dX7). 
"(1) REGULATIONS.—The Oversight Board may prescribe any regu-
lations necessary to carry out this section.". 
(b) FUNDING CORPORATION AS MIXED-OWNERSHIP GOVERNMENT 
CORPORATION.— 
(1) IN GENERAL.—Section 9101(2) of title 31, United States 
Code, is amended by adding at the end the following new 
,, subparagraph: 
"(M) the Resolution Funding Corporation.". 
(2) ANNUAL GAO AUDIT.— 
(A) IN GENERAL.—Section 9105(aX2) of title 31, United 
States Code, is amended by adding at the end the following 
new sentence: "The Comptroller General shall audit the 
Resolution Funding Corporation annually.". 
(B) CONFORMING AMENDMENT.—Section 9105(a)(2) of title 
' 3 1 , United States Code, is amended by striking "Federal 
Savings and Loan Insurance Corporation and". 
SEC. 512. FINANCING CORPORATION. 
Section 21 of the Federal Home Loan Bank Act (12 U.S.C. 1441) is 
amended— 
(1) by striking "insured institution" each place it appears and 
inserting "Savings Association Insurance Fund member"; 
(2) by striking "Federal Home Loan Bank Board" and 
"Board" each place they appear and inserting "Federal Housing 
* Finance Board"; 
(3) in subsection (cX2), by inserting before the period the 
following: "prior to the date of the enactment of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 
and thereafter to transfer the proceeds of any obligation issued 
by the Financing Corporation to the FSLIC Resolution Fund"; 
(4) in subsection (cX9) by striking "or section 402(b) of the 
National Housing Act"; 
(5) by amending the portion of subsection (dX4) appearing 
before the table to read as follows: "Of the first $1,000,000,000 in 
the aggregate which the Oversight Board pursuant to section 
21B or the Federal Housing Finance Board under this section 
(as the case may be) may require the Federal Home Loan Banks 
collectively to invest in the stock of the Funding Corporation or 
'
-
? 
invest in the capital stock of the Financing Corporation, respec-
tively, the amount which each Federal Home Loan Bank (or any 
successor to such Bank) shall invest shall be determined by the 
Oversight Board or the Federal Housing Finance Board (as the 
case may be) by multiplying the aggregate amount of such 
pajmient or investment by all Banks by the percentage appear-
s
^ ing in the following table for each such Bank:'; 
(6) in subsection (dX5), by striking "$1,000,000,000 which the 
Board" and inserting "the $1,000,000,000 amount referred to in 
paragraph (4) which the Federal Housing Finance Board"; 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 407 
(7) in subsection (dX6XAXiii), by striking "available for divi-
dends"; 
(8) in subsection (dX6XD), by striking "available for divi-
dends"; 
(9) in subsection (dX6XE), by striking "available for divi-
dends"; 
(10) by striking subsection (dX6XF) and adding at the end of 
subsection (1) the following: 
"(4) NET EARNINGS DEFINED.—The term 'net earnings' means 
net earnings without reduction for any chargeoffs or expenses 
incurred by a Bank in connection with the purchase of capital 
stock of the Financing Corporation or the purchase of stock of 
the Funding Corporation required by the Oversight Board 
under subsections (e) and (f) of section 21B."; 
(11) in subsection (eX3XA)— 
(A) by striking "used to"; 
(B) by inserting "used to" before "purchase" and 
"refund*^; and 
(C) by inserting before the semicolon the following: "prior 
to the enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, and thereafter 
transferred to the FSLIC Resolution Fund"; 
(12) in subsection (e)— 
(A) by striking paragraph (2) and redesignating para-
graphs (3) through (10) as paragraphs (2) through (9), respec-
tively, and 
(B) in paragraph (6) as redesignated, by striking "the 
Federal Savings and Loan Insurance Corporatioiv' and 
inserting "the FSLIC Resolution Fund"; 
(13) by striking subsection (f) and inserting the following: 
"(f) SOURCES OF FUNDS FOR INTEREST PAYMENTS; FINANCING COR-
PORATION ASSESSMENT AUTHORITY.—The Financing Corporation 
shall obtain funds for anticipated interest pajrments, issuance costs, 
and custodial fees on obligations issued hereunder from the follow-
ing sources: 
"(1) PREENACTMENT ASSESSMENTS.—The Financing Clorpora-
tion assessments which were assessed on insured institutions 
t 
pursuant to this section as in effect prior to the date of enact-
ment of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989. 
"(2) NEW ASSESSMENT AUTHORITY.—^To the extent the amounts 
available pursuant to paragraph (1) are insufficient to cover the 
amount of interest pajonents, issuance costs, and custodial fees, 
the Financing Corporation, with the approval of the Board of 
Directors of the Federal Deposit Insurance Corporation, shall 
assess against each Savings Association Insurance Fund 
member an assessment (in the same manner as assessments are 
assessed against such members by the Federal Deposit Insur-
ance (Corporation under section 7 of the Federal Deposit Insur-
ance Act), except that— 
"(A) the sum of— 
"(i) the amount assessed under this paragraph; and 
"(ii) the amount assessed by the Funding Corporation 
;• 
under section 21B; 
shall not exceed the amount authorized to be assessed 
against Savings Association Insurance Fund members pur-
suant to section 7 of the Federal Deposit Insurance Act; 
103 STAT. 408 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) the Financing Corporation shall have first priority to 
make the assessment; and 
"(C) the amount of the applicable assessment determined 
under such section 7 shall be reduced by the sum described 
in subparagraph (A) of this paragraph. 
"(3) RECEIVERSHIP PROCEEDS.—To the extent the amounts 
available pursuant to paragraphs (1) and (2) are insufficient to 
cover the amount of interest payments, issuance costs, and 
custodial fees, and if the funds are not required by the Resolu-
tion Funding Corporation to provide funds for the Funding 
Corporation Principal Fund under section 21B, the Federal 
Deposit Insurance Corporation shall transfer to the Financing 
Corporation, from the liquidating dividends and payments made 
on claims received by the FSLIC Resolution Fund (established 
under section 11A of the Federal Deposit Insurance Act) from 
receiverships, the remaining amount of funds necessary for the 
Financing Corporation to make interest payments."; 
(14) in subsection (g)(1) by striking "National Housing Act," 
and inserting "National Housing Act before the date of enact-
ment of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 and after such date in capital certifi-
cates issued by the FSLIC Resolution Fund,"; 
(15) in subsection (g), by inserting the following at the end of 
paragraph (2): "For purposes of the foregoing, the Financing 
Corporation shall be deemed to hold noninterest bearing 
instruments that it lends temporarily to primary United States 
Treasury dealers in order to enhance market liquidity and 
facilitate deliveries, provided that United States Treasury 
securities of equal or greater value have been delivered as 
collateral."; 
(16) in subsection (j), by striking subparagraph (A) of para-
graph (1) and inserting the following: 
"(A) the maturity and full payment of all obligations 
issued by the Financing Corporation pursuant to this sec-
tion; or"; and 
(17) in subsection (1)— 
(A) by striking paragraph (1) and inserting the following: 
"(1) SAVINGS ASSOCIATION INSURANCE FUND MEMBER.—The 
term 'Savings Association Insurance Fund member' means a 
savings association which is a Savings Association Insurance 
-' Fund member as defined by section 7(1) of the Federal Deposit 
Insurance Act."; and 
(B) by striking paragraph (2) and redesignating para-
graphs (3) and (4) as paragraphs (2) and (3), respectively. 
TITLE VI—THRIFT ACQUISITION 
ENHANCEMENT PROVISIONS 
SEC. 601. ACQUISITION OF THRIFT INSTITUTIONS BY BANK HOLDING 
COMPANIES. 
(a) IN GENERAL.—Section 4 of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843) is amended by adding at the end the following 
new subsection: 
note. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 409 
"(i) ACQUISITION OF SAVINGS ASSOCIATIONS.— 
"(1) IN GENERAL.—The Board may approve an application by 
any bank holding company under subsection (cX8) to acquire 
any savings association in accordance with the requirements 
and limitations of this section. 
"(2) PROHIBITION ON TANDEM RESTRICTIONS.—In approving an 
application by a bank holding company to acquire a savings 
association, the Board shall not impose any restriction on trans-
actions between the savings association and its holding com-
pany affiliates, except as required under sections 23A and 23B 
of the Federal Reserve Act or any other applicable law.", 
(b) MODIFICATION OF PRIOR APPROVALS.—If the Board of Governors 
12 use 1843 
of the Federal Reserve System, in approving an application by a 
bank holding company to acquire a savings association, imposed any 
restriction that would have been prohibited under section 4(iX2) of 
the Bank Holding Company Act of 1956 (as added by subsection (a) 
of this section) if that section had been in effect when the applica-
tion was approved, the Board shall modify that approval in a 
manner consistent with that section. 
SEC. 602. TECHNICAL AMENDMENTS TO THE BANK HOLDING COMPANY 
ACT. 
(a) DEFINITIONS.—Section 2(j) of the Bank Holding Company Act of 
1956 (12 U.S.C. 18410)) is amended to read as follows: 
"(j) DEFINITION OF SAVINGS ASSOCIATIONS AND RELATED TERM.— 
The term 'savings association' or 'insured institution' means— 
"(1) any Federal savings association or Federal savings bank; 
"(2) any building and loan association, savings and loan 
association, homestead association, or cooperative bank if such 
association or cooperative bank is a member of the Savings 
Association Insurance Fund; and 
"(3) any savings bank or cooperative bank which is deemed by 
the Director of the Office of Thrift Supervision to be a savings 
association under section 10(1) of the Home Owners' Loan Act.". 
(b) INSURANCE REQUIRED.—Section 3(e) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1842(e)) is amended by striking "an 
insured bank as defined in section 3(h)" and inserting "an insured 
depository institution as defined in section 3". 
SEC. 603. PASSIVE INVESTMENTS BY COMPANIES CONTROLLING CERTAIN 
NONBANK BANKS. 
(a) IN GENERAL.—Section 4(fX2XAXii) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1843(f)(2)(AXii)) is amended to read as 
follows: 
"(ii) acquires control of more than 5 percent of the shares or 
assets of an additional bank or a savings association other 
than— 
"(I) shares held as a bona fide fiduciary (whether with or 
without the sole discretion to vote such shares); 
"(II) shares held by any person as a bona fide fiduciary 
solely for the benefit of employees of either the company 
described in paragraph (1) or any subsidiary of that com-
pany and the beneficiaries of those employees; 
"(III) shares held temporarily pursuant to an underwrit-
ing commitment in the normal course of an underwriting 
business; 
103 STAT. 410 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(IV) shares held in an account solely for trading pur-
poses; 
"(V) shares over which no control is held other than 
control of voting rights acquired in the normal course of a 
proxy solicitation; 
"(VI) loans or other accounts receivable acquired in the 
normal course of business; 
"(VII) shares or assets acquired in securing or collecting a 
debt previously contracted in good faith, during the 2-year 
period beginning on the date of such acquisition or for such 
additional time (not exceeding 3 years) as the Board may 
permit if the Board determines that such an extension will 
not be detrimental to the public interest; 
"(VIII) shares or assets of a savings association described 
in paragraph (10) or (12) of this subsection; 
(IX) shares of a savings association held by any insur-
ance company, as defined in section 2(aX17) of the Invest-
ment Company Act of 1940, except as provided in 
paragraph (11); and 
"(X) shares issued in a qualified stock issuance under 
section 10(q) of the Home Owners' Loan Act; 
except that the aggregate amount of shares held under this 
. clause (other than under subclauses (I), (II), (III), (IV), (V), and 
(VIII)) may not exceed 15 percent of all outstanding shares or of 
the voting power of a savings association; or", 
(b) TECHNICAL AMENDMENTS.— 
(1) Section 4(fK10) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1843(fK10)) is amended— 
(A) by striking "and (ii)(V)" and inserting "and (ii)(VIII)"; 
and 
(B) in subparagraph (A), by inserting "or section 13(k) of 
the Federal Deposit Insurance Act" after "National Hous-
ing Act". 
(2) Section 4(f) of the Bank Holding Company Act of 1956 (12 
. 
U.S.C. 1843(f)) is amended by adding at the end the following: 
"(11) 
SHARES HELD BY INSURANCE AFFILIATES.—Shares 
de-
scribed in clause (iiXIX) of paragraph (2)(A) shall not be ex-
cluded for purposes of clause (ii) of such paragraph if— 
"(A) all shares held under such clause (iiXIX) by all 
insurance company affiliates of such savings association in 
the aggregate exceed 5 percent of all outstanding shares or 
of the voting power of the savings association; or 
"(B) such shares are acquired or retained with a view to 
acquiring, exercising, or transferring control of the savings 
association.". 
SEC. 604. PURCHASE OF MINORITY INTEREST IN UNDERCAPITALIZED 
. 
SAVINGS ASSOCIATIONS BY HOLDING COMPANIES ALLOWED. 
(a) AMENDMENT TO DEPOSITORY INSTITUTION MANAGEMENT INTER-
LOCKS ACT.—Section 205 of the Depository Institution Management 
Interlocks Act (12 U.S.C. 3204) is amended by adding at the end 
thereof the following new paragraph: 
"(9) Any savings association (as defined in section lO(aXlXA) 
of the Home Owners' Loan Act or any savings and loan holding 
company (as defined in section 10(aXl)(D) of such Act) which has 
issued stock in connection with a qualified stock issuance pursu-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 411 
ant to section 10(q) of such Act, except that this paragraph shall 
apply only with respect to service as a single management 
i 
official of such savings association or holding company, or any 
subsidiary of such savings association or holding company, by a 
single management official of the savings and loan holding 
company which purchased the stock issued in connection with 
such qualified stock issuance, and shall apply only when the 
Director of the Office of Thrift Supervision has determined that 
such service is consistent with the purposes of this Act and the 
Home Owners' Loan Act.", 
(b) AMENDMENTS TO BANK HOLDING COMPANY ACT.—Section 4(f) of 
the Bank Holding Company Act of 1956 (12 U.S.C. 1843(f)) is 
amended— 
(1) by adding at the end thereof the following new paragraphs: 
"(12) 
EXEMPTION UNAFFECTED BY CERTAIN OTHER ACQUISI-
TIONS.—For purposes of clauses (i) and (ii)(VIII) of paragraph 
(2XA), an insured institution is described in this pareigraph if 
the insured institution was acquired (or any shares or assets of 
such institution were acquired) by a company described in 
paragraph (1)— 
"(A) from the Resolution Trust Corporation, the Federal 
Deposit Insurance (Corporation, or the Director of the Office 
of Thrift Supervision, in any capacity; or 
"(B) in an acquisition in which the insured institution has 
been found to be in danger of default (as defined in section 3 
of the Federal Deposit Insurance Act) by the appropriate 
Federal or State authority. 
"(13) SPECIAL RULE RELATING TO SHARES ACQUIRED IN A QUALI-
FIED S
T
O
C
K ISSUANCE.—A Company described in paragraph (1) 
^ 
that holds shares issued in a qualified stock issuance pursuant 
to section 10(q) of the Home Owners' Loan Act by any savings 
association or savings and loan holding company (neither of 
which is a subsidiary) shall not be deemed to control such 
^, 
savings association or savings and loan holding company solely 
because such company holds such shares unless— 
"(A) the company fails to comply with any requirement 
or condition imposed by paragraph (2XAXii)(X) or section 
* - ' 
10(q) of the Home Owners' Loan Act with respect to such 
shares; or 
"(B) the shares are acquired or retained with a view to 
acquiring, exercising, or transferring control of the savings 
association or savings and loan holding company."; and 
(2) in clause (i) of paragraph (2XA), by striking out "paragraph 
(10)" and inserting in lieu thereof "paragraph (10) or (12)". 
TITLE VII—FEDERAL HOME LOAN BANK 
SYSTEM REFORMS 
Subtitle A—Federal Home Loan Bank Act 
Amendments 
SEC. 701. DEFINITIONS. 
(a) IN GENERAL.—Section 2 of the Federal Home Loan Bank Act 
(12 U.S.C. 1422) is amended— 
103 STAT. 412 
PUBLIC LAW 101-73—AUG. 9, 1989 
(1) by striking paragraphs (1) and (2) and inserting the 
following: 
"(1) BOARD.—The term 'Board' means the Federal Housing 
Finance Board established under section 2A. 
"(2)(A) BANK.—The term 'Federal Home Loan Bank' or 'Bank' 
means a bank established under the authority of the Federal 
Home Loan Bank Act. 
"(B) BANK SYSTEM,—The term 'Federal Home Loan Bank 
System' means the Federal Home Loan Banks under the super-
vision of the Board."; 
(2) in paragraph (4) by striking "(except when used in ref-
erence to the member of the Board)"; and 
*
f 
(3) by striking paragraph (9) and adding at the end the 
following: 
"(9) SAVINGS ASSOCIATION.—The term 'savings association' has 
the meaning given to such term in section 8 of the Federal 
Deposit Insurance Act. 
"(10) CHAIRPERSON.—The term 'Chairperson' means the 
Chairperson of the Board. 
"(11) SECRETARY.—The term 'Secretary' means the Secretary 
of Housing and Urban Development. 
"(12) INSURED DEPOSITORY INSTITUTION.—The term 'insured 
' • 
depository institution' means— 
"(A) an insured depository institution (as defined in sec-
tion 3 of the Federal Deposit Insurance Act), and 
"(B) except as used in sections 21A and 21B, an insured 
credit union (as defined in section 101 of the Federal Credit 
Union Act).". 
O
t
)
) CHANGE IN TERMS.— 
(1) IN GENERAL.—Except as otherwise specifically provided in 
12 use 1421 et 
this title, the Federal Home Loan Bank Act is amended by 
*^9- 
striking "board" (other than in section 7) and "Federal Home 
Loan Bank Board" each place such terms appear and inserting 
"Board". 
12 use 1421 e« 
(2) CHAIRPERSON.—The Federal Home Loan Bank Act is 
««9- 
amended by striking "Chairman" and "chairman" each place 
such terms appear and inserting "Chairperson" and "chair-
V 
person". 
(3) EXCEPTIONS.— 
(A) GENERAL RULE.—The amendments made by para-
graph (1) shall not apply to sections 18(c), 21A, and 21B of 
u 
the Federsd Home Loan Bank Act. 
(B) CONFORMING AMENDMENT.—Section 18(c) of the Fed-
eral Home Loan Bsink Act (12 U.S.C. 1438(c)) is amended by 
striking "Federal Home Loan Bank Board" and "board" 
each place such terms appear and inserting "Director of the 
Office of Thrift Supervision". 
(c) TECHNICAL AMENDMENTS.—Section 11 of the Federal Home 
Loan Bank Act (12 U.S.C. 1431) is amended— 
(1) in subsection (e)(2)(C), by inserting "Federal Home Loan" 
before "Banks,"; and 
(2) in the first sentence of the third paragraph of subsection (i) 
by inserting "Federal" before "Home Loan Bank System". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 413 
SEC. 702. FEDERAL HOUSING FINANCE BOARD ESTABLISHED. 
(a) IN GENERAL.—The Federal Home Loan Bank Act (12 U.S.C. 
1421 et seq.) is amended by inserting after section 2 the following 
new sections: 
"SEC. 2A. FEDERAL HOUSING FINANCE BOARD. 
^^"- 
* 
?f^ 
12 USC 1422a. 
"(a) ESTABUSHMENT.— 
"(1) IN GENERAL.—There is established the Federal Housing 
Finance Board, which shall succeed to the authority of the 
Federal Home Loan Bank Board with respect to the Federal 
Home Loan Banks. 
"(2) STATUS.—The Board shall be an independent agency in 
the executive branch of the Gk)vemment. 
"(3) DUTIES.—The duties of the Board shall be— 
"(A) to supervise the Federal Home Loan Banks, 
"(B) to ensure that the Federal Home Loan Banks carry 
out their housing finance mission, 
"(C) to ensure the Federal Home Loan Banks remain 
adequately capitalized and able to raise funds in the capital 
markets, and 
4 
"(D) to ensure the Federal Home Loan Banks operate in a 
safe and sound manner. 
"(b) MANAGEMENT.— 
"(1) IN GENERAL.—The management of the Board shall be 
vested in a Board of Directors consisting of 5 directors as 
follows: 
"(A) The Secretary who shall serve without additional 
compensation. 
"(B) Four citizens of the United States, appointed by the 
President, by and with the advice and consent of the 
Senate, each of whom shall hold office for a term of 7 years. 
"(2) PROVISIONS RELATING TO APPOINTED DIRECTORS.— 
"(A) IN GENERAL.—The directors appointed pursuant to 
paragraph (IXB) shall be from among persons with exten-
sive experience or training in housing tinance or with a 
commitment to providing specialized housing credit. An 
appointed director shall not hold any other appointed office 
during his or her term as director. Not more than 3 direc-
tors shall be members of the same political party. Not more 
than 1 appointed director shall be from any single district 
of the Federal Home Loan Bank System. Nominations 
pursuant to this subparagraph shall be referred in the 
Senate to the Committee on Banking, Housing, and Urban 
Affairs. 
"(B) CONSUMER REPRESENTATIVE.—At least 1 director 
shall be chosen from an organization with more than a 2-
year history of representing consumer or community in-
terests on banking services, credit needs, housing, or finan-
cial consumer protections. 
"(C) LIMITATIONS ON CONFUCTS OF INTEREST.—No director 
may— 
"(i) serve as a director or officer of any Federal Home 
Loan Bank or any member of any Bank; or 
"(ii) hold shares of, or any other financial interest in, 
any member of any such Bank. 
"(3) INITIAL TERMS.—Notwithstanding paragraph (2), of the 
directors first appointed— 
103 STAT. 414 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(A) one shall be appointed for a term of 1 year; , 
"(B) one shall be appointed for a term of 3 years; and 
"(C) one shall be appointed for a term of 5 years. 
"(c) CHAIRPERSON; TRANSITIONAL PROVISIONS.— 
President of U.S. 
"(1) IN GENERAL.—The President shall designate 1 of the 
- 
' 
appointed directors to be the Chairperson of the Board. The 
Chairperson shall designate another director to serve as Acting 
Chairperson during the absence or disability of the Chairperson. 
"(2) TRANSITIONAL PROVISION.—Beginning on the date of 
I, 
enactment of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, until such time that at least 2 direc-
tors are appointed and confirmed pursuant to subsection (b), the 
Secretary shall act for all purposes and with the full powers of 
the Board of Directors. The Secretary may utilize the services of 
employees from the Department of Housing and Urban Devel-
j , 
opment to perform services for the Board of Directors during 
such transition period. 
"(d) VACANCIES.— 
"(1) IN GENERAL.—Any vacancy on the Board of Directors 
shall be filled in the manner in which the original appointment 
was made. Any director appointed to fill a vacancy occurring 
before the expiration of the term for which such director's 
predecessor w£is appointed shall be appointed only for the 
remainder of such term. Each director may continue to serve 
/; 
until a successor has been appointed and qualified. 
"(2) THE SECRETARY.—In the event of a vacancy in the office of 
Secretary or during the absence or disability of the Secretary, 
the Acting Secretary shall act as a director in place of the 
Secretary. 
. 
.^^ 
12 use 1422b. 
"SEC. 2B. POWERS AND DUTIES. 
"(a) GENERAL POWERS.—The Board shall have the following 
powers: 
"(1) To supervise the Federal Home Loan Banks and to 
promulgate and enforce such regulations and orders as are 
necessary from time to time to carry out the provisions of this 
, 
Act. 
"(2) To suspend or remove for cause a director, officer, em-
ployee, or agent of any Federal Home Loan Bank or joint office. 
The cause of such suspension or removal shall be communicated 
in writing to such director, officer, employee, or agent and to 
such Bank or joint office. Notwithstanding any other provision 
of this Act, no officer, employee, or agent of a Bank or joint 
office shall be a Federal officer or employee under any defini-
tion of either term in title 5, United States Code. 
"(3) To determine necessary expenditures of the Board under 
this Act and the manner in which such expenditures shall be 
incurred, allowed, and paid. 
"(4) To use the United States mails in the same manner and 
under the same conditions as a department or agency of the 
United States. 
"(b) STAFF.— 
"(1) BOARD STAFF.—Subject to title IV of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989, the 
Board may employ, direct, and fix the compensation and 
number of employees, attorneys, and agents of the Federal 
Housing Finance Board, except that in no event shall the Board 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 415 
delegate any function to any employee, administrative unit of 
any Bank, or joint office of the Federal Home Loan Bank 
System. The prohibition contained in the preceding sentence 
shall not apply to the delegation of ministerial functions includ-
ing issuing consolidated obligations pursuant to section IIG)). In 
directing and fixing such compensation, the Board shall consult 
with and maintain comparability with the compensation at the 
Federal bank regulatory agencies. Such compensation shall be 
paid without regard to the provisions of other laws applicable to 
officers or employees of the United States, except the Chair-
person and other Directors shall be compensated as prescribed 
in sections 5314 and 5315 of title 5, United States Code, respec-
tively. 
"(2) ABOLITION OF JOINT OFFICES.—The joint or collective of-
fices of the Federsd Home Loan Bank System, except for the 
Office of Finance, are hereby abolished. 
"(c) RECEIPTS OF THE BOARD.—Receipts of the Board derived from 
assessments levied upon the Federal Home Loan Banks and from 
other sources (other than receipts from the sale of consolidated 
Federal Home Loan Bank bonds and debentures issued under sec-
tion 11 of this Act) shall be deposited in the Treasury of the United 
States. Salaries of the directors and other employees of the Board 
and all other expenses thereof may be paid from such assessments 
or other sources and shall not be construed to be Government Funds 
or appropriated monies, or subject to apportionment for the pur-
poses of chapter 15 of title 31, United States Code, or any other 
authority. 
"(d) ANNUAL REPORT.—The Board shall make an annual report to 
the Congress.". 
(b) AUDITS AND REPORTS.—Section 20 of the Federal Home Loan 
Bank Act (12 U.S.C. 1440) is amended by adding at the end the 
following: "In addition to such examinations, the Comptroller Gen-
eral may audit or examine the Board and the Banks, to determine 
the extent to which the Board and the Banks are fairly and effec-
tively fulfilling the purposes of this Act.". 
(c) APPOINTMENT OF INSPECTOR GENERAL.—Section 8E(aX2) of the 
Inspector Genersd Act of 1978 (5 U.S.C. App.) is amended by striking 
"Federal Home Loan Bank Board," and inserting "Federal Housing 
Finance Board,". 
SEC. 7
0
3
. 
TERMINATION OF 
THE 
FEDERAL 
HOME LOAN 
BANK 
BOARD. 
(a) IN GENERAL.—Section 17 of the Federal Home Loan Bank Act 
(12 U.S.C. 1437) is hereby repealed. 
SEC. 704. ELIGIBILITY FOR MEMBERSHIP. 
(a) INSURED DEPOSITORY INSTITUTIONS.—Section 4(a) of the Federal 
Home Loan Bank Act (12 U.S.C. 1424(a)) is amended to read as 
follows: 
"(a) CRITERIA FOR ELIGIBILITY.— 
"(1) IN GENERAL.—Any building and loan association, savings 
and loan association, cooperative bank, homestead association, 
insurance company, savings bank, or any insured depository 
institution (as defined in section 2 of this Act), shall be eligible 
to become a member of a Federal Home Loan Bank if such 
institution— 
.^ 
"(A) is duly organized under the laws of any State or of 
the United States; 
103 STAT. 416 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) is subject to inspection and regulation under the 
banking laws, or under similar laws, of the State or of the 
United States; and 
"(C) makes such home mortgage loans as, in the judgment 
of the Board, are long-term loans (except that in the case of 
a savings bank, this subparagraph applies only if, in the 
judgment of the Board, its time deposits, as defined in 
section 19 of the Federal Reserve Act, warrant its making 
such loans). 
"(2) QuAUFiED THRIFT LENDER.—An insured 
depository 
institution that is not a member on January 1, 1989, may 
become a member of a Federal Home Loan Bank only if— 
"(A) the insured depository institution has at least 10 
percent of its total assets in residential mortgage loans; 
"(B) the insured depository institution's financial condi-
tion is such that advances may be safely made to such 
institution; and 
J, . 
"(C) the character of its management and its home-
financing policy are consistent with sound and economical 
home financing. 
An insured depository institution commencing its initial business 
operations after January 1, 1989, may become a member of a 
Federal Home Loan Bank if it complies with regulations and orders 
prescribed by the Board for the 10 percent asset requirement (de-
scribed in the preceding sentence) within one year after the 
commencement of its operations.". 
(c) REPEAL OF SECTION 27.—Section 27 of the Federal Home Loan 
Bank Act (12 U.S.C. 1447) is hereby repealed. 
SEC. 705. REPEAL OF PROVISION RELATING TO RATE OF INTEREST ON 
DEPOSITS. 
Section 5B of the Federal Home Loan Bank Act (12 U.S.C. 1425b) 
is hereby repealed. 
* 
SEC. 706. CAPITAL STOCK. 
Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is 
amended— 
(1) by striking subsections (a), (e), (f), and (g) and redesignating 
subsections (b), (c), (d), (h), (i), (j), (k), and (m) as subsections (a), 
(b), (c), (d), (e), (f), (g), and (h), respectively; 
(2) by striking the second sentence of subsection (e) (as re-
designated by paragraph (1) of this section) and inserting the 
following: "If any member's membership in a Federal Home 
Loan Bank is terminated, the indebtedness of such member to 
the Federal Home Loan Bank shall be liquidated in an orderly 
manner (as determined by the Federal Home Loan Bank), and 
upon completion of such liquidation, the capital stock in the 
Federal Home Loan Bank owned by such member shall be 
surrendered and canceled. Any such liquidation shall be deemed 
a prepayment of any such indebtedness, and shall be subject to 
any penalties or other fees applicable to such prepayment."; and 
(3) in subsection (h) (as redesignated by paragraph (1) of this 
section), by striking "charter" and all that follows through the 
end period and inserting "charter as a Federal savings associa-
tion (as defined in section 3 of the Federal Deposit Insurance 
Act).". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 417 
SEC. 707. ELECTION OF BANK DIRECTORS. 
Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is 
amended— 
(1) in subsection (a)— 
(A) by striking "appointed by the Federal Home Loan 
Bank Board referred to in subsection (b) of section 17, 
hereinafter in this section referred to as the Board" and 
inserting "appointed by the Board referred to in section 
2A", 
(B) by inserting after the last sentence the following: "At 
least 2 of the Federal Home Loan Bank directors who are 
appointed by the Board shall be representatives chosen 
from organizations with more than a 2-year history of 
representing consumer or community interests on banking 
services, credit needs, housing, or financial consumer 
protections. No Federal Home Loan Bank director who is 
appointed pursuant to this subsection may, during such 
Bank director's term of office, serve as an officer of any 
Federal Home Loan Bank or a director or officer of any 
member of a Bank, or hold shares, or any other financial 
interest in, any member of a Bank,"; 
(2) by inserting after the first sentence of subsection (b) the 
following: "No person who is an officer or director of a member 
that fails to meet any applicable capital requirement is eligible 
to hold the office of Federal Home Loan Bank director."; 
(3) by amending subsection (f) to read as follows: 
"(f) VACANCIES.— 
"(1) IN GENERAL.—A Bank director appointed or elected to fill 
a vacancy shall be appointed or elected for the unexpired term 
of his or her predecessor in office, 
"(2) APPOINTED BANK DIRECTORS.—In the event of a vacancy in 
any appointive Bank directorship, such vacancy shall be filled 
through appointment by the Board for the unexpired term. If 
any appointive Bank director shall cease to have the qusdifica-
tions set forth in subsection (a), the office held by such person 
shall immediately become vacant, but such person may con-
tinue to act as a Bank director until his or her successor 
assumes the vacated office or the term of such office expires, 
whichever occurs first. 
"(3) ELECTED BANK DIRECTORS.—In the event of a vacancy in 
any elective Bank directorship, such vacancy shall be filled by 
an affirmative vote of a majority of the remaining Bank direc-
tors, regardless of whether such remaining Bank directors con-
stitute a quorum of the Bank's board of directors. A Bank 
director so elected shall satisfy the requirements for eligibility 
which were applicable to his predecessor. If any elective Bank 
director shall cease to have any qualification set forth in this 
section, the office held by such person shall immediately become 
vacant, and such person shall not continue to act as a Bank 
director."; and 
(4) by adding at the end the following new subsection: 
"(k) INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES.— 
.^ 
The board of directors of each Bank shall determine the terms and 
conditions under which such Bank may indemnify its directors, 
officers, employees or agents.". 
103 STAT. 418 
PUBLIC LAW 101-73—AUG. 9, 1989 
SEC. 
7
0
8
. 
REPEAL 
OF 
PROVISIONS 
RELATING 
TO 
CERTAIN 
POWERS 
OF 
THE 
FEDERAL 
HOME 
LOAN 
BANK 
BOARD. 
Section 19 of the Federal Home Loan Bank Act (12 U.S.C. 1439) is 
hereby repealed. 
SEC. 709. POWERS AND DUTIES OF BANKS. 
Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is 
amended— 
(1) in subsection (eXl), by inserting "incidental to activities" 
after "not"; 
(2) in subsection (f), by striking out "or whenever in the 
judgment of at least 4 members of the board an emergency 
exists requiring such action"; 
(3) by amending subsection (k) to read as follows: 
, 
"(k) BANK LOANS TO S A I F . — 
"(1) LOANS AUTHORIZED.—Subject to paragraph (3), the Fed-
eral Home Loan Banks may, upon the request of the Federal 
Deposit Insurance Corporation, make loans to such Corporation 
for the use of the Savings Association Insurance Fund. 
"(2) LIABILITY OF THE FUND.—Any loan by a Federal Home 
Loan Bank pursuant to paragraph (1) shall be a direct liability 
of the Savings Association Insurance Fund. 
"(3) INTEREST ON AND SECURITY FOR SUCH LOANS.—Any loan by 
a Federal Home Loan Bank pursuant to paragraph (1) shall— 
"(A) bear a rate of interest not less than such Bank's 
current marginal cost of funds, taking into account the 
maturities involved; and 
"(B) be adequately secured.". 
SEC. 710. ELIGIBILITY OF BORROWERS TO SECURE ADVANCES. 
(a) IN GENERAL.—Section 9 of the Federal Home Loan Bank Act 
(12 U.S.C. 1429) is amended by striking "or nonmember borrower" 
in the first sentence. 
(b) CIONFORMING AMENDMENTS.—The Federal Home Loan Bank 
Act (12 U.S.C. 1421 et seq.) is amended— 
12 use 1422, 
(1) in sections 2(5) and 4(b), by striking "or a nonmember 
1424. 
borrower" wherever it appears; 
12 use 1426. 
(2) in section 6(e) (as redesignated by section 706 of this Act), 
by striking "or nonmember borrower" wherever it appears; 
(3) in section 6(e) (as redesignated by section 706 of this Act), 
by striking "or deprive any nonmember borrower of the privi-
lege of further advances,"; 
12 use 1427, 
(4) in sections 70') and 10(c), by striking "or nonmember 
1430. 
borrower" wherever it appears; 
(5) in section 10(c), by striking ", or made to a nonmember 
borrower" in the second sentence; and 
12 use 1431. 
(6) in sections 11(g) and 11(h), by striking "or nonmember 
borrowers" wherever it appears. 
(c) COMMUNITY SUPPORT.—Section 10 of the Federal Home Loan 
Bank Act (12 U.S.C. 1430) is amended by adding at the end the 
following: 
"(g) COMMUNITY SUPPORT REQUIREMENTS.— 
Regulations. 
"(1) IN GENERAL.—Before the end of the 2-year period begin-
ning on the date of enactment of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, the Board 
shall adopt regulations establishing standards of community 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 419 
investment or service for members of Banks to maintain contin-
ued access to long-term advances. 
"(2) FACTORS TO BE INCLUDED.—The regulations promulgated 
pursuant to paragraph (1) shall take into account factors such 
; 
as a member's performance under the Community Reinvest-
ment Act of 1977 and the member's record of lending to first- 
_ 
time homebuyers.". 
~ 
SEC. 711. ADMINISTRATIVE EXPENSES. 
Section 18(b) of the Federal Home Loan Bank Act (12 U.S.C. 
1437(b)) is amended to read as follows: 
12 USC 1438. 
"(b) ASSESSMENTS FOR ADMINISTRATIVE EXPENSES.— 
"(1) IN GENERAL.—The Board may impose a semiannual 
assessment on the Federal Home Loan Banks, the aggregate 
amount of which is sufficient to provide for the payment of the 
Board's estimated expenses for the period for which such assess-
ment is made. 
"(2) DEFICIENCIES.—If, at any time, amounts available from 
any assessment for any semiannual period are insufficient to 
cover the expenses of the Board incurred in carr3dng out the 
provisions of this Act during such period, the Board may make 
an immediate £issessment against the Bsmks to cover the 
amount of the deficiency for such semiannual period. 
"(3) SURPLUSES.—If, at the end of any semiannual period for 
which an assessment is made, any amount remains from such 
assessment, such amount will be deducted from the assessment 
on the Banks by the Board for the following semiannual period. 
"(4) TRANSITION PROVISION.—On or after the effective date of 
the Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989, the Board may levy a one-time special assessment 
on the Banks pursuant to this subsection for the Board's esti-
mated expenses for the transitional period following enactment 
of such Act, if such assessment is made before the Board's first 
semiannual assessment under paragraph (1).". 
SEC. 712. N O N A D M I N I S T R A T I V E EXPENSES. 
Subsection (a) of section 18 of the Federal Home Loan Bank Act 
(12 U.S.C. 1438(a)) and section 19A of such Act (12 U.S.C. 1439-1) are 
hereby repealed. 
SEC. 713. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION INDUS-
TRY ADVISORY COMMITTEE. 
Subsection (i) of section 21 of the Federal Home Loan Bank Act (12 
U.S.C. 1441) is repealed and subsections (j), (k), and (1) are redesig-
nated subsections (i), (j), and (k), respectively. 
SEC. 714. ADVANCES. 
(a) IN GENERAL.—Subsection (a) of section 10 of the Federal Home 
Loan Bank Act (12 U.S.C. 1430(a)) is amended by striking everything 
after "members" to the end period and inserting the following: 
"upon collateral sufficient, in the judgment of the Bank, to fully 
secure advances obtained from the Bank under this section or 
section 11(g) of this Act. All long-term advances shall only be made 
for the purpose of providing funds for residential housing finance. A 
Bank, at the time of origination or renewsd of a loan or advance, 
shall obtain and maintain a security interest in collateral eligible 
pursuant to one or more of the following categories: 
103 STAT. 420 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(1) Fully disbursed, whole first mortgages on improved resi-
dential property (not more than 90 days delinquent), or securi-
ties representing a whole interest in such mortgages. 
"(2) Securities issued, insured, or guaranteed by the United 
States Government or any agency thereof (including without 
limitation, mortgage-backed securities issued or guaranteed by 
the Federal Home Loan Mortgage C!orporation, the Federal 
National Mortgage Corporation, and the Government National 
Mortgage Association). 
. . . 
"(3) Deposits of a Federal Home Loan Bank. 
"(4) Other real estate related collateral acceptable to the 
Bank if such collateral has a readily ascertainable value and 
the Bank can perfect its interest in the collateral. The aggregate 
' 
amount of outstanding advances secured by such other real 
estate related collateral shall not exceed 30 percent of such 
member's capital. 
"(5) Paragraphs (1) through (4) shall not affect the ability of 
any Federal Home Loan Bank to take such steps as it deems 
necessary to protect its security position with respect to 
outstanding advances, including requiring deposits of additional 
coUatersd security, whether or not such additional security 
would be eligible to originate an advance. If an advance existing 
; 
on the date of enactment of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 matures and the 
member does not have sufficient eligible collateral to fully 
secure a renewal of such advance, a Bank may renew such 
advance secured by such collateral as the Bank and the Board 
determines is appropriate. A member that has an advance 
secured by such insufficient eligible collateral must reduce its 
level of outstanding advances promptly and prudently in 
accordance with a schedule determined by the Board.", 
(b) REDUCED ELIGIBILITY FOR ADVANCES.—Section 10(e) of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1430(e)) is amended to read as 
follows: 
"(e) QUALIFIED THRIFT LENDER STATUS.— 
"(1) IN GENERAL.—A member that is not a qualified thrift 
lender may only receive an advance if it holds stock in its 
Federal Home Loan Bank at the time it receives that advance in 
/ 
an amount equal to at least— 
"(A) 5 percent of that member's total advances, divided 
by 
"(B) such members actual thrift investment percentage. 
^ Such members that are not qualified thrift lenders may only 
apply for advances under this section for the purpose of obtain-
ing funds for housing finance. 
"(2) PRIORITY.—The Board, by regulation, shall establish a 
priority for advances to members that are qualified thrift lend-
ers. The aggregate amount of any Bank's advances to members 
that are not qualified thrift lenders shall not exceed 30 percent 
of a Bank's total advances. 
"(3) MINIMUM STOCK PURCHASE REQUIREMENT FOR MEMBER-
SHIP.—Each member of a Federal Home Loan Bank shall, at a 
minimum, purchase and maintain stock in its Federal Home 
Loan Bank in the amount that would be required under section 
6(b) if at least 30 percent of such member's assets were home 
mortgage loans. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 421 
"(4) EXCEPTIONS.—Paragraphs (1) and (2) of this subsection do 
not apply to— 
"(A) a savings bank as defined in section 3 of the Federal 
Deposit Insurance Act; or 
"(B) a Federal savings association in existence as a Fed-
eral savings association on the date of enactment of the 
Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989— 
"(i) that w£is chartered as a savings bank or coopera-
tive bank prior to October 15,1982; or 
"(ii) that acquired its principal assets from an institu-
tion which was chartered prior to October 15,1982, as a 
savings bank or cooperative bank under State law. 
"(5) DEFINITIONS.—As used in this subsection— 
"(A) SAVINGS ASSOCIATION.—The term 'savings associa-
tion' has the same meaning as in section 10(a)(lXA) of the 
Home Owners' Loan Act. 
"(B) QuAUFiED THRIFT LENDER.—The term 
'qualified 
thrift lender' has the same meaning as in section 10(m) of 
the Home Owners' Loan Act. 
"(C) ACTUAL THRIFT INVESTMENT PERCENTAGE.—The term 
'actual thrift investment percentage' has the same meaning 
as in section 10(m) of the Home Owners' Loan Act.". 
(c) SPECIAL LIQUIDITY ADVANCES.—Section 10 of the Federal Home 
Loan Bank Act (12 U.S.C. 1430) (as amended by section 710(c) of this 
Act) is amended by adding at the end the following new subsection: 
"(h) SPECIAL LIQUIDITY ADVANCES.— 
"(1) IN GENERAL.—Subject to paragraph (2), the Federal Home 
Loan Banks may, upon the request of the Director of the Office 
of Thrift Supervision, make short-term liquidity advances to a 
savings association that— 
"(A) is solvent but presents a supervisory concern because 
of such association's poor financial condition; and 
"(B) has reasonable and demonstrable prospects of 
returning to a satisfactory financial condition. 
"(2) INTEREST ON AND SECURITY FOR SPECIAL UQUIDITY AD-
VANCES.—Any loan by a Federal Home Loan Bank pursuant to 
paragraph (1) shall be subject to all applicable collateral 
requirements, including the requirements of section 10(a) of this 
Act, and shall be at an interest rate no less favorable than those 
made available for similar short-term liquidity advances to 
savings associations that do not present such supervisory 
concern.". 
SEC. 715. AMENDMENTS RELATING TO WITHDRAWAL FROM FEDERAL 
HOME LOAN BANK MEMBERSHIP. 
Section 6(h) of the Federal Home Loan Bank Act (as redesignated 
by section 706 of this Act) is amended by striking "five" and 
inserting "10". 
SEC. 716. REPEAL OP PROVISIONS RELATING TO LAWFUL CONTRACT 
RATE. 
Section 5 of the Federal Home Loan Bank Act (12 U.S.C. 1425) is 
hereby repealed. 
103 STAT. 422 
PUBLIC LAW 101-73—AUG. 9, 1989 
Classified 
information. 
Reports. 
SEC. 717. BANK STOCK AND OBLIGATIONS. 
Section 23 of the Federal Home Loan Bank Act (12 U.S.C. 1443) is 
amended to read as follows: 
"SEC. 23. FORMS OF BANK STOCK AND OBLIGATIONS. 
"Any stock, debentures, bonds, notes, or other obligations issued 
under the authority of this Act may be issued in uncertificated form, 
utilizing a book entry method, or in certificated form under such 
rules, regulations, or guidelines as the Board of Directors of the 
Federal Housing Finance Board may provide.". 
SEC. 718. THRIFT ADVISORY COUNCIL. 
Section 8a of the Federal Home Loan Bank Act (12 U.S.C. 1428a) is 
hereby repealed. 
SEC. 719. EXAMINATION OF MEMBERS. 
Section 22 of the Federal Home Loan Bank Act (12 U.S.C. 1442) is 
amended to read as follows: 
"SEC. 22. MEMBER FINANCIAL INFORMATION. 
"(a) IN GENERAL.—In order to enable the Federal Home Loan 
Banks to carry out the provisions of this Act, the Secretary of the 
Treasury, the Comptroller of the Currency, the Chairman of the 
Board of Governors of the Federal Reserve System, the Chairperson 
of the Federal Deposit Insurance Corporation, the Chairperson of 
the National Credit Union Administration, and the Director of the 
Office of Thrift Supervision, upon request by any Federal Home 
Loan Bank— 
"(1) shall make available in confidence to any Federal Home 
Loan Bank, such reports, records, or other information as may 
be available, relating to the condition of any member of any 
Federal Home Loan Bank or any institution with respect to 
which any such Bank has had or contemplates having trans-
actions under this Act; and 
1 
"(2) may perform through their examiners or other employees 
or agents, for the confidential use of the Federal Home Loan 
Bank, examinations of institutions for which such agency is the 
appropriate Federal banking regulatory agency. 
In addition, the Comptroller of the Currency, the Chairman of the 
Board of Governors of the Federal Reserve System, the Chairperson 
of the National Credit Union Administration, and the Director of 
the Office of Thrift Supervision shall make available to the Board or 
any Federal Home Loan Bank the financial reports filed by mem-
bers of £my Bank to enable the Board or a Bank to compile and 
publish cost of funds indices or other financial or statistical reports. 
"(b) CONSENT BY MEMBERS.—Every member of a Federal Home 
Loan Bank shall, as a condition precedent thereto, be deemed— 
"(1) to consent to such examinations as the Bank or the Board 
may require for the purposes of this Act; 
'i 
"(2) to agree that reports of examinations by local, State, or 
Federal gigencies or institutions may be furnished by such 
authorities to the Bank or the Board upon request; and 
"(3) to agree to give the Bank or the Federal agency, upon 
request, such information as they may need to compile and 
publish cost of funds indices and to publish other reports or 
statistical summaries pertaining to the activities of Bank mem-
bers.". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 423 
SEC. 720. LIQUIDITY. 
Section 5A of the Federal Home Loan Bank Act (12 U.S.C. 1425a) 
is hereby repealed. 
SEC. 721. AFFORDABLE HOUSING. 
Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as 
amended by section 710 and section 714 of this Act) is amended by 
adding at the end the following: 
"(i) COMMUNITY INVESTMENT PROGRAM.— 
"(1) IN GENERAL.—Each Bank shall establish a program to 
provide funding for members to undertake community-oriented 
mortgage lending. Each Bank shall designate a community 
investment officer to implement community lending and afford-
able housing advance programs of the Banks under this subsec-
tion and subsection (j) and provide technical assistance and 
outreach to promote such programs. Advances under this pro-
gram shall be priced at the cost of consolidated Federal Home 
Loan Bank obligations of comparable maturities, taking into 
account reasonable administrative costs. 
"(2) COMMUNITY-ORIENTED MORTGAGE LENDING.—For purposes 
of this subsection, the term 'community-oriented mortggige lend-
ing' means providing loans— 
"(A) to finance home purchases by families whose income 
does not exceed 115 percent of the median income for the 
^-^v 
area, 
"(B) to finance purchase or rehabilitation of housing for 
occupancy by families whose income does not exceed 115 
percent of median income for the area, 
"(C) to finance commercial and economic development 
activities that benefit low- and moderate-income families or 
activities that are located in low- and moderate-income 
neighborhoods, and 
"(D) to finance projects that further a combination of the 
purposes described in subparagraphs (A) through (C). 
"(j) AFFORDABLE HOUSING PROGRAM.— 
"(1) IN GENERAL.—Pursuant to regulations promulgated by Disadvantaged 
the Board, each Bank shall establish an Affordable Housing persons. 
Program to subsidize the interest rate on advances to members 
engaged in lending for long term, low- and moderate-income, 
owner-occupied and affordable rental housing at subsidized in-
terest rates. 
"(2) STANDARDS.—The Board's regulations shall permit Bank 
members to use subsidized advances received from the Banks 
to— 
"(A) finance homeownership by families with incomes at 
or below 80 percent of the median income for the area; or 
"(B) finance the purchase, construction, or rehabilitation 
of rental housing, at least 20 percent of the units of which 
will be occupied by and affordable for very low-income 
households for the remaining useful life of such housing or 
the mortgage term. 
"(3) PRIORITIES FOR MAKING ADVANCES.—In using advances 
authorized under paragraph (1), each Bank member shall give 
priority to qualified projects such as the following: 
"(A) purchase of homes by families whose income is 80 
percent or less of the median income for the area, 
103 STAT. 424 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(B) purchase or rehabilitation of housing owned or held 
, by the United States Government or any agency or 
instrumentality of the United States; and 
"(C) purchase or rehabilitation of housing sponsored by 
any nonprofit organization, any State or political subdivi-
sion of any State, any local housing authority or State 
housing finance agency. 
"(4) REPORT.—Each member receiving advances under this 
program shall report annually to the Bank making such ad-
vances concerning the member's use of advances received under 
this program. 
/ 
"(5) CONTRIBUTION TO PROGRAM.—Each Bank shall annually 
contribute the percentage of its annual net earnings prescribed 
in the following subparagraphs to support subsidized advances 
through the Affordable Housing Program: 
"(A) In 1990, 1991, 1992, and 1993, 5 percent of the 
" 
, 
preceding year's net income, or such prorated sums as may 
be required to assure that the aggregate contribution of all 
the Banks shall not be less than $50,000,000 for each such 
year. 
"(B) In 1994, 6 percent of the preceding year's net income, 
or such prorated sum as may be required to assure that the 
aggregate contribution of the Banks shall not be less than 
$75,000,000 for such year. 
"(C) In 1995, and subsequent years, 10 percent of the 
preceding year's net income, or such prorated sums as may 
be required to assure that the aggregate contribution of the 
Banks shall not be less than $100,000,000 for each such 
year. 
"(6) GROUNDS FOR SUSPENDING CONTRIBUTIONS.— 
"(A) IN GENERAL.—If a Bank finds that the payments 
required under this paragraph are contributing to the 
financial instability of such Bank, it may apply to the 
Federal Housing Finance Board for a temporary suspension 
of such payments. 
"(B) FINANCIAL INSTABILITY.—In determining the finan-
V cial instability of a Bank, the Federal Housing Finance 
Board shall consider such factors as (i) whether the Bank's 
earnings are severely depressed, (ii) whether there has been 
a substantial decline in membership capital, and (iii) 
whether there has been a substantial reduction in advances 
outstanding. 
"(C) REVIEW.—The Board shall review the application 
and any supporting financial data and issue a written 
decision approving or disapproving such application. The 
Board's decision shall be accompanied by specific findings 
and reasons for its action. 
"(D) MONITORING SUSPENSION.—If the Board grants a 
suspension, it shall specify the period of time such suspen-
sion shall remain in effect and shall continue to monitor 
the Bank's financial condition during such suspension. 
"(E) 
LIMITATIONS ON GROUNDS FOR SUSPENSION.—The 
Board shall not suspend payments to the Affordable Hous-
ing Program if the Bank's reduction in earnings is a result 
^ 
of (i) a change in the terms for advances to members which 
is not justified by market conditions, (ii) inordinate operat-
ing and administrative expenses, or (iii) mismanagement. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 425 
"(F) The Federal Housing Finance Board shall notify 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 not less than 60 
days before such suspension takes effect. Such suspension 
shall become effective unless a joint resolution is enacted 
disapproving such suspension. 
"(7) FAILURE TO USE AMOUNTS FOR AFFORDABLE HOUSING.—If 
any Bank fails to utilize or commit the full amount provided in 
this subsection in any year, 90 percent of the amount that has 
not been utilized or committed in that year shall be deposited by 
the Bank in an Affordable Housing Reserve Fund administered 
by the Board. The 10 percent of the unutilized and uncommitted 
amount retained by a Bank should be fully utilized or commit-
ted by that Bank during the following year and any remaining 
portion must be deposited in the Affordable Housing Reserve 
Fund. Under regulations established by the Board, funds from 
the Affordable Housing Reserve Fund may be made available to 
any Bank to meet additional affordable housing needs in such 
Bank's district pursuant to this section. 
"(8) NET EARNINGS.—The net earnings of any Federal Home 
Loan Bank shall be determined for purposes of this paragraph— 
"(A) after reduction for any payment required under 
section 21 or 21B of this Act; and 
"(B) before declaring any dividend under section 16. 
"(9) REGULATIONS.—The Federal Housing Finance Board shall 
promulgate regulations to implement this subsection. Such 
regulations shall, at a minimum— 
"(A) specify activities eligible to receive subsidized ad-
vances from the Banks under this program; 
"(B) specify priorities for the use of such advances; 
"(C) ensure that advances made under this program will 
be used only to assist projects for which adequate long-term 
monitoring is available to guarantee that affordability 
standards and other requirements of this subsection are 
satisfied; 
"(D) ensure that a preponderance of assistance provided 
under this subsection is ultimately received by low- and 
moderate-income households; 
"(E) ensure that subsidies provided by Banks to member 
institutions under this program are passed on to the ulti-
mate borrower; 
"(F) establish uniform standards for subsidized advances 
under this program and subsidized lending by member 
institutions supported by such advances, including maxi-
mum subsidy and risk limitations for different categories of 
loans made under this subsection; and 
' *' 
"(G) coordinate activities under this subsection with 
A 
other Federal or federally-subsidized affordable housing 
activities to the maximum extent possible. 
"(10) OTHER PROGRAMS.—No provision of this subsection or 
subsection (i) shall preclude any Bank from establishing addi-
tional community investment cash advance programs or 
contributing additional sums to the Affordable Housing Reserve 
Fund. 
"(11) ADVISORY COUNCIL.—Each Bank shall appoint an Ad-
visory Council of 7 to 15 persons drawn from community and 
103 STAT. 426 
PUBLIC LAW 101-73—AUG. 9, 1989 
nonprofit organizations actively involved in providing or 
promoting low- and moderate-income housing in its district. The 
Advisory Council shall meet with representatives of the board 
of directors of the Bank quarterly to advise the Bank on low-
and moderate-income housing programs and needs in the dis-
trict and on the utilization of the advances for these purposes. 
Each Advisory Council established under this paragraph shall 
submit to the Board at least annually its analysis of the low-
income housing activity of the Bank by which it is appointed. 
"(12) REPORTS TO CONGRESS.— 
"(A) The Board shall monitor and report annually to the 
Congress and the Advisory Council for each Bank the sup-
port of low-income housing and community development by 
the Banks and the utilization of advances for these pur-
poses. 
"(B) The analyses submitted by the Advisory Councils to 
the Board under paragraph (11) shall be included as part of 
-- 
the report required by this paragraph. 
"(C) The Comptroller General of the United States shall 
audit and evaluate the Affordable Housing Program estab-
lished by this subsection after such program has been 
operating for 2 years. The Comptroller General shall report 
to (Dongress on the conclusions of the audit and recommend 
improvements or modifications to the program. 
"(13) DEFINITIONS.—For purposes of this subsection— 
"(A) Low- O
R MODERATE-INCOME HOUSEHOLD.—The term 
. .t.. 
'low- or moderate-income household' means any household 
which has an income of 80 percent or less of the area 
median. 
"(B) VERY LOW-INCOME HOUSEHOLD.—The term 'very low-
income household' means any household that has an 
income of 50 percent or less of the area median. 
"(C) Low- 
O
R MODERATE-INCOME NEIGHBORHOOD.—The 
term 'low- or moderate-income neighborhood' means any 
neighborhood in which 51 percent or more of the house-
holds are low- or moderate-income households. 
"(D) AFFORDABLE FOR VERY-LOW INCOME HOUSEHOLDS.— 
For purposes of paragraph (2)(B) the term 'affordable for 
very-low income households' means that rents charged to 
tenants for units made available for occupancy by low-
'-'• 
income families shall not exceed 30 percent of the adjusted 
income of a feimily whose income equals 50 percent of the 
income for the area (as determined by the Secretary of 
Housing and Urban Development) with adjustment for 
family size.". 
12 use 1437 
SEC. 722. TRANSFERRED EMPLOYEES OF FEDERAL HOME LOAN BANKS 
note. 
AND JOINT OFFICES. 
(a) IN GENERAL.—Each employee of the Federal Home Loan Banks 
or joint offices of such Banks performing a function identified for 
transfer under section 403 of this Act, including employees who 
otherwise would be ineligible for employment by the United States 
because of their citizenship, shall be transferred for emplo3mient not 
later than 60 days after the date of the enactment of this Act. 
(b) NOTICE TO EMPLOYEES.—Transferring employees shall receive 
notice of their position assignments not later than 120 days after the 
effective date of their trgmsfer. 
PUBLIC LAW 101-73-AUG. 9, 1989 
103 STAT. 427 
(c) GUARANTEED POSITION.—Each transferred employee shall be 
guaranteed a position with the same status and tenure as that held 
by such employee on the day immediately preceding the transfer. 
Each such employee holding a permanent position shall not be 
involuntarily separated for one year after the date of transfer, 
except for cause. 
(d) PAY AND BENEFITS.—Each employee transferred under this 
section shall be entitled to receive, during the one-year period 
immediately following the transfer, pay and benefits comparable to 
those received by such employee immediately preceding the trans-
fer. Where necessary or appropriate to further the safety and 
soundness of the thrift industry, the employing agency may con-
tinue the pre-transfer compensation of any transferring employee 
for up to 2 years beyond the expiration of the period provided for 
^ 
under the preceding sentence. Such pay and benefits shall be subject 
to the comparability provisions of this Act. Any transferred em-
ployee who suffers a reduction of pay or benefits as a result of such 
comparability provisions shall be compensated for such reduction 
during the 1 year period following the transfer by assessments from 
the Federal Home Loan Bank or joint office of such Banks, from 
which the employee transferred. In any event, this subsection shall 
only apply to a transferred employee while such employee remains 
with the agency to which the employee is transferred. 
(e) HEALTH INSURANCE.—If the health insurance program of a 
transferred employee is not continued by the agency to which the 
employee is transferred, such employee may elect to participate in 
the agency's health insurance program notwithstanding health 
conditions pre-existing at the time of election or enrollment into an 
alternate health insurance program of the agency to which he or she 
is transferred and without regard to any other regularly scheduled 
open season. Such election shall be made within 30 days of the 
transfer. 
(f) EQUITABLE TREATMENT.—The Director of the Office of Thrift 
Supervision or the Chairperson of the Federal Housing Finance 
Board shall take such action as is necessary on a case-by-case basis 
so that employees transferring under this section receive equitable 
treatment regarding credit for prior service with a Federal entity or 
instrumentality, or with a Federal Home Loan Bank or joint office 
of such Banks, with respect to the transferring employees' retire-
ment accounts and the transferring employees' accrued leave or 
vacation time, in recognition of the transferring employees' super-
visory service. 
(g) SPECIAL RULE FOR CERTAIN ANNUITANTS.—An individual who 
was a reemployed annuitant on July 26, 1989, and who is trans-
ferred under this section, shall not be subject to the deduction from 
pay required by section 8344 or 8468 of title 5, United States Code, 
during the 1-year period beginning on the date of enactment of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 
1989. 
SEC. 723. TRANSITIONAL PROVISIONS. 
12 USC 1437 
(a) FEDERAL HOME LOAN BANKS' SHARE OF ADMINISTRATIVE EX-
PENSES.—The Federal Home Loan Banks shall pay to the Director of 
the Office of Thrift Supervision the amount obtained by multiplying 
the administrative expenses of the Office of Thrift Supervision 
incurred in connection with functions of the Banks that are trans-
103 STAT. 428 
PUBLIC LAW 101-73—AUG. 9, 1989 
ferred to the Office (less any fees or assessments collected by the 
Office) by a fraction— 
(1) the numerator of which is the amount of such expenses of 
the Federal Home Loan Bank Board and the Federal Savings 
and Loan Insurance Corporation paid by the Banks during the 
1-year period ending on the date of enactment of this Act; and 
(2) the denominator of which is the total expenses of such 
Board and Corporation during such period. 
No payment under this subsection is required after December 31, 
1989. 
(b) COMPENSATION OF SUPERVISORY AND EXAMINATIONS EMPLOY-
EES.—The Federal Home Loan Banks shall continue to pay the 
compensation of employees of the Federal Home Loan Banks or the 
joint offices of such banks who, on the day before the date of the 
enactment of this Act, are performing supervisory and examination 
functions until such supervisory and examination functions are 
transferred under this Act. Thereafter, the obligation of the Federal 
Home Loan Banks hereunder to pay such applicable compensation 
shall continue until the later of— 
(1) the date which is 120 days after the date of transfer of such 
supervisory and examination functions to the Office of Thrift 
Supervision, or 
(2) March 31,1990. 
Payment of such compensation by the Federal Home Loan Banks 
shall be in lieu of, and not in addition to, the payment of compensa-
tion by the Office of Thrift Supervision. 
(c) FACIUTIES AND SUPPORT SERVICES.—Until December 31, 1990, 
the Federal Home Loan Banks, as necessary, shall (with respect to 
supervisory and examination functions performed by employees 
transferred from the Federal Home Loan Banks or joint offices of 
such Banks to the Office of Thrift Supervision), provide the Office of 
Thrift Supervision facilities and support services comparable to 
those presently provided for the employees of the Federal Home 
Loan Banks or joint offices of such Banks performing such super-
visory and examination functions, including office space, furniture 
and equipment, computer, personnel, and other support services. 
With respect to supervisory and examination functions presently 
performed by employees of individual Federal Home Loan Banks, 
each such Bank will only be required to provide such facilities and 
support services to the extent that the functions continue to be 
performed in that Bank's offices. 
(d) PRINCIPAL SUPERVISORY AGENT.—Beginning on the date of 
enactment of this Act until the Director of the Office of Thrift 
Supervision shall otherwise provide, the Principal Supervisory 
Agent for each Federal Home Loan Bank district shall be the senior 
supervisory official (other than the President of the Federal Home 
Loan Bank) employed by the Federal Home Loan Bank in such 
district on the day before the date of the enactment of this Act, and 
such employees performing supervisory and examination functions 
shall continue to be responsible for the supervision and examination 
of savings associations within such district. 
SEC. 
7
2
4
. 
FEDERAL 
HOME 
LOAN 
BANK 
RESERVES. 
(a) IN GENERAL.—Section 16(a) of the Federal Home Loan Bank 
Act (12 U.S.C. 1436(a)) is amended— 
(1) by striking the first three sentences and inserting in lieu 
thereof: "Each Federal Home Loan Bank may carry to a reserve 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 429 
account from time-to-time such portion of its net earnings as 
may be determined by its board of directors."; and 
(2) by striking the fifth sentence and inserting the following: 
"No dividends shall be paid except out of net earnings remain-
ing after reductions for all reserves, chargeoffs, purchases of 
capital certificates of the Financing Corporation, and payments 
relating to the Funding Corporation required under this Act 
have been provided for, other than chargeoffs or expenses in-
curred by a Bank in connection with the purchase of capital 
stock of the Financing Corporation under section 21 or pay-
ments relating to the Funding Corporation Principal Fund 
under section 21B(e), and then only with the approval of the 
Federal Housing Finance Board. Beginning on January 1, 1992, Effective date, 
the preceding sentence shall be applied by substituting 'pre-
viously retained earnings or current net earnings' for 'net 
earnings'.", 
(b) EFFECTIVE DATE.—The amendment made by subsection (aXD 12 use 1436 
shall take effect on January 1,1992. 
note. 
SEC. 725. SPECIAL ACCOUNT. 
12 USC 1437 
At the time of dissolution of the Federal Home Loan Bank Board, 
all such moneys and funds as shall remsiin in the special deposit 
account of the Federal Home Loan Bank Board, or other such 
accounts, shall become the property of the Federsil Housing Finance 
Board. 
Subtitle B—Federal Home Loan Mortgage 
Corporation 
SEC. 731. FEDERAL HOME LOAN MORTGAGE CORPORATION. 
(a) STATEMENT OF PURPOSE.— 
(1) IN GENERAL.—Section 301 of the Federal Home Loan Mort-
gage Corporation Act (12 U.S.C. 1451 note) is amended— 
(A) by inserting "(a)" after the section designation; and 
(B) by adding at the end the following new subsection: 
"(b) It is the purpose of the Federeil Home Loan Mortgage Cor-
poration— 
"(1) to provide stability in the secondary market for home 
mortgages; 
"(2) to respond appropriately to the private capital market; 
and 
"(3) to provide ongoing assistance to the secondary market for 
home mortgages (including mortgages securing housing for low-
and moderate-income families involving a reasonable economic 
return to the CJorporation) by increasing the liquidity of mort-
gage investments and improving the distribution of investment 
capital available for home mortgage financing.". 
(2) CONFORMING AMENDMENT.—The section heading for sec-
tion 301 of the Federal Home Loan Mortgage Corporation Act 
(12 U.S.C. 1451 note) is amended to read as follows: 
"SHORT TITLE AND STATEMENT OF PURPOSE". 
(b) BOARD OF DIRECTORS.— 
103 STAT. 430 
PUBLIC LAW 101-73—AUG. 9, 1989 
District of 
Columbia. 
President of U.S. 
12 u s e 1452 
note. 
(1) NEW BOARD.—Section 303(a) of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1452(a)) is amended to read 
as follows: 
"(aXD There is hereby created the Federal Home Loan Mortgage 
Corporation, which shall be a body corporate under the direction of 
a Board of Directors, Within the limitations of law and regulation, 
the Board of Directors shall determine the general policies that 
govern the operations of the Corporation. The principal office of the 
Corporation shall be in the District of Columbia or at any other 
place determined by the Corporation. 
"(2)(A) The Board of Directors of the Corporation shall consist of 
18 persons, 5 of whom shall be appointed annually by the President 
of the United States and the remainder of whom shall be elected 
annually by the voting common stockholders. The Board of Direc-
tors shall at all times have as members appointed by the President 
of the United States at least 1 person from the homebuilding 
industry, at least 1 person from the mortgage lending industry, and 
at least 1 person from the real estate industry. 
"(B) Each member of the Board of Directors shall be such or 
elected for a term ending on the date of the next annual meeting of 
the voting common stockholders. 
"(C) Any appointive seat on the Board of Directors that becomes 
vacant shall be filled by appointment by the President of the United 
States, but only for the unexpired portion of the term. Any elective 
seat on the Board of Directors that becomes vacant after the annual 
election of the directors shall be filled by the Board of Directors, but 
only for the unexpired portion of the term. 
"(D) Any member of the Board of Directors who is a full-time 
officer or employee of the Federal Government shall not, as such 
member, receive compensation for services as such a member.". 
(2) TRANSITIONAL PROVISIONS.— 
(A) INTERIM BOARD.— 
(i) ESTABUSHMENT.—There shall be an interim Board 
of Directors of the Federal Home Loan Mortgage C!or-
' 
poration, which shall serve from the date of the enact-
ment of this Act until the date of the 1st meeting of the 
' * 
• 
voting common shareholders of the Corporation at 
"' ' 
which the first election of the directors elected by the 
shareholders occurs. 
(ii) MEMBERS.—The interim Board of Directors of the 
Federal Home Loan Mortgage Corporation shall consist 
of— 
' < 
• 
(I) the President of the (Dorporation; and 
(II) the persons who were (on the day before the 
date of the enactment of this Act) the Chairman of 
^ 
the Federal Home Loan Bank Board and the Sec-
retary of Housing and Urban Development (or 
their designees), 
(iii) QUORUM.—A quorum of the interim Board of 
Directors of the Federal Home Loan Mortgage Corpora-
tion shall consist of a majority of the directors duly 
serving from time to time. 
(B) ELECTION OF PERMANENT DIRECTORS.—The first meet-
ing of the voting common shareholders of the Federal Home 
Loan Mortgage Corporation for election of directors shall 
occur, under procedures established by the Corporation, 
within 6 months after the date of the enactment of this Act. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 431 
(c) REGULATORY POWER.—Section 308 of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1452) is amended— 
(1) by redesignating subsections O
t
>
) through (f) as subsections 
(c) through (g), respectively; and 
(2) by inserting after subsection (a) the following new subsec-
tion: 
"(b)(1) The Secretary of Housing and Urban Development shall 
have general regulatory power over the Corporation and shall make 
such rules and regulations as shall be necessary and proper to 
ensure that the purposes of this title are accomplished. 
"(2) The Secretary of Housing and Urban Development may re- 
Disadvantaged 
quire that a reasonable portion of the mortgage purchases of the 
persons. 
Corporation be related to the national goal of providing adequate 
housing for low- and moderate-income families, but with reasonable 
economic return to the Corporation. 
"(3) The aggregate amount of cash dividends paid by the Corpora-
tion in any fiscal year on account of any share of its common stock 
shall not exceed any rate that may be determined from time to time 
by the Secretary of Housing and Urban Development to be a fair 
rate of return after consideration of the current earnings and 
capital condition of the Corporation. 
"(4) The Secretary of Housing and Urban Development may exam-
ine and audit the books and financial transactions of the Corpora-
tion and may require the Corporation to issue any reports on its 
activities that the Secretary determines to be advisable. The Sec- Reports, 
retary shall, not later than June 30 of each year, submit to the 
Congress a report describing the activities of the Corporation under 
this Act. 
"(5) The aggregate amount of notes, debentures, or substantially 
identical types of unsecured obligations outstanding at any time 
shall not exceed the amount which is 15 times the sum of the 
Corporation's capital, capital surplus, general surplus, reserves, and 
undistributed earnings unless a greater ratio shall be fixed at any 
time or from time to time by the Secretary of Housing and Urban 
Development. The outstanding total principal amount of any obliga-
tions of the Corporation which are entirely subordinated to the 
general debt obligations of the Corporation shall be deemed to be 
capital of the Corporation for the purpose of determining the aggre-
gate amount of notes, debentures, or substantially identical types of 
unsecured obligations outstanding at any time. 
"(6) All issuances of stock, and debt obligations convertible into 
stock, by the Corporation shall be made only with the approval of 
the Secretary of Housing and Urban Development. 
"(7)(A) The exercise of the authority of the Corporation pursuant 
to commitments or otherwise to purchase, service, sell, lend on the 
security of, or otherwise deal in conventional residential mortgages 
under section 305(a) shall be subject to the approval of the Secretary 
of Housing and Urban Development. 
"(B) Any conventional mortgage programs or activities with re-
spect to purchasing, servicing, selling, lending on the security of, or 
otherwise dealing in mortgages in which the Corporation has en-
gaged or is engaging as of the date of the enactment of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 shall be 
deemed to have been approved by the Secretary of Housing and 
Urban Development as required by this paragraph. 
"(8) If the Corporation submits to the Secretary of Housing and Reports. 
Urban Development a request for approval or other action under 
103 STAT. 432 
PUBLIC LAW 101-73—AUG. 9, 1989 
this title, the Secretary shall, not later than the expiration of the 45-
day period following the submission of the request, approve the 
request or transmit to the Congress a report explaining why the 
request has not been approved. The period may be extended for an 
additional 15-day period if the Secretary requests additional 
information from the Corporation, but the 45-day period may not be 
extended for any other reason or for any period in addition to or 
other than the 15-day period. If the Secretary fails to transmit the 
report to the Congress within the 45-day period or 60-day period, as 
the case may be, the Corporation may proceed as if the request had 
been approved.", 
(d) COMMON STOCK.— 
(1) IN GENERAL.—Section 304(a) of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1453(a)) is amended to read 
as follows: 
"(a)(1) The common stock of the Corporation shall consist of— 
"(A) nonvoting common stock, which shall be issued only to 
Federal home loan banks; and 
"(B) voting common stock, which shall be issued to such 
holders in the manner and amount, and subject to any limita-
tions on concentration of ownership, as may be established by 
the (Corporation. 
"(2) The nonvoting common stock and the voting common stock 
^ 
shall have such par value and other characteristics as the Corpora-
*'' tion provides, llie voting common stock shall be vested with all 
voting rights, each share being entitled to 1 vote. The free transfer-
ability of the voting common stock at all times to any person, firm, 
corporation or other entity shall not be restricted except that, as to 
the (Corporation, it shall be transferable only on the books of the 
Corporation. Nonvoting common stock of the Corporation shall be 
evidenced in the manner and shall be transferable only to the 
extent, to the trcmsferees, and in the manner, provided by the 
Corporation.". 
12 use 1453 
(2) CONVERSION OF STOCK.—On the date of the enactment of 
^°^- 
this Act, each share of outstanding senior participating pre-
ferred stock of the Federal Home Loan Mortgage Corporation, 
with a par value of $2,50 per share, shall be changed into and 
1 
shall become 1 share of voting common stock of the Corporation. 
Such voting common stock shall, with respect to the nonvoting 
common stock of the Corporation, retain all of the rights, 
I 
' 
priorities and privileges of the senior participating preferred 
'' 
stock. The transformation of the senior participating preferred 
stock into voting common stock under this paragraph shall be 
deemed to satisfy the obligation of the Corporation to redeem 
senior participating preferred stock for non-callable common 
stock. 
(3) CONFORMING AMENDMENTS.— 
(A) SUBSCRIPTIONS OF FEDERAL HOME LOAN BANKS.—Sec-
tion 304(b) of the Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1453(b)) is amended by inserting "nonvoting" 
before "common". 
(B) ALLOCATION OF SUBSCRIPTIONS.—Section 304(c) of the 
Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
X 
1453(c)) is amended by striking "such" and by inserting 
"nonvoting common" before "stock". 
(C) RETIREMENT OF STOCK.—Section 304(d) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 1453(d)) is 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 433 
amended by inserting "nonvoting common" before "stock" 
each place it appears. 
(e) MORTGAGE OPERATIONS.— 
(1) PROHIBITION ON FEES.—Section 305(a)(1) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(1)) is 
amended by adding at the end the following: "Nothing in this 
section authorizes the Corporation to impose any charge or fee 
upon any mortgagee approved by the Secretary of Housing and 
Urban Development for participation in any mortgage insur-
ance program under the National Housing Act solely because of 
such status.". 
(2) LENDING ACTIVITIES.—Section 805(a) of the Federal Home 
Loan Mortgage Corporation Act (12 U.S.C. 1454(a)) is amended 
by adding at the end the following new paragraph: 
"(5) The Corporation is authorized to lend on the security of, and 
to make commitments to lend on the security of, any mortgage that 
the Corporation is authorized to purchase under this section. The 
volume of the Corporation's lending activities and the establishment 
of its loan ratios, interest rates, maturities, and charges or fees in its 
secondary market operations under this paragraph, shall be deter-
mined by the Corporation from time to time; and such determina-
tions shall be consistent with the objectives that the lending activi-
ties shall be conducted on such terms as will reasonably prevent 
excessive use of the Corporation's facilities, and that the operations 
of the Corporation under this paragraph shall be within its income 
derived from such operations and that such operations shall be fully 
self-supporting. The Corporation shall not be permitted to use its 
lending authority under this paragraph (A) to advance funds to a 
mortgage seller on an interim basis, using mortgage loans as collat-
eral, pending the sale of the mortgages in the secondary market; or 
(B) to originate mortgage loans. Notwithstanding any Federal, State, 
or other law to the contrary, the Corporation is hereby empowered, 
in connection with any loan under this paragraph, whether before 
or after any default, to provide by contract with the borrower for the 
settlement or extinguishment, upon default, of any redemption, 
equitable, legal, or other right, title, or interest of the borrower in 
any mortgage or mortgages that constitute the security for the loan; 
and with respect to any such loan, in the event of default and 
pursuant otherwise to the terms of the contract, the mortgages that 
constitute such security shall become the absolute property of the 
Corporation.". 
(f) REFERENCES TO F S L I C AND F H L B B . — 
(1) SECTION 302.—Section 302a))(2) of the Federal National 
Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) is 
amended— 
(A) in the 4th sentence, by striking out "Federal Savings 
and Loan Insurance Corporation" and inserting in lieu 
J 
thereof "Resolution Trust Corporation"; and 
(B) in the 8th sentence, by striking out "Federal Home 
Loan Bank Board" and inserting in lieu thereof "Federal 
Housing Finance Board". 
(2) SECTION 305.—Section 305 of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1454) is amended— 
(A) by striking out "Federal Savings and Loan Insurance 
Corporation" each place it appears and inserting in lieu 
thereof "Resolution Trust Corporation"; and 
103 STAT. 434 
PUBLIC LAW 101-73—AUG. 9, 1989 
(B) in subsection (a)(2), by striking out "Federal Home 
Loan Bank Board" and inserting in lieu thereof "Federal 
Housing Finance Board". 
(g) STANDBY CREDIT.—Section 306(c) of the Federal Home Loan 
, 
Mortgage Corporation Act (12 U.S.C. i455(c)) is amended to read as 
follows: 
"(c)(1) The Secretary of the Treasury may purchase any obliga-
tions issued under subsection (a). For such purpose, the Secretary 
may use as a public debt transaction the proceeds of the sale of any 
securities issued under chapter 31 of title 31, United States Code, 
and the purposes for which securities may be issued under such 
chapter are extended to include such purpose. 
"(2) The Secretary of Treasury shall not at any time purchase any 
obligations under this subsection if the purchase would increase the 
aggregate principal amount of the outstanding holdings of obliga-
tions under this subsection by the Secretary to an amount greater 
than $2,250,000,000. 
"(3) Each purchase of obligations by the Secretary of the Treasury 
under this subsection shall be upon terms and conditions established 
to 5deld a rate of return determined by the Secretary to be appro-
priate, taking into consideration the current average rate on 
outstanding marketable obligations of the United States as of the 
last day of the month preceding the making of the purchase. 
"(4) The Secretary of the Treasury may at any time sell, upon 
terms and conditions and at prices determined by the Secretary, any 
of the obligations acquired by the Secretary under this subsection. 
"(5) All redemptions, purchases and sales by the Secretary of the 
Treasury of obligations under this subsection shall be treated as 
public debt transactions of the United States.". 
(h) PREFERRED STOCK.—Section 306(f) of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1455(f)) is amended to read as 
follows: 
"(f) The C!orporation may have preferred stock on such terms and 
conditions as the Board of Directors shall prescribe. Any preferred 
stock shall not be entitled to vote with respect to the election of any 
member of the Board of Directors.". 
(i) TERMS OF OBUGATIONS.—Section 306 of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1455) is amended by adding at 
the end the following new subsections: 
"(j)(l) Any notes, debentures, or substantially identical types of 
unsecured obligations of the Corporation evidencing money bor-
rowed, whether general or subordinated, shall be issued upon the 
approval of the Secretary of the Treasury and shall have such 
maturities and bear such rate or rates of interest as may be deter-
mined by the Corporation with the approval of the Secretary of the 
Treasury. 
"(2) Any notes, debentures, of substantially identical types of 
unsecured obligations of the Corporation having maturities of 1 year 
or less that the Corporation has issued or is issuing as of the date of 
the enactment of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 shall be deemed to have been approved by 
the Secretary of the Treasury as required by this subsection. Such 
deemed approval shall expire 365 days after such date of enactment. 
"(3) Any notes, debentures, or substantially identical types of 
unsecured obligations of the Corporation having maturities of more 
than 1 year that the Corporation has issued or is issuing as of the 
date of the enactment of the Financial Institutions Reform, Recov-
note. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 435 
ery, and Enforcement Act of 1989 shall be deemed to have been 
approved by the Secretary of the Treasury as required by this 
subsection. Such deemed approval shall expire 60 days after such 
date of enactment. 
"(k)(l) Any securities in the form of debt obligations or trust 
certificates of beneficial interest, or both, and based upon mortgages 
held and set aside by the Corporation, shall be issued upon the 
approval of the Secretary of the Treasury and shall have such 
maturities and shall bear such rate or rates of interest as may be 
determined by the Corporation with the approval of the Secretary of 
the Treasury. 
"(2) Any securities in the form of debt obligations or trust certifi-
cates of beneficial interest, or both, and based upon mortgages held 
and set aside by the Corporation, that the Corporation has issued or 
is issuing as of the date of the enactment of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 shall be 
deemed to have been approved by the Secretary of the Treasury as 
required by this subsection.". 
(j) STATE LIMITATIONS.— 
(1) The second sentence of section 807(a) of the Federal Home 
Loan Mortgage Corporation Act (12 U.S.C. 1456(a)) is amended 
to read as follows: "The Corporation is authorized to conduct its 
business without regard to any qualification or similar statute 
in any State.". 
(2) The amendment made by this subsection shall not apply to 12 USC 1456 
any assertion of priority by the Federal Home Loan Mortgage 
Corporation with respect to any cause of action or claim filed 
before the date of the enactment of this Act. 
(k) PENAL PROVISIONS.—Section 308 of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1457) is amended— 
(1) in subsection (a), by striking the subsection designation; 
and 
(2) by striking subsections (b), (c), (d), (e), and (f). 
(1) CONSTRUCTION.—Section 310 of the Federal Home Loan Mort-
gage Corporation Act (12 U.S.C. 1459) is amended— 
(1) in the section heading, by striking "CONSTRUCTION AND"; 
and 
(2) by striking the first sentence, 
(m) CONFORMING AMENDMENTS TO FEDERAL NATIONAL MORTGAGE 
ASSOCIATION CHARTER ACT.— 
(1) STATEMENT OF PURPOSE.—Section 301 of the Federal Na-
tional Mortgage Association Charter Act (12 U.S.C. 1716) is 
amended— 
(A) by striking paragraphs (a) and Ot)) and inserting the 
following new paragraphs: 
"(1) provide stability in the secondary market for home mort-
gages; 
"(2) respond appropriately to the private capital market; 
"(3) provide ongoing assistance to the secondary market for 
home mortgages (including mortgages securing housing for low-
and moderate-income families involving a reasonable economic 
return) by increasing the liquidity of mortgage investments and 
improving the distribution of investment capital available for 
home mortgage financing; and"; and 
(B) by redesignating paragraph (c) as paragraph (4). 
103 STAT. 436 
PUBLIC LAW 101-73—AUG. 9, 1989 
^ 
(2) LENDING ACTIVITIES.—Section 304(aX2) of the Federal Na-
tional Mortgage Association Charter Act (12 U.S.C. 1719(aX2)) is 
amended— 
(A) by inserting after the 3rd sentence the following new 
sentence: "The corporation shall not be permitted to use its 
lending authority (A) to advance funds to a mortgage seller 
on an interim basis, using mortgage loans as collateral, 
pending the sale of the mortgages in the secondary market; 
or (B) to originate mortgage loans."; and 
(B) by striking the 1st and 2d sentences. 
(3) AUDITS BY GAO.—Section 309 of the Federal National 
Mortgage Association Charter Act (12 U.S.C. 1723a) is amended 
by adding at the end the following new subsection: 
"0) The mortgage transactions of the corporation may be subject 
to audit by the Comptroller General of the United States in accord-
ance with the principles and procedures applicable to commercial 
corporation transactions under such rules and regulations as may be 
prescribed by the Comptroller General. The representatives of the 
General Accounting Office shall have access to such books, accounts, 
financial records, reports, files, and such other papers, things, or 
property belonging to or in use by the corporation and necessary to 
facilitate the audit, and they shall be afforded full facilities for 
verifying transactions with the balances or securities held by deposi-
Reports. 
tories, fiscal agents, and custodians. A report on each such audit 
shall be made by the Comptroller General to the Congress. The 
corporation shall reimburse the General Accounting Office for the 
full cost of any such audit as billed therefor by the Comptroller 
General.". 
Subtitle C—Technical and Conforming 
Amendments 
SEC. 741. REPEAL OF LIMITATION OF OBLIGATION FOR ADMINISTRATIVE 
EXPENSES. 
Section 7(b) of the First Deficiency Appropriation Act of 1936 (15 
U.S.C. 712a(b)) is amended by striking the following: 
"1. Federal Home Loan Bank Board;"; 
"2. Home Owners' Loan Corporation;"; and 
"11. Federal Savings and Loan Insurance Corporation;". 
SEC. 742. AMENDMENT OF TITLE 5, UNITED STATES CODE. 
(a) EXECUTIVE SCHEDULE.— 
(1) Section 5314 of title 5, United States Code (5 U.S.C. 5315) is 
amended— 
(A) by striking 
"Chairman of the Federal Home Loan Bank Board."; and 
(B) by adding at the end thereof the following: 
"Director of the Office of Thrift Supervision. 
"Chairperson of the Federal Housing Finance Board.". 
(2) Section 5315 of title 5, United States Code (5 U.S.C. 5315) is 
amended— 
(A) by striking out 
"Members, Federal Home Loan Bank Board.", and 
(B) by inserting 
"Directors, Federal Housing Finance Board.". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 437 
(b) LIMITATION ON PAY FIXED BY ADMINISTRATIVE ACTION.—Section 
5373(2) of title 5, United States Code, is amended by inserting after 
"481," the following: "1437,1439,". 
(c) DEFINITION OF AoENCY.^Section 3132(aXl) of title 5, United 
States Code (5 U.S.C. 3132(aXl)), is amended— 
(1) in subparagraph (B), by striking "or" after the semicolon; 
(2) in subparagraph (C), by inserting "or" after the semicolon; 
and 
(3) by adding at the end the following: 
"(D) the Office of the Comptroller of the Currency, the 
Office of Thrift Supervision, the Federal Housing Finance 
Board, the Resolution Trust Corporation, and the National 
Credit Union Administration;". 
SEC. 743. AMENDMENT OF BALANCED BUDGET AND EMERGENCY DEFICIT 
CONTROL ACT PROVISIONS. 
(a) Section 255(g)(1)(A) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 (2 U.S.C. 905(gXl)(A)) is amended— 
(1) by inserting after the item relating to the Comptroller of 
the Currency the following new item: 
"Director of the Office of Thrift Supervision;"; 
(2) by striking out "Federal Home Loan Bank Board;" and 
inserting in lieu thereof the following new items: 
"Federal Deposit Insurance Corporation, Bank Insurance 
N
^ 
Fund; 
"Federal Deposit Insurance Corporation, FSLIC Resolu-
tion Fund; 
"Federal Deposit Insurance Corporation, Savings Associa-
tion Insurance Fund;"; 
* 
(3) by striking out "Federal Home Loan Bank Board, Federal 
Savings and Loan Insurance Corporation" and inserting in lieu 
thereof "Federal Housing Finance Board"; and 
(4) by inserting after the item relating to the Postal service 
fund the following new items: 
"Resolution Funding Corporation; 
"Resolution Trust Corporation;". 
(b) Section 256(b)(4) of the Balanced Budget and Emergency Deficit 
Control Act of 1985 (2 U.S.C. 256(bX4)) is amended— 
2 use 906. 
(1) by striking out subparagraph (C) and inserting in lieu 
thereof the following new subparagraph 
"(C) Office of Thrift Supervision."; 
(2) by striking subparagraph (D) and inserting in lieu thereof 
-^ 
the following new subparagraph: 
"(D) Office of Thrift Supervision."; and 
. 
(3) by adding at the end thereof the following new subpara-
graphs: 
"(H) Resolution Funding Corporation. 
"(I) Resolution Trust Corporation.". 
(c) Section 255(gX2) of the Balanced Budget and Emergency Deficit 
Control Act of 1985 is amended by striking "Federal Savings and 
Loan Insurance Corporation fund (82-4037-0-3-371);". 
SEC. 744. CONFORMING AMENDMENTS TO FINANCIAL INSTITUTION RE-
LATED ACTS. 
(a) 
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL 
ACT.— 
103 STAT. 438 
PUBLIC LAW 101-73—AUG. 9, 1989 
(1) SECTION IOO3.—Section 1003 of the Federal Financial 
Institutions Examination Council Act of 1978 (12 U.S.C. 3302) is 
amended— 
* 
(A) in paragraph (1), by striking out "Federal Home Loan 
Bank Board" and inserting in lieu thereof "Office of Thrift 
,
- 
Supervision"; and 
, • _. 
(B) in paragraph (3), by striking out "savings and loan 
I 
association" and inserting in lieu thereof "savings associa-
tion". 
(2) SECTION 1004.—Section 1004(a)(4) of the Federal Financial 
Institutions Examination Council Act of 1978 (12 U.S.C. 
3303(a)(4)) is amended by striking out "Chairman of the Federal 
Home Loan Bank Board, and" and inserting in lieu thereof 
"Director, Office of Thrift Supervision". 
(3) SECTION looe.—Section 1006(d) of the Federal Financial 
^ 
Institutions Examination Council Act of 1978 (12 U.S.C. 3305(d)) 
is amended in the 2d sentence by inserting "and employees of 
^ the Federal Housing Finance Board" after "supervisory agen-
cies". 
(b) RIGHT TO FINANCIAL PRIVACY ACT.—Section 1101 of the Right 
to Financial Privacy Act of 1978 (12 U.S.C. 3401) is amended— 
(1) in paragraph (1), by striking out "savings and loan" and 
inserting in lieu thereof "savings association"; 
(2) in paragraph (6), by striking out subparagraph (B) and 
redesignating the remaining subparagraphs as subparagraphs 
(B) through (H), respectively; and 
(3) in paragraph (6)(B) (as so redesignated), by striking out 
"the Federal Home Loan Bank Board" and inserting in lieu 
thereof "Director, Office of Thrift Supervision". 
(c) ALTERNATIVE MORTGAGE TRANSACTIONS PARITY ACT.—The 
Alternative Mortgage Transactions Parity Act of 1982 (12 U.S.C. 
3801-06) is amended by striking out "Federal Home Loan Bank 
Board" each place such term appears and inserting in lieu thereof 
"Director of the Office of Thrift Supervision". 
(d) EXPEDITED FUNDS AVAILABILITY ACT.—Section 610(aX2) of the 
Expedited Funds Availability Act (12 U.S.C. 4009(aX2)) is amended 
to read as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision in the case of 
savings associations the deposits of which are insured by the 
Federal Deposit Insurance Corporation; and". 
(e) PAPERWORK REDUCTION ACT.—Section 2(aX10) of the Paper-
work Reduction Act of 1980 (44 U.S.C. 3502(aX10)) is amended by 
striking out "Federal Home Loan Bank Board" and inserting in lieu 
thereof "the Federal Housing Finance Board". 
(f) FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT.—Sec-
tion 602(11) of the Federal Property and Administrative Services Act 
of 1949 (40 U.S.C. 474(11)) is amended— 
(1) by inserting "or the Resolution Trust Corporation" after 
"Department of Housing and Urban Development"; 
^ 
(2) by striking out "savings and loan accounts" and inserting 
in lieu thereof savings association accounts"; and 
(3) by inserting "under the Federal Deposit Insurance Act or 
any other law." after "National Housing Act". 
(g) PUBLIC BUILDINGS ACT.—Section 13(4) of the Public Buildings 
Act of 1959 (40 U.S.C. 612(d)) is amended by striking out subpara-
graph (D). 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 439 
(h) BANK PROTECTION ACT.—Section 2 of the Bank Protection Act 
of 1968 (12 U.S.C. 1881) is amended— 
(1) in paragraph (4), by— 
(A) striking out "Federal Home Loan Bank Board" and 
inserting in lieu thereof "Director of the Office of Thrift 
Supervision"; 
(B) striking out "and login"; and 
(C) striking "associations" and all that follows through 
"Corporation"; and 
(2) in paragraph (8), by inserting "and State savings associa-
tions" before ", and". 
(i) THE FEDERAL RESERVE ACT.— 
(1) SECTION ii.—Section 11(a)(2) of the Federal Reserve Act (12 
U.S.C. 248(a)(2)) is amended by striking "(iii) Federal Home 
Loan Bank Board in the case of any institution insured by the 
Federal Savings and Loan Insurance Corporation" and insert-
ing "(iii) the Director of the Office of Thrift Supervision in the 
case of any savings association which is an insured depository 
institution (as defined in section 8 of the Federal Deposit Insur-
ance Act)". 
(2) SECTION 19 (b) .—Section 19(b)(l)(AXvi) of the Federal Re-
serve Act (12 U:S.C. 461(b)(l)(A)(vi)) is amended to read as 
follows: 
"(vi) any savings association (as defined in section 3 
of the Federal Deposit Insurance Act) which is an 
insured depository institution (as defined in such Act) 
or is eligible to apply to become an insured depository 
r 
institution under the Federal Deposit Insurance Act; 
and". 
(3) SECTION 19.—Section 19 of the Federal Reserve Act (12 
U.S.C. 461) is amended by striking out "the Federal Home Loan 
Bank Board," and inserting in lieu thereof "the Director of the 
Office of Thrift Supervision," each place it appears. 
(j) PUBLIC LAW 98-495.—Section 3 of title I of Public Law 93-495 
(12 U.S.C. 250) is amended by striking "Federal Home Loan Bank 
Board" and inserting "Director of the Office of Thrift Supervision". 
(k) TRUTH IN LENDING ACT.—Section 108(aX2) of the Truth in 
Lending Act (15 U.S.C. 1607(a)(2)) is amended to read as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision, in the case of a 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation.". 
(1) FAIR CREDIT REPORTING ACT.—Section 6210t)X2) of the Fair 
Credit Reporting Act (15 U.S.C. 1681s(bX2)) is amended to read as 
follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision, in the case of a 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation;". 
(m) EQUAL CREDIT OPPORTUNITY ACT.—Section 704(aX2) of the 
Equal Credit Opportunity Act (15 U.S.C. 1691c(aX2)) is amended to 
read as follows: 
"(2) Section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision, in the case of a 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation.". 
103 STAT. 440 
PUBLIC LAW 101-73—AUG. 9, 1989 
(n) FAIR DEBT COLLECTION PRACTICES ACT.—Section 814(bX2) of the 
Fair Debt Collection Practices Act (15 U.S.C. 1692/(bX2)) is amended 
to read as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision, in the case of a 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation;". 
(o) ELECTRONIC FUND TRANSFER ACT.—Section 917(aX2) of the 
Electronic Fund Transfer Act (15 U.S.C. 1693o(aX2)) is amended to 
read as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision, in the case of a 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation;", 
(p) HOME MORTGAGE DISCLOSURE ACT OF 1975.— 
(1) SECTION 305.—Section 305(bX2) of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2804(bX2)) is amended to read 
as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision, in the case of a 
^
^ 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation; and". 
(2) SECTION 306.—Section 306(bX2) of the Home Mortgage 
; 
Disclosure Act of 1975 (12 U.S.C. 2805(bX2)) is amended to read 
as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision in the case of a 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation.". 
: 
(3) SECTION 307.—Section 307 of the Home Mortgage Dis-
closure Act of 1975 (12 U.S.C. 2806) is amended by striking 
"Federal Home Loan Bank Board" each place it appears and 
inserting "Director of the Office of Thrift Supervision", 
(q) COMMUNITY REINVESTMENT ACT OF 1977.—Section 803(1XD) of 
the Community Reinvestment Act of 1977 (12 U.S.C. 2902(1XD)) is 
amended to read as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
Director of the Office of Thrift Supervision, in the case of a 
savings association (the deposits of which are insured by the 
Federal Deposit Insurance Corporation) and a savings and loan 
holding company;", 
(r) DEPOSITORY INSTITUTIONS MANAGEMENT INTERLOCKS ACT.— 
(1) Section 207(4) of the Depository Institutions Management 
Interlocks Act (12 U.S.C. 3206(4)) is amended to read as follows: 
"(4) the Director of the Office of Thrift Supervision with 
respect to a savings association (the deposits of which are 
insured by the Federal Deposit Insurance Corporation) and 
savings and loan holding companies,". 
(s) DEPOSITORY INSTITUTIONS DEREGULATION ACT OF 1980.—Section 
208(aX2) of the Depository Institutions Deregulation Act of 1980 (12 
U.S.C. 3507(aX2)) is amended to read as follows: 
"(2) section 8 of the Federal Deposit Insurance Act, by the 
^ 
Director of the Office of Thrift Supervision, in the case of a 
savings association the deposits of which are insured by the 
Federal Deposit Insurance Corporation.". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 441 
(t) FEDERAL TRADE COMMISSION ACT.—Section 18(fX3) of the Fed-
eral Trade Commission Act (15 U.S.C. 57a(fX3)) is amended to read 
as follows: 
"(3) Compliance with regulations prescribed under this 
subsection shall be enforced under section 8 of the Federal 
Deposit Insurance Act with respect to savings gissociations as 
defined in section 3 of the Federal Deposit Insurance Act.". 
(u) SECURITIES EXCHANGE ACT OF 1934.— 
(1) SECTION 3.—Section 3(aX34) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c(aX34)) is amended— 
(A) in subparagraph (G)— 
(i) by striking clauses (iv) and (v) and inserting the 
following: 
"(iv) the Director of the Office of Thrift Supervision, 
in the case of a savings association the deposits of 
which are insured by the Federal Deposit Insurance 
Corporation;"; and 
(ii) by redesignating clause (vi) as clause (v); and 
(B) in the second sentence, by striking "the Federal Home 
Loan Bank Board" and inserting "the Office of Thrift 
Supervision". 
(2) SECTION 12.—Section 12(i) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78/(i)) is amended— 
(A) in the first sentence— 
(i) by inserting "and savings eissociations" after 
"banks" the first place it appears; 
(ii) by striking "or institutions the accounts of which 
are insured by the Federal Savings and Loan Insurance 
Corporation"; and 
(iii) by striking paragraph (4) and inserting "(4) with 
> 
respect to savings sissociations the accounts of which 
are insured by the Federal Deposit Insurance Corpora-
tion are vested in the Office of Thrift Supervision"; and 
(B) in the second sentence, by striking "the Federal Home 
Loan Bank Board" and inserting "the Office of Thrift 
Supervision". 
(3) SECTION 15.—Section 15afXl) (15 U.S.C. 78o-5(f)(l)) of such 
Act is amended by striking "Federal Home Loan Bank Board" 
and inserting "Director of the Office of Thrift Supervision". 
TITLE VIII—BANK CONSERVATION ACT 
AMENDMENTS 
SEC. 801. DEFINITIONS. 
Section 202 of the Bank Conservation Act (12 U.S.C. 202) is 
amended— 
(1) by inserting after "national banking association" the fol-
lowing: "or any other financial institution chartered or licensed 
under Federal law and subject to the supervision of the 
Comptroller of the Currency"; and 
(2) by inserting before "and the term 'State' " the following: 
"the term 'voluntary dissolution and liquidation' means a trans-
action pursuant to section 5220 of the Revised Statutes that 
involves the assumption of the bank's insured deposit liabilities 
103 STAT. 442 
PUBLIC LAW 101-73—AUG. 9, 1989 
' 
and the sale of the bank, or of control of the bank, as a going 
concern;". 
SEC. 802. APPOINTMENT OF CONSERVATOR 
Section 203 of the Bank Conservation Act (12 U.S.C. 203) is 
amended to read as follows: 
"SEC. 203. APPOINTMENT OF CONSERVATOR. 
"(a) APPOINTMENT.—The Comptroller of the Currency may, with-
out notice or prior hearing, appoint a conservator, which may be the 
Federal Deposit Insurance Corporation, to take possession and con-
trol of a bank whenever the Comptroller determines that one or 
more of the following circumstances exist: 
"(1) any one or more of the conditions for appointment of a 
receiver for the bank specified in the first section of the Act of 
June 30,1876 (12 U.S.C. 191) are present; 
"(2) the bank is not likely to be able to meet the demands of 
its depositors or pay its obligations in the normal course of 
business; 
"(3) the bank is in an unsafe or unsound condition to transact 
business, including having substantially insufficient capital or 
otherwise; 
"(4)(A) the bank has incurred or is likely to incur losses that 
will deplete all or substantially all of its capital, and 
"(B) there is no reasonable prospect for the bank's capital to 
be replenished without Federal assistance; 
"(5) there is a violation or violations of laws, rules, or regula-
tions, or any unsafe or unsound practice or condition which is 
likely to cause insolvency or substantial dissipation of assets or 
earnings, or is likely to weaken the bank's condition or other-
wise seriously prejudice the interests of its depositors; 
"(6) there is concealment of books, papers, records, or assets of 
the bank, or refusal to submit books, papers, records, or affairs 
of the bank for inspection to any examiner or to any lawful 
agent of the Comptroller; 
\ 
"(7) there is a willful or continuing violation of an order 
enforceable against the bank under section 8(i) of the Federal 
Deposit Insurance Act; or 
(8) the bank's board of directors consists of fewer than 5 
members. 
• 
"Ot)) JUDICIAL REVIEW.— 
"(1) IN GENERAL.—Not later than 20 days after the initial 
appointment of a conservator pursuant to this section, the bank 
may bring an action in the United States district court for the 
judicial district in which the home office of such bank is located, 
or in the United States District Court for the District of Colum-
bia, for an order requiring the Comptroller to terminate the 
^ 
appointment of the conservator, and the court, upon the merits, 
shall dismiss such action or shall direct the Comptroller to 
terminate the appointment of such conservator. The Comptrol-
ler's decision to appoint a conservator pursuant to this section 
shall be set aside only if the court finds that such decision was 
arbitrary, capricious, an abuse of discretion, or otherwise not in 
accordance with law. 
"(2) STAY.—The conservator may request that any judicial 
action or proceeding to which the conservator or the bank is or 
may become a party be stayed for a period of up to 45 days after 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 443 
the appointment of the conservator. Upon petition, the court 
shall grant such stay £is to all parties. 
"(3) ACTIONS AND ORDERS.—Except as otherwise provided in 
this subsection, no court may take any action regarding the 
removal of a conservator, or restrain, or £iffect the exercise of 
powers or functions of a conservator. A court, upon application 
by the Comptroller, shall have jurisdiction to enforce an order 
of the Comptroller relating to— 
"(A) 
the 
conservatorship 
and 
the 
bank 
in 
conservatorship, or 
"(B) restraining or affecting the exercise of powers or 
functions of a conservator. 
"(c) ADDITIONAL GROUNDS FOR APPOINTMENT.—In addition to the 
foregoing provisions, the Comptroller may appoint a conservator for 
a bank if— 
"(1) the bank, by an affirmative vote of a majority of its board 
of directors or by an affirmative vote of a majority of its 
shareholders, consents to such appointment, or 
"(2) the Federal Deposit Insurance Corporation terminates 
the bank's status as an insured bank. 
The appointment of a conservator pursuant to this subsection shall 
not be subject to review. 
"(d) EXCLUSIVE AUTHORITY.—The Comptroller shall have exclusive 
power and jurisdiction to appoint a conservator for a bank. When-
ever the Comptroller appoints a conservator for any bank, the 
Comptroller may appoint the Federal Deposit Insurance Corpora-
tion conservator for such bank. The Federal Deposit Insurance 
Corporation, as such conservator, shall have all the powers granted 
under the Federal Deposit Insurance Act, and (when not inconsist-
ent therewith) any other rights, powers, and privileges possessed by 
conservators of banks under this Act and £iny other provision of law. 
The Comptroller may also appoint another person as conservator, 
who shall be subject to the provisions of this Act. 
"(e) REPLACEMENT OF CONSERVATOR.—The Comptroller 
may, 
without notice or hearing, replace a conservator with another con-
servator. Such replacement shall not affect the bank's right under 
subsection (b) to obtain judicial review of the Comptroller's original 
decision to appoint a conservator.". 
SEC. 803. EXAMINATIONS. 
Section 204 of the Bank Conservation Act (12 U.S.C. 204) is 
amended to read as follows: 
"SEC. 204. EXAMINATIONS. 
"The Comptroller of the Currency (in consultation with the Board 
of Directors of the Federal Deposit Insurance Corporation when the 
Corporation is appointed conservator) is authorized to examine and 
supervise the bank in conservatorship as long as the bank continues 
to operate as a going concern. The Comptroller may use reports and 
other information provided by the Federal Deposit Insurance Cor-
poration for this purpose.". 
SEC. 804. TERMINATION OF CONSERVATORSHIP. 
Section 205 of the Bank Conservation Act (12 U.S.C. 205) is 
amended to read as follows: 
103 STAT. 444 
PUBLIC LAW 101-73—AUG. 9, 1989 
"SEC. 205. TERMINATION OF CONSERVATORSHIP. 
"(a) GENERAL RULE.—At any time the Comptroller becomes satis-
fied that it may safely be done and that it would be in the public 
interest, the Comptroller (with the agreement of the Board of 
Directors of the Federal Deposit Insurance Corporation when the 
Corporation has been appointed conservator) may— 
"(1) terminate the conservatorship and permit the involved 
bank to resume the transaction of its business subject to such 
' 
terms, conditions, and limitations as the Comptroller may pre-
scribe; or 
' 
"(2) terminate the conservatorship upon a sale, merger, 
consolidation, purchase and assumption, change in control, or 
voluntary dissolution and liquidation of the involved bank. 
"(b) OTHER GROUNDS FOR TERMINATION.—The Comptroller also 
may terminate the conservatorship upon the appointment of a 
receiver pursuant to the first section of the Act of June 30, 1876 (12 
U.S.C. 191). 
Courts, U.S. 
"(c) ENFORCEMENT UNDER FEDERAL DEPOSIT INSURANCE ACT.— 
Such terms, conditions, and limitations as may be prescribed under 
subsection (a)(1) shall be enforceable under the provisions of section 
8(i) of the Federal Deposit Insurance Act, to the same extent as an 
order issued pursuant to section 8(b) of the Federal Deposit Insur-
ance Act which has become final. The bank may bring an action in 
the United States district court for the judicial district in which the 
home office of such bank is located or in the United States District 
Court for the District of Columbia for an order requiring the 
( 
Comptroller to terminate the order. An action for judicial review of 
-
^ 
the terms, conditions, and limitations may not be commenced later 
than 20 days from the date of the termination of the conservatorship 
or the imposition of the order, whichever is later. 
Courts, U.S. 
"(d) ACTION UPON TERMINATION.— 
"(1) IN GENERAL.—Upon termination of the conservatorship 
under subsection (aX2), the Federal Deposit Insurance Corpora-
tion, as conservator, or when another person is appointed con-
servator, such other person, shall conclude the affairs of the 
^ 
conservatorship in accordance with paragraph (2). 
"(2) DEPOSIT AND DISTRIBUTION OF PROCEEDS.—(A) Within 180 days 
of the sale, merger, consolidation, purchase and assumption, change 
in control, or voluntary dissolution and liquidation, the conservator 
shall deposit all net proceeds received from the transaction, less any 
outstanding expenses of the conservatorship, with the United States 
district court for the judicial district in which the home office of 
such bank is located and shall cause notice to be published for three 
consecutive months and notify by mail all known and remaining 
creditors and shareholders. Within 60 days thereafter, any deposi-
tor, creditor, or other claimant of the bank, or any shareholder of 
the bank may bring an action in interpleader in that court for 
distribution of the proceeds. The district court shall distribute such 
funds equitably. If no such action is instituted within one year after 
the date the funds are deposited with the district court, title to such 
net proceeds shall revert to the United States and the district court 
shall remit the funds to the Treasury of the United States. 
"(B) The conservator shall be deemed to have discharged all 
responsibility of the conservatorship upon the deposit of the pro-
ceeds with the district court and giving the required notifications.". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 445 
SEC. 805. CONSERVATOR; POWERS AND DUTIES. 
Section 206 of the Bank Conservation Act (12 U.S.C. 206) is 
amended to read as follows: 
"SEC. 206. CONSERVATOR; POWERS AND DUTIES. 
"(a) GENERAL POWERS.—A conservator shall have all the powers of 
-^ 
the shareholders, directors, and officers of the bank and may oper-
ate the bank in its own name unless the Comptroller in the order of 
appointment limits the conservator's authority. 
"Qi) SUBJECT TO RULES OF COMPTROLLER.—The conservator shall be 
subject to such rules, regulations, and orders as the Comptroller 
from time to time deems appropriate; and, except as otherwise 
specifically provided in such rules, regulations, or orders or in 
section 209 of this Act, shall have the same rights and privileges and 
be subject to the same duties, restrictions, penalties, conditions, and 
limitations as apply to directors, officers, or employees of a national 
bank. 
"(c) PAYMENT OF DEPOSITORS AND CREDITORS.—The Comptroller 
may require the conservator to set aside and make available for 
withdrawal by depositors and payment to other creditors such 
amounts as in the opinion of the Comptroller may safely be used for 
that purpose. All depositors and creditors who are similarly situated 
shall be treated in the same manner. 
"(d) COMPENSATION OF CONSERVATOR AND EMPLOYEES.—The con-
servator and professional employees appointed to represent or assist 
the conservator shall not be paid amounts greater than are payable 
to employees of the Federal Government for similar services, except 
that the Comptroller of the Currency may authorize payment at 
higher rates (but not in excess of rates prevailing in the private 
sector), if the Comptroller determines that paying such higher rates 
is necessary in order to recruit and retain competent personnel. 
"(e) EXPENSES.—All expenses of any such conservatorship shall be 
paid by the bank and shall be a lien upon the bank which shall be 
prior to any other lien.". 
.^ 
SEC. 806. LIABILITY PROTECTION. 
Section 209 of the Bank Conservation Act (12 U.S.C. 209) is 
amended to read as follows: 
"SEC. 209. LIABILITY PROTECTION. 
"(a) FEDERAL AGENCY AND EMPLOYEES.—In any case in which the 
conservator is a Federal agency or an employee of the Government, 
the provisions of chapters 161 and 171 of title 28, United States 
Code, shall apply with respect to such conservator's liability for acts 
or omissions performed pursuant to and in the course of the duties 
and responsibilities of the conservatorship. 
"(b) OTHER CONSERVATORS.—In any case where the conservator is 
not a conservator described in subsection (a), the conservator shall 
not be liable for damaiges in tort or otherwise for acts or omissions 
performed pursuant to and in the course of the duties and respon-
sibilities of the conservatorship, unless such acts or omissions con-
stitute gross negligence, including any similar conduct or any form 
of intentional tortious conduct, £is determined by a court. 
"(c) INDEMNIFICATION.—The Comptroller shall have authority to 
indemnify the conservator on such terms as the Comptroller deems 
proper.". 
103 STAT. 446 
PUBLIC LAW 101-73—AUG. 9, 1989 
SEC. 807. RULES AND REGULATIONS. 
Section 211 of the Bank Conservation Act (12 U.S.C. 211) is 
amended to read as follows: 
"SEC. 211. RULES AND REGULATIONS. 
"(a) IN GENERAL.—The Comptroller of the Currency may prescribe 
such rules and regulations as the Comptroller may deem necessary 
to carry out the provisions of this Act. 
"(b) F.D.I.C. AS CONSERVATOR.—In any case in which the Federal 
Deposit Insurance Corporation is the conservator, any rules or 
regulations prescribed by the Comptroller shall be consistent with 
any rules and regulations prescribed by the Federal Deposit Insur-
ance Corporation pursuant to the Federal Deposit Insurance Act.". 
SEC. 808. REPEALS. 
Sections 207 and 208 of the Bank Conservation Act (12 U.S.C. 207 
and 208) are repealed. 
TITLE IX—REGULATORY ENFORCEMENT 
AUTHORITY AND CRIMINAL ENHANCE-
MENTS 
Subtitle A—Expanded Enforcement Powers, 
Increased Penalties, and Improved Account-
ability 
SEC. 901. INSTITUTION-AFFILIATED PARTIES OF A DEPOSITORY INSTITU-
TION SUBJECT TO ADMINISTRATIVE ENFORCEMENT ORDERS; 
SUBSTITUTION OF "DEPOSITORY INSTITUTION" FOR "BANK" 
IN ENFORCEMENT PROVISIONS. 
(a) INSTITUTION-AFFILIATED PARTY DEFINED.—Section 206 of the 
Federal Credit Union Act (12 U.S.C. 1786) is amended by adding at 
the end thereof the following new subsection: 
"(r) INSTITUTION-AFFILIATED PARTY DEFINED.—For purposes of this 
Act, the term 'institution-affiliated party' means— 
"(1) any committee member, director, officer, or employee of, 
or agent for, an insured credit union; 
"(2) any consultant, joint venture partner, and any other 
person as determined by the Board (by regulation or on a case-
by-case basis) who participates in the conduct of the affairs of an 
insured credit union; and 
"(3) any independent contractor (including any attorney, ap-
praiser, or accountant) who knowingly or recklessly participates 
i n ^ 
"(A) any violation of any law or regulation; 
"(B) any breach of fiduciary duty; or 
"(C) any unsafe or unsound practice, 
which caused or is likely to cause more than a minimal finan-
cial loss to, or a significant adverse effect on, the insured credit 
union.". 
O
t
)
) AMENDMENTS RELATING TO USE OF "INSTITUTION-AFFILIATED 
PARTY".— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 447 
(1) FDIA.—Section 8 of the Federal Deposit Insurance Act (12 
U.S.C. 1818) is amended— 
(A) in subsection (bXD— 
(i) by striking out "director, officer, employee, agent, 
or other person participating in the conduct of the 
affairs of such a bank" and inserting in lieu thereof 
"institution-affiliated party"; and 
(ii) by striking out "directors, officers, employees, 
agents, or other persons participating in the conduct of 
the affairs of such bank" and inserting in lieu thereof 
"institution-affiliated parties"; 
(B) in each of subsections (bXD and (c)— 
(i) by striking out "director, officer, employee, agent, 
or other person participating in the conduct of the 
affairs of such bank" each place such term appears and 
inserting in lieu thereof "institution-affiliated party"; 
and 
(ii) by striking out "such director, officer, employee, 
agent, or other person" each place such term appears 
and inserting in lieu thereof "such party"; 
(C) in subsection (eX4), as so redesignated by section 
903(aX2) of this Act— 
(i) by striking out "a director, officer, or other person 
from office or to prohibit his participation" and insert-
ing in lieu thereof "an institution-affiliated party from 
office or to prohibit such party from participating"; 
(ii) by striking out "such director or officer or other 
person" and inserting in lieu thereof "such party"; 
(iii) by striking out "such director, officer, or other 
person" and inserting in lieu thereof "such party"; 
(iv) by striking out "he" and inserting in lieu thereof 
"such party"; 
(v) by striking out "any director, officer or other 
person" and inserting in lieu thereof "any such party"; 
and 
^ 
(vi) by striking out "the director, officer, or other 
person concerned" and inserting in lieu thereof "such 
party"; 
(D) in subsection (eX5), as so redesignated by section 
903(aX2)ofthisAct— 
(i) by inserting after "the term 'officer' " the follow-
ing: "within the term 'institution-affiliated party' "; 
and 
(ii) by inserting after "the term 'director' " the fol-
lowing: "within the term 'institution-affiliated party' as 
used in this subsection"; 
(E) in subsection (f)— 
(i) by striking out "any director, officer, or other 
person" and inserting in lieu thereof "any institution-
affiliated party"; and 
(ii) by striking out "such director, officer, or other 
person' each place such term appears and inserting in 
lieu thereof "such party"; 
(F) in subsection (gXD— 
(i) by striking out "director or officer of an insured 
bank, or other person participating in the conduct of 
103 STAT. 448 
PUBLIC LAW 101-73—AUG. 9, 1989 
A , 
the affairs of such bank" and inserting in lieu thereof 
"institution-affiliated party"; 
(ii) by striking out "the individual" each place such 
-" 
term appears and inserting in lieu thereof "such 
^ 
, . 
party"; 
(iii) by striking out "such director, officer, or other 
person" each place such term appears and inserting in 
, 
lieu thereof "such party"; 
(iv) by striking out "him" each place such term 
' 
, 
appears and inserting in lieu thereof "such party"; 
(v) by striking out "director, officer or other person" 
and inserting in lieu thereof "party"; and 
(vi) by striking out "whereupon such director or offi-
cer" and inserting in lieu thereof "whereupon such 
party (if a director or an officer)"; 
(G) in subsection (g)(3)— 
(i) by striking out "the director, officer, or other 
^ 
person concerned" and inserting in lieu thereof "the 
institution-affiliated party concerned"; 
(ii) by striking out "such individual" each place such 
., 
term appears and inserting in lieu thereof "such 
party"; 
(iii) by striking out "the concerned director, officer, 
or other person' and inserting in lieu thereof "such 
party"; 
(iv) by striking out "the director, officer, or other 
person" each place such term appears (except in "the 
director, officer, or other person concerned") and 
inserting in lieu thereof "such party"; 
(v) by striking out "said director, officer or other 
person" and inserting in lieu thereof "such party"; and 
(vi) by striking out "the director, officer or other 
person" and inserting in lieu thereof "such party"; 
(H) in subsection (h)(2), by striking out "director or officer 
or other person" and inserting in lieu thereof "institution-
affiliated party"; 
(I) in subsection (1), by striking out "director or officer 
thereof or other person participating in the conduct of its 
affairs" and inserting in lieu thereof "institution-affiliated 
party"; and 
(J) in subsection (m), by striking out "director or officer or 
other person participating in the conduct of its affairs" and 
inserting in lieu thereof "institution-affiliated party". 
(2) FCUA.—Section 206 of the Federal Credit Union Act (12 
U.S.C. 1786) is amended— 
(A) in subsection (e)(1)— 
• 
-
^ 
(i) by striking out "director, officer, committee 
member, employee, agent, or other person participating 
in the conduct of the affairs of such a credit union" and 
"•'ar- 
inserting in lieu thereof "institution-affiliated party"; 
and 
(ii) by striking out "directors, officers, committee 
i i members, employees, agents, or other persons partici-
pating in the conduct of the affairs of such credit 
union" and inserting in lieu thereof "institution-affili-
ated parties"; 
(B) in each of subsections (e)(1) and (f)— 
PUBLIC LAW 101-73—AUG. 9,1989 
103 STAT. 449 
(i) by striking out "director, officer, 
committee 
member, employee, agent, or other person participating 
in the conduct of the affairs of such credit union' each 
place such term appears and inserting in lieu thereof 
institution-affiliated party"; and 
(ii) by striking out "such director, officer, committee 
member, employee, agent, or other person" each place 
such term appears and inserting in lieu thereof * such 
party"; and 
(C) in subsection (fXD, by striking out "such director, 
officer, committee member, employee, agents, or other 
person" and inserting in lieu thereof "such party"; 
(D) in subsection (iXl)— 
(i) by striking out "director, committee member, or 
officer of an insured credit union, or other person 
participating in the conduct of the affairs of such credit 
union' and inserting in lieu thereof "institution-affili-
ated party"; 
(ii) by striking out "the individual" each place such 
term appears and inserting in lieu thereof "such 
party"; 
(iii) by striking out "such director, committee 
member, officer, or other person" each place such term 
appears and inserting in lieu thereof "such party"; 
(iv) by striking out "him" and inserting in lieu 
thereof such party"; 
(v) by striking out "director, officer or other person" 
and inserting in lieu thereof "party"; and 
(vi) by striking out "whereupon such director, 
committee member, or officer" and inserting in lieu 
thereof "whereupon such party (if a director, a commit-
tee member, or an officer)^; 
(E) in subsection (iX3)— 
(i) by striking out "director, committee member, offi-
cer, or other person concerned" and inserting in lieu 
thereof "institution-affiliated party concerned'; and 
(ii) by striking out "such individual" each place such 
term appears and inserting in lieu thereof "such 
party"; 
(iii) by striking out "the concerned director, commit-
tee member, officer, or other person" and inserting in 
lieu thereof "such party"; 
(iv) by striking out "the director, committee member, 
officer, or other person" each place such term appears 
(except in "the director, committee member, officer, or 
other person concerned") and inserting in lieu thereof 
"such party"; and 
(v) by striking out "said director, committee member, 
officer or other person" and inserting in lieu thereof 
i 
"such party"; 
(F) in subsection (jX2), by striking out "director, officer, 
committee member, or other person" and inserting in lieu 
thereof "institution-affiliated party"; and 
(G) in subsection (o), by striking out "director, officer, 
committee member or other person participating in the 
conduct of its affairs" and inserting in lieu thereof "institu-
tion-affiliated party". 
103 STAT. 450 
PUBLIC LAW 101-73—AUG. 9, 1989 
(d) SUBSTITUTION OF "DEPOSITORY INSTITUTION" FOR "BANK".— 
Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), as 
amended by subsection (b)(1) of this section, is amended by striking 
out "bank" and "banks" each place such terms appear and inserting 
in lieu thereof "depository institution" and "depository institu-
tions", respectively, except in subsections (b)(3), (b)(4), (m), (o), and 
(r). 
SEC. 902. AMENDMENTS TO CEASE AND DESIST AUTHORITY WITH RE-
SPECT TO RESTITUTION, RESTRICTIONS ON SPECIFIC ACTIVI-
TIES, GROUNDS FOR ISSUANCE OF A TEMPORARY ORDER. AND 
INCOMPLETE OR INACCURATE RECORDS. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.— 
(1) CEASE AND DESIST AUTHORITY.—Section 8(b) of the Federal 
Deposit Insurance Act (12 U.S.C. 1818(b)) is amended— 
(A) in paragraph (3), by striking out "subsections (c) 
»
j
. 
through (f) and (h) through (n)" and inserting in lieu thereof 
"subsections (c) through (s) and subsection (u)"; 
(B) in paragraph (4), by striking out "subsections (c) 
through (0 and (h) through (n)" and inserting in lieu thereof 
"subsections (c) through (s) and subsection (u)"; and 
(C) by adding at the end thereof the following new para-
graphs: 
"(6) AFFIRMATIVE ACTION TO CORRECT CONDITIONS RESULTING 
FROM VIOLATIONS O
R PRACTICES.—The authority to issue an order 
under this subsection and subsection (c) which requires an 
, 
' 
insured depository institution or any institution-affiliated party 
to take affirmative action to correct any conditions resulting 
from any violation or practice with respect to which such order 
is issued includes the authority to require such depository 
institution or such party to— 
"(A) make restitution or provide reimbursement, indem-
nification, or guarantee against loss if— 
"(i) such depository institution or such party was 
unjustly enriched in connection with such violation or 
practice; or 
/ w 
' 
"(ii) the violation or practice involved a reckless 
disregard for the law or any applicable regulations or 
prior order of the appropriate Federal banking agency; 
"(B) restrict the growth of the institution; 
"(C) dispose of any loan or asset involved; 
"(D) rescind agreements or contracts; and 
"(E) employ qualified officers or employees (who may be 
subject to approval by the appropriate Federal banking 
agency at the direction of such agency); and 
"(F) take such other action as the banking agency deter-
mines to be appropriate. 
"(7) AUTHORITY TO LIMIT ACTIVITIES.—The authority to issue 
an order under this subsection or subsection (c) includes the 
authority to place limitations on the activities or functions of an 
insured depository institution or any institution-affiliated party. 
"(8) EXPANSION OF AUTHORITY TO SAVINGS AND LOAN AFFIU-
- 
ATES AND ENTITIES.—Subsections (a) through (s) and subsection 
(u) shall apply to any savings and loan holding company and to 
any subsidiary (other than a bank or subsidiary of that bank) of 
a savings and loan holding company, to any service corporation 
of a savings association and to any subsidiary of such service 
PUBLIC LAW 101-73—AUG. 9,1989 
103 STAT. 451 
corporation, whether wholly or partly owned, in the same 
manner as such subsections apply to a savings association.". 
(2) TEMPORARY CEASE AND DESIST AUTHORITY.—Section 8(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1818(c)) is amend-
ed— 
(A) in paragraph (1)— 
(i) by striking out "substantial" and inserting in lieu 
thereof "significant"; 
(ii) by striking out "seriously" each place such term 
appears; and 
(iii) by inserting after the 1st sentence the following 
new sentence: "Such order may include any require-
ment authorized under subsection (bX6)(B)."; and 
(B) by adding at the end thereof the following new para-
graph: 
"(8) INCOMPLETE OR INACCURATE RECORDS.— 
"(A) TEMPORARY ORDER.—If a notice of charges served 
under subsection (bXD specifies, on the basis of particular 
facts and circumstances, that an insured depository institu-
tion's books and records are so incomplete or inaccurate 
that the appropriate Federal banking agency is unable, 
through the normal supervisory process, to determine the 
financial condition of that depository institution or the 
details or purpose of any transaction or transactions that 
may have a material effect on the financial condition of 
that depository institution, the agency may issue a tem-
porary order requiring— 
"(i) the cessation of any activity or practice which 
gave rise, whether in whole or in part, to the incom-
plete or inaccurate state of the books or records; or 
"(ii) affirmative action to restore such books or 
records to a complete and accurate state, until the 
completion of the proceedings under subsection (bXD-
"(B) EFFECTIVE PERIOD.—Any temporary order issued 
under subparagraph (A)— 
"(i) shall become effective upon service; and 
"(ii) unless set aside, limited, or suspended by a court 
in proceedings under paragraph (2), shall remain in 
effect and enforceable until the earlier of— 
"(I) the completion of the proceeding initiated 
under subsection (b)(1) in connection with the 
notice of charges; or 
"(II) the date the appropriate Federal banking 
agency determines, by examination or otherwise, 
that the insured depository institution's books and 
records are accurate and reflect the financial 
condition of the depository institution.", 
(b) CREDIT UNIONS INSURED BY THE NCUA.— 
(1) CEASE AND DESIST AUTHORITY.—Section 206(e) of the Fed-
eral Credit Union Act (12 U.S.C. 1786(e)) is amended by adding 
at the end thereof the following new paragraphs: 
"(3) AFFIRMATIVE ACTION TO CORRECT CONDITIONS RESULTING 
FROM VIOLATIONS O
R PRACTICES.—The authority to issue an order 
under this subsection and subsection (f) which requires an 
insured credit union or any institution-affiliated party to take 
affirmative action to correct any conditions resulting from any 
violation or practice with respect to which such order is issued 
103 STAT. 452 
PUBLIC LAW 101-73—AUG. 9, 1989 
includes the authority to require such insured credit union or 
such party to— 
'
« 
"(A) make restitution or provide reimbursement, indem-
nification, or guarantee against loss if— 
"(i) such credit union or such party was unjustly 
enriched in connection with such violation or practice; 
or 
"(ii) the violation or practice involved a reckless 
disregard for the law or any applicable regulations or 
prior order of the Board; 
' 
"(B) restrict the growth of the institution; 
"(C) rescind agreements or contracts; 
"(D) dispose of any loan or asset involved; and 
"(E) employ qualified officers or employees (who may be 
subject to approval by the Board at the direction of such 
Board); and 
"(F) take such other action as the Board determines to be 
appropriate. 
"(4) AUTHORITY TO LIMIT ACTIVITIES.—The authority to issue 
an order under this subsection or subsection (f) includes the 
authority to place limitations on the activities or functions of an 
insured credit union or any institution-affiliated party.". 
(2) TEMPORARY CEASE AND DESIST AUTHORITY.—Section 206(f) of 
the Federal Credit Union Act (12 U.S.C. 1786(f)) is amended— 
(A) by redesignating paragraph (3) as paragraph (4); 
(B) in paragraph (1)— 
(i) by striking out "substantial" and inserting in lieu 
thereof "significant"; 
(ii) by striking out "seriously" each place such term 
appears; and 
(iii) by inserting after the 1st sentence the following 
new sentence: "Such order may include any require-
ment authorized under subsection (eX3XB)."; and 
(C) by inserting after paragraph (2) the following new 
paragraph: 
"(3) INCOMPLETE OR INACCURATE RECORDS.— 
"(A) TEMPORARY ORDER.—If a notice of charges served 
under subsection (eXl) specifies, on the basis of particular 
facts and circumstances, that an insured credit union's 
books and records are so incomplete or inaccurate that the 
Board is unable, through the normsd supervisory process, to 
determine the financial condition of that insured credit 
union or the details or purpose of any transaction or trans-
actions that may have a material effect on the financial 
condition of that insured credit union, the Board may issue 
a temporary order requiring— 
"(i) the cessation of any activity or practice which 
gave rise, whether in whole or in part, to the incom-
plete or inaccurate state of the books or records; or 
"(ii) affirmative action to restore such books or 
records to a complete and accurate state, until the 
completion of the proceedings under subsection (eXD-
"(B) EFFECTIVE PERIOD.—Any temporary order issued 
under subparagraph (A)— 
"(i) shall become effective upon service; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 453 
"(ii) unless set aside, limited, or suspended by a court 
in proceedings under paragraph (2), shall remain in 
effect and enforceable until the earlier of^ 
"(I) the completion of the proceeding initiated 
under subsection (e)(1) in connection with the 
notice of charges; or 
"(ID the date the Board determines, by examina-
tion or otherwise, that the insured credit union's 
^ 
books and records are accurate and reflect the 
financial condition of the credit union.". 
SEC. 903. MERGER OF REMOVAL AND PROHIBITION AUTHORITY. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.— 
(1) IN GENERAL.—Section 8(e)(1) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1818(e)(1)) is amended to read as follows: 
"(e) REMOVAL AND PROHIBITION AUTHORITY.— 
"(1) AUTHORITY TO ISSUE ORDER.—Whenever the appropriate 
Federal banking agency determines that— 
"(A) any institution-affiliated party has, directly or in-
directly— 
^ 
* 
"(i) violated— 
"(I) any law or regulation; 
"(II) any cease-and-desist 
order which 
has 
become final; 
"(III) any condition imposed in writing by the 
appropriate Federal banking agency in connection 
with the grant of any application or other request 
by such depository institution; or 
"(IV) any written agreement between such 
depository institution and such agency; 
"(ii) engaged or participated in any unsafe or un-
sound practice in connection with any insured deposi-
tory institution or business institution; or 
' (iii) committed or engaged in any act, omission, or 
practice which constitutes a breach of such party's 
fiduciary duty; 
"(B) by reason of the violation, practice, or breach de-
scribed in any clause of subparagraph (A)— 
"(i) such insured depository institution or business 
,-
institution has suffered or will probably suffer finan-
cial loss or other damage; 
"(ii) the interests of the insured depository institu-
tion's depositors have been or could be prejudiced; or 
"(iii) such party has received financial gain or other 
benefit by reason of such violation, practice, or breach; 
and 
"(C) such violation, practice, or breach— 
"(i) involves personal dishonesty on the part of such 
party; or 
"(ii) demonstrates willful or continuing disregard by 
such party for the safety or soundness of such insured 
depository institution or business institution, 
the agency may serve upon such party a written notice of the 
agency's intention to remove such party from office or to pro-
hibit any further participation by such party, in any manner, in 
the conduct of the affairs of any insured depository institu-
tion.". 
103 STAT. 454 
PUBLIC LAW 101-73—AUG. 9, 1989 
(2) TEMPORARY SUSPENSION OR PROHIBITION.—Section 8(e) of 
the Federal Deposit Insurance Act (12 U.S.C. 1818(e)) is amend-
ed by striking out paragraphs (2) and (4), by redesignating 
paragraphs (3), (5), and (6) as paragraphs (2), (4), and (5), respec-
tively, and by inserting after paragraph (2) (as so redesignated) 
the following new paragraph: 
"(3) SUSPENSION ORDER.— 
"(A) SUSPENSION OR PROHIBITION AUTHORIZED.—If the 
appropriate Federal banking agency serves written notice 
under paragraph (1) or (2) to any institution-affiliated party 
of such agency's intention to issue an order under such 
paragraph, the appropriate Federal banking agency may 
suspend such party from office or prohibit such party from 
further participation in any manner in the conduct of the 
affairs of the depository institution, if the agency— 
"(i) determines that such action is necessary for the 
protection of the depository institution or the interests 
of the depository institution's depositors; and 
"(ii) serves such party with written notice of the 
suspension order. 
"(B) EFFECTIVE PERIOD.—Any suspension order issued 
under subparagraph (A)— 
"(i) shall become effective upon service; and 
,
^ 
"(ii) unless a court issues a stay of such order under 
subsection (f), shall remain in effect and enforceable 
until— 
"(I) the date the appropriate Federal banking 
agency dismisses the charges contained in the 
notice served under paragraph (1) or (2) with re-
spect to such party; or 
"(II) the effective date of an order issued by the 
agency to such party under paragraph (1) or (2). 
"(C) COPY OF ORDER.—If an appropriate Federal banking 
agency issues a suspension order under subparagraph (A) to 
any institution-affiliated party, the agency shall serve a 
copy of such order on any insured depository institution 
with which such party is associated at the time such order 
is issued.". 
(3) PROHIBITION OF CERTAIN SPECIFIC ACTIVITIES.—Section 8(e) 
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)) is 
amended by adding after paragraph (5) (as so redesignated by 
paragraph (2) of this subsection) the following new paragraph: 
"(6) PROHIBITION OF CERTAIN SPECIFIC ACTIVITIES.—Any person 
subject to an order issued under this subsection shall not— 
"" 
"(A) participate in any manner in the conduct of the 
affairs of any institution or agency specified in paragraph 
(7XA); 
"(B) solicit, procure, transfer, attempt to transfer, vote, or 
attempt to vote any proxy, consent, or authorization with 
respect to any voting rights in any institution described in 
subparagraph (A); 
"(C) violate any voting agreement previously approved by 
the appropriate Federal banking agency; or 
t- 
"(D) vote for a director, or serve or act as an institution-
affiliated party.". 
(4) CONFORMING AMENDMENTS.— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 455 
(A) Section 8(f) of the Federal Deposit Insurance Act (12 
U.S.C. 1818(f)) is amended— 
; 
(i) by striking out "(e)(4)" and inserting in lieu 
thereof "(eX3)"; and 
(ii) by striking out "(e)(1), (e)(2), or (eX3)" and insert-
ing in lieu thereof "(e)(1) or (e)(2)". 
(B) Section 8(gXl) of the Federal Deposit Insurance Act 
(12 U.S.C. 1818(gXl)) is amended by striking out "(1), (2), (3), 
or (4)" and inserting in lieu thereof "(1), (2), or (3)". 
(b) CREDIT UNIONS INSURED BY THE N C U A . — 
(1) IN GENERAL.—Section 206(gXl) of the Federal Credit Union 
Act (12 U.S.C. 1786(gXl)) is amended to read as follows: 
"(g) REMOVAL AND PROHIBITION AUTHORITY.— 
^ 
"(1) AUTHORITY TO ISSUE ORDER.—Whenever the Board deter-
mines that— 
"(A) any institution-affiliated party has, directly or in-
directly— 
"(i) violated— 
"(I) any law or regulation; 
"(II) any cease-and-desist 
order which has 
• 
become final; 
"(III) any condition imposed in writing by the 
Board in connection with the grant of any applica-
' 
tion or other request by such credit union; or 
"(IV) any written agreement between such credit 
union and the Board; 
"(ii) engaged or participated in any unsafe or un-
sound practice in connection with any insured credit 
union or business institution; or 
"(iii) committed or engaged in any act, omission, or 
practice which constitutes a breach of such party's 
fiduciary duty; 
"(B) by reason of the violation, practice, or breach de-
scribed in any clause of subparagraph (A)— 
"(i) such insured credit union or business institution 
haB suffered or will probably suffer financial loss or 
other damage; 
; 
"(ii) the interests of the insured credit union's mem-
bers have been or could be prejudiced; or 
"(iii) such party has received financial gain or other 
benefit by reason of such violation, practice or breach; 
and 
"(C) such violation, practice, or breach— 
"(i) involves personal dishonesty on the part of such 
party; or 
"(ii) demonstrates such party's unfitness to serve as a 
director or officer of, or to otherwise participate in the 
conduct of the affairs of, an insured credit union, 
the Board may serve upon such party a written notice of the 
Board's intention to remove such party from office or to prohibit 
any further participation, by such party, in any manner in the 
conduct of the affairs of any insured credit union.". 
(2) TEMPORARY SUSPENSION OR PROHIBITION.—Section 206(g) of 
the Federal Credit Union Act (12 U.S.C. 1786(g)) is amended by 
striking out paragraphs (2) and (4), by redesignating paragraphs 
(3) and (5) as paragraphs (2) and (4), respectively, and by insert-
103 STAT. 456 
PUBLIC LAW 101-73—AUG. 9, 1989 
ing after paragraph (2) (as so redesignated) the following new 
paragraph: 
' 
"(3) SUSPENSION ORDER.— 
"(A) SUSPENSION OR PROHIBITION AUTHORIZED.—If the 
Board serves written notice under paragraph (1) or (2) to 
any institution-affiliated party of the Board's intention to 
issue an order under such paragraph, the Board may sus-
pend such party from office or prohibit such party from 
further participation in any manner in the conduct of the 
affairs of the institution, if the Board— 
"(i) determines that such action is necessary for the 
protection of the credit union or the interests of the 
credit union's members; and 
"(ii) serves such person with written notice of the 
suspension order. 
"(B) EFFECTIVE PERIOD.—Any suspension order issued 
under subparagraph (A)— 
"(i) shall become effective upon service; and 
^ 
_ 
"(ii) unless a court issues a stay of such order under 
paragraph (6), shall remain in effect and enforceable 
until— 
"(I) the date the Board dismisses the charges 
contained in the notice served under paragraph (1) 
, 
or (2) with respect to such party; or 
"(II) the effective date of an order issued by the 
Board to such person under paragraph (1) or (2). 
"(C) COPY OF ORDER.—If the Board issues a suspension 
order under subparagraph (A) to any institution-affiliated 
party, the Board shall serve a copy of such order on any 
insured credit union with which such party is associated at 
the time such order is issued.". 
(3) PROHIBITION OF CERTAIN SPECIFIC ACTIVITIES REQUIRED.— 
Section 206(g) of the Federal Credit Union Act (12 U.S.C. 
1786(g)) is amended by adding after paragraph (4) (as so redesig-
nated by paragraph (2) of this subsection) the following new 
paragraph: 
"(5) PROHIBITION OF CERTAIN SPECIFIC ACTIVITIES.—Any person 
subject to an order issued under this subsection shall not— 
"(A) participate in any manner in the conduct of the 
affairs of any institution or agency specified in paragraph 
(7XA); 
"(B) solicit, procure, transfer, attempt to transfer, vote, or 
attempt to vote any proxy, consent, or authorization with 
respect to any voting rights in any institution described in 
subparagraph (A); 
"(C) violate any voting agreement previously approved by 
the appropriate Federal banking agency; or 
"(D) vote for a director, or serve or act as an institution-
affiliated party.". 
(4) CONFORMING AMENDMENTS.—Section 206(gX6) of the Fed-
eral Credit Union Act (12 U.S.C. 1786(gX6)) is amended— 
(A) by striking out "paragraph (4)" and inserting in lieu 
thereof "paragraph (3)"; and 
(B) by striking out "(1), (2), or (3)" and inserting in lieu 
thereof "(Dor (2)". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 457 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
12 use 1786 
apply with respect to violations committed and activities engaged in 
^°^-
after the date of the enactment of this Act. 
SEC. 904. INDUSTRYWIDE APPLICATION OF REMOVAL, SUSPENSION, AND 
PROHIBITION ORDERS. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.—Section 8(e) 
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)) is amended 
by inserting after the paragraph added by section 903(a)(3) of this 
Act the following new paragraph: 
"(7) INDUSTRYWIDE PROHIBITION.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), any person who, pursuant to an order issued under this 
subsection or subsection (g), h£is been removed or suspended 
from office in an insured depository institution or prohib-
ited from participating in the conduct of the affairs of an 
insured depository institution may not, while such order is 
in effect, continue or commence to hold any office in, or 
participate in any manner in the conduct of the affairs of— 
"(i) any insured depository institution; 
"(ii) any institution treated as an insured bank under 
subsection (b)(3) or (b)(4), or as a savings association 
under subsection (b)(8); 
"(iii) any insured credit union under the Federal 
Credit Union Act; 
"(iv) any institution chartered under the Farm Credit 
Act of 1971; 
"(v) any appropriate Federal depository institution 
regulatory agency; 
"(vi) the Federal Housing Finance Board and any 
Federal home loan bank; and 
"(vii) the Resolution Trust Corporation. 
"(B) EXCEPTION IF AGENCY PROVIDES WRITTEN CONSENT.— 
If, on or after the date an order is issued under this 
subsection which removes or suspends from office any 
institution-affiliated party or prohibits such party from 
participating in the conduct of the affairs of an insured 
depository institution, such party receives the written con-
sent of— 
"(i) the Eigency that issued such order; and 
"(ii) the appropriate Federal financial institutions 
regulatory agency of the institution described in any 
. c ' 
clause of subparagraph (A) with respect to which such 
party proposes to become an 
institution-affiliated 
party, 
subparagraph (A) shall, to the extent of such consent, cease 
to apply to such party with respect to the institution de-
scribed in each written consent. Any agency that grants 
Reports, 
such a written consent shall report such action to the Public 
Corporation and publicly disclose such consent. 
information. 
"(C) VIOLATION OF PARAGRAPH TREATED AS VIOLATION OF 
ORDER.—Any violation of subparagraph (A) by any person 
who is subject to an order described in such subparagraph 
shall be treated as a violation of the order. 
"(D) APPROPRIATE FEDERAL FINANCIAL INSTITUTIONS REGU-
LATORY AGENCY DEFINED.—For purposes of this paragraph 
103 STAT. 458 
PUBLIC LAW 101-73—AUG. 9, 1989 
f 
and subsection 0')> the term "appropriate Federal financial 
institutions regulatory agency" means— 
"(i) the appropriate Federal banking agency, in the 
case of an insured depository institution; 
"(ii) the Farm Credit Administration, in the case of 
an institution chartered under the Farm Credit Act of 
1971; 
"(iii) the National Credit Union Administration 
' : 
Board, in the case of an insured credit union (as defined 
in section 101(7) of the Federal Credit Union Act); 
"(iv) the Secretary of the Treasury, in the case of the 
Federal Housing Finance Board and any Federal home 
loan bank; and 
"(v) the Oversight Board, in the case of the Resolu-
tion Trust Corporation. 
"(E) CONSULTATION BETWEEN AGENCIES.—The agencies re-
ferred to in clauses (i) and (ii) of subparagraph (B) shall 
consult with each other before providing any written con-
sent described in subparagraph (B). 
"(F) AppLiCABiLrry.—This paragraph shall only apply to a 
person who is an individual, unless the appropriate Federal 
banking agency specifically finds that it should apply to a 
corporation, firm, or other business enterprise.", 
(b) CREDIT UNIONS INSURED BY THE NCUA.—Section 206(g)(7) of 
the Federal Credit Union Act (12 U.S.C. 1786(gX7)) is amended to 
read as follows: 
"(7) INDUSTRYWIDE PROHIBITION.— 
"(A) IN GENERAL.—Except as provided in subparagraph (B), 
any person who, pursuant to an order issued under this subsec-
tion or subsection (i), has been removed or suspended from office 
in an insured credit union or prohibited from participating in 
the conduct of the affairs of an insured credit union may not, 
while such order is in effect, continue or commence to hold any 
office in, or participate in any manner in the conduct of the 
affairs of— 
"(i) any insured depository institution; 
"(ii) any institution treated as an insured bank under 
paragraph (3) or (4) of section 8(b) of the Federal Deposit 
Insurance Act, or as a savings association under section 
8(b)(8) of such Act; 
"(iii) any insured credit union; 
"(iv) any institution chartered under the Farm Credit Act 
of 1971; 
"(v) any appropriate Federal depository institution regu-
latory agency; 
"(vi) the Federal Housing Finance Board and any Federal 
home loan bank; and 
"(vii) the Resolution Trust Corporation. 
"(B) EXCEPTION IF AGENCY PROVIDES WRITTEN CONSENT.— 
If, on or after the date an order is issued under this 
subsection which removes or suspends from office any 
institution-affiliated party or prohibits such party from 
participating in the conduct of the affairs of an insured 
credit union, such party receives the written consent of— 
"(i) the Board; and 
"(ii) the appropriate Federal financial institutions 
regulatory agency of the institution described in any 
information. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 459 
clause of subparagraph (A) with respect to which such 
party proposes to become an institution-affiliated 
c 
party, 
subparagraph (A) shall, to the extent of such consent, cease 
to apply to such party with respect to the institution de-
scribed in each written consent. If any person receives such 
a written consent from the Board, the Board shall publicly 
disclose such consent. If the agency referred to in clause (ii) Reports. 
grants such a written consent, such agency shall report 
?^^|^ 
such action to the Board and publicly disclose such consent. 
"(C) VIOLATION OP PARAGRAPH TREATED AS VIOLATION OP 
ORDER.—Any violation of subparagraph (A) by any person 
who is subject to an order described in such subparagraph 
shall be treated as a violation of the order. 
"(D) APPROPRIATE FEDERAL FINANCIAL INSTITUTIONS REGU-
* 
L
A
T
O
R
Y AGENCY DEFINED.—For purposes of this paragraph 
and subsection (1), the term "appropriate Federal financial 
institutions regulatory agency" means— 
"(i) the appropriate Federal banking agency, as pro-
vided in section 3(q) of the Federal Deposit Insurance 
Act; 
"(ii) the Farm Credit Administration, in the case of 
an institution chartered under the Farm Credit Act of 
1971; 
"(iii) the National Credit Union Administration 
Board, in the case of an insured credit union (as defined 
- 
in section 101(7) of the Federal Credit Union Act); 
"(iv) the Secretary of the Treasury, in the case of the 
Federal Housing Finance Board and any Federal home 
loan bank; and 
"(v) the Oversight Board, in the case of the Resolu-
tion Trust Corporation. 
"(E) CONSULTATION BETWEEN AGENCIES.—The agencies re-
ferred to in clauses (i) and (ii) of subparagraph (B) shall 
consult with each other before providing any written con-
sent described in subparagraph (B). 
"(F) APPUCABIUTY.—This paragraph shall only apply to a 
person who is an individual, unless the Board specifically 
finds that it should apply to a corporation, firm, or other 
business enterprise.". 
SEC. 905. ENFORCEMENT PROCEEDINGS ALLOWED AFTER SEPARATION 
FROM SERVICE. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.—Section 8(i) of 
the Federal Deposit Insurance Act (12 U.S.C. 1818(i)) is amended by 
adding at the end thereof the following new paragraph: 
"(3) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERV-
ICE.—The resignation, termination of employment or participa-
tion, or separation of an institution-affiliated party (including a 
separation caused by the closing of an insured depository 
institution) shall not affect the jurisdiction and authority of the 
appropriate Federal banking agency to issue any notice and 
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 such a party with respect to such 
depository institution (whether such date occurs before, on, or 
after the date of the enactment of this paragraph).". 
103 STAT. 460 
PUBLIC LAW 101-73—AUG. 9, 1989 
(b) CREDIT UNIONS INSURED BY THE NCUA.—Section 206(k) of the 
Federal Credit Union Act (12 U.S.C. 1786(k)) is amended by adding 
at the end thereof the following new paragraph: 
"(3) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERV-
ICE.—The resignation, termination of employment or participa-
tion, or separation of a institution-affiliated party (including a 
separation caused by the closing of an insured credit union) 
shall not affect the jurisdiction £uid authority of the Board to 
issue any notice and 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 such a 
party with respect to such credit union (whether such date 
occurs before, on, or after the date of the enactment of this 
paragraph).". 
(c) CHANGE IN CONTROL OF DEPOSITORY INSTITUTION.—Section 
7(jX15) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)(15)) is 
amended by adding at the end thereof the following new sentence: 
"The resignation, termination of employment or participation, 
divestiture of control, or separation of or by an institution-affiliated 
party (including a separation caused by the closing of a depository 
institution) shall not affect the jurisdiction and authority of the 
appropriate Federal banking agency to issue any notice and proceed 
under this subsection 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 such a party with respect to such depository institution 
(whether such date occurs before, on, or after the date of the 
enactment of this sentence).". 
(d) NONMEMBER INSURED BANKS AND SAVINGS ASSOCIATIONS.— 
Section 180') of the Federal Deposit Insurance Act (12 U.S.C. 18280')) 
is amended by adding at the end the following new paragraph: 
"(6) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERV-
ICE.—The resignation, termination of employment or participa-
tion, or separation of an institution-affiliated party (including a 
separation caused by the closing of a nonmember bank or a 
savings association) shall not affect the jurisdiction and author-
ity of the Corporation or the Director of the Office of Thrift 
Supervision, as appropriate, to issue any notice and 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 such a party with respect to such 
nonmember bank or such savings association (whether such 
date occurs before, on, or after the date of the enactment of this 
paragraph).". 
(e) NATIONAL BANKS.—Section 5239 of the Revised Statutes (12 
U.S.C. 93) is amended by adding at the end thereof the following 
new subsection: 
"(c) 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 
such an Eissociation (including a separation caused by the closing of 
such an association) shall not affect the jurisdiction and authority of 
the Clomptroller of the Currency to issue any notice and 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 such a party with respect to such association (whether 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 461 
such date occurs before, on, or after the date of the enactment of this 
subsection).". 
(f) MEMBER BANKS.—Section 29 of the Federal Reserve Act (12 
U.S.C. 504(a)), as added by section 907(g) of this Act, is amended by 
adding at the end the following new subsection: 
"(m) 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 member bank (including a separation caused by the closing of such 
a bank) shall not affect the jurisdiction and authority of the appro-
priate Federal banking agency to issue any notice and 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 such a party with respect to such bank (whether such 
date occurs before, on, or after the date of the enactment of this 
subsection).". 
(g) MEMBER BANKS.—Section 19 of the Federal Reserve Act (12 
U.S.C. 505) is amended by adding at the end thereof the following 
12 USC 506. 
new subsection: 
"(m) 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 member bank (including a separation caused by the closing of such 
a bank) shall not affect the jurisdiction and authority of the Board 
to issue any notice and 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 such a party with 
respect to such bank (whether such date occurs before, on, or after 
the date of the enactment of this subsection).". 
(h) BANKS.—Section 106(b)(2) of the Bank Holding Company Act 
Amendments of 1970 (12 U.S.C. 1972(2)) is amended by adding at the 
end the following new subparagraph: 
"(I) 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 
such a bank (including a separation caused by the closing of such a 
bank) shall not affect the jurisdiction and authority of the appro-
priate Federal banking agency to issue any notice and 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 such a party with respect to such bank (whether such 
date occurs before, on, or after the date of the enactment of this 
subparagraph).". 
(i) BANK HOLDING COMPANIES.—Section 8 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1847) is amended by adding at the 
end the following new subsection: 
"(c) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERV-
ICE.—The resignation, termination of emplojonent or participation, 
or separation of an institution-affiliated party (vdthin the meaning 
of section 3(u) of the Federal Deposit Insurance Act) with respect to 
a bank holding company (including a separation caused by the 
deregistration of such a company) shall not affect the jurisdiction 
, 
and authority of the Board to issue any notice and proceed under 
this section against any such party, if such notice is served before 
103 STAT. 462 
PUBLIC LAW 101-73—AUG. 9, 1989 
the end of the 6-year period beginning on the date such party ceased 
to be such a party with respect to such holding company (whether 
such date occurs before, on, or after the date of the enactment of this 
subsection).". 
0) SAVINGS AND LOAN HOLDING COMPANIES.—Section 10(i) of the 
Home Owners' Loan Act (as amended by section 301 of this Act) is 
amended by adding at the end thereof the following new paragraph: 
"(5) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM SERV-
ICE.—The resignation, termination of employment or participa-
tion, or separation of an institution-affiliated party (within the 
meaning of section 3(u) of the Federal Deposit Insurance Act) 
with respect to a savings and loan holding company or subsidi-
ary thereof (including a separation caused by the deregistration 
of such a company or such a subsidiary) shall not affect the 
jurisdiction and authority of the Director to issue any notice 
and 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 such a party with respect to 
such holding company or its subsidiary (whether such date 
occurs before, on, or after the date of the enactment of this 
paragraph).". 
SEC. 906 EXPANSION OF REMOVAL POWERS FOR STATE CRIMINAL 
PROCEEDINGS. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.—Section 
8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(g)(1)) is 
amended— 
(1) in the 1st sentence, by striking "authorized by a United 
States attorney"; and 
(2) in the 4th sentence, by striking "with respect to such 
crime" and inserting in lieu thereof "or an agreement to enter a 
pre-trial diversion or other similar program". 
(b) CREDIT UNIONS INSURED BY THE NCUA.—Section 206(i)(l) of the 
Federal Credit Union Act (12 U.S.C. 1786(i)) is amended— 
(1) in the 1st sentence, by striking "authorized by a United 
States Attorney"; and 
(2) in the 4th sentence, by striking "with respect to such 
crime" and inserting in lieu thereof "or an agreement to enter a 
pre-trial diversion or other similar program". 
SEC. 907. AMENDMENTS TO EXPAND AND INCREASE CIVIL MONEY 
PENALTIES. 
(a) GENERAL PROVISIONS FOR DEPOSITORY INSTITUTIONS INSURED BY 
THE FDIC.—Section 8(i)(2) of the Federal Deposit Insurance Act (12 
U.S.C. 1818(i)(2)) is amended to read as follows: 
"(2) CIVIL MONEY PENALTY.— 
"(A) FIRST TIER.—Any insured depository institution 
which, and any institution-affiliated party who— 
"(i) violates any law or regulation; 
"(ii) violates any final order or temporary order 
issued pursuant to subsection (b), (c), (e), (g), or (s); 
"(iii) violates any condition imposed in writing by the 
appropriate Federal banking agency in connection with 
the grant of any application or other request by such 
depository institution; or 
"(iv) violates any written agreement between such 
depository institution and such agency, 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 463 
shall forfeit and pay a civil penalty of not more than $5,000 
for each day during which such violation continues. 
"(B) SECOND TIER.—Notwithstanding subparagraph (A), 
any insured depository institution which, and any institu-
tion-affiliated party who— 
"(iXD commits any violation described in any clause 
of subparagraph (A); 
"(II) recklessly engages in an unsafe or unsound 
practice in conducting the affairs of such insured 
depository institution; or 
"(III) breaches any fiduciary duty; 
"(ii) which violation, practice, or breach— 
"(I) is part of a pattern of misconduct; 
"(II) causes or is likely to cause more than a 
minimal loss to such depository institution; or 
"(III) results in pecuniary gain or other benefit 
to such party, 
shall forfeit and pay a civil penalty of not more than 
$25,000 for each day during which such violation, practice, 
or breach continues. 
"(C) THIRD TIER.—Notwithstanding subparagraphs (A) 
and (B), any insured depository institution which, and any 
institution-affiliated party who— 
"(i) knowingly— 
"(I) commits any violation described in any 
clause of subparagraph (A); 
"(II) engages in any unsafe or unsound practice 
in conducting the affEiirs of such depository institu-
tion; or 
"(III) breaches any fiduciary duty; and 
"(ii) knowingly or recklessly causes a substantial loss 
to such depository institution or a substantial pecu-
niary gain or other benefit to such party by reason of 
such violation, practice, or breach, 
shall forfeit and pay a civil penalty in an amount not to 
exceed the applicable maximum amount determined under 
subparagraph (D) for each day during which such violation, 
practice, or breach continues, 
"(D) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION 
DESCRIBED IN SUBPARAGRAPH (c).—The maximum daily 
amount of any civil penalty which may be assessed pursu-
ant to subparagraph (C) for any violation, practice, or 
breach described in such subparagraph is— 
"(i) in the case of any person other than an insured 
depository institution, an amount to not exceed 
$1,000,000; and 
"(ii) in the case of any insured depository institution, 
an amount not to exceed the lesser of— 
"(I) $1,000,000; or 
"(II) 1 percent of the total assets of such institu-
tion. 
"(E) ASSESSMENT.— 
"(i) WRITTEN NOTICE.—Any penalty imposed under 
subparagraph (A), (B), or (C) may be assessed and col-
lected by the appropriate Federal banking agency by 
written notice. 
103 STAT. 464 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(ii) FINALITY OF ASSESSMENT.—If, with respect to any 
assessment under clause (i), a hearing is not requested 
' 
pursuant to subparagraph (H) within the period of time 
allowed under such subparagraph, the assessment shall 
constitute a final and unappesdable order. 
"(F) AUTHORITY TO MODIFY OR REMIT PENALTY.—Any 
appropriate Federal banking agency may compromise, 
: 
modify, or remit any penalty which such agency may assess 
•...,. or had already assessed under subparagraph (A), (B), or (C). 
"(G) MITIGATING FACTORS.—In determining the amount of 
any penalty imposed under subparagraph (A), (B), or (C), 
the appropriate agency shall take into account the appro-
priateness of the penalty with respect to— 
"(i) the size of financial resources and good faith of 
the insured depository institution or other person 
charged; 
"(ii) the gravity of the violation; 
? 
"(iii)thehistory of previous violations; and 
"(iv) such other matters as justice may require. 
"(H) HEARING.—The insured depository institution or 
other person against whom any penalty is assessed under 
this paragraph shall be afforded an agency hearing if such 
institution or person submits a request for such hearing 
within 20 days after the issuance of the notice of assess-
ment. 
"(I) COLLECTION.— 
( i 
"(i) REFERRAL.—If any insured depository institution 
i 
or other person fails to pay an assessment after any 
penalty assessed under this paragraph has become 
final, the agency that imposed the penalty shall recover 
'• /' 
' 
the amount assessed by action in the appropriate 
United States district court. 
"(ii) APPROPRIATENESS OF PENALTY NOT REVIEWABLE,— 
In any civil action under clause (i), the validity and 
appropriateness of the penalty shall not be subject to 
. 
. ; 
review. 
• 
"(J) DISBURSEMENT.—All 
penalties 
collected 
under 
authority of this paragraph shall be deposited into the 
Treasury. 
"(K) REGULATIONS.—Each appropriate Federal banking 
agency shall prescribe regulations establishing such proce-
dures as may be necessary to carry out this paragraph.", 
(b) GENERAL PROVISIONS FOR CREDIT UNIONS INSURED BY THE 
NCUA.—Section 206(k)(2) of the Federal Credit Union Act (12 U.S.C. 
1786(k)(2)) is amended to read as follows: 
"(2) CIVIL MONEY PENALTY.— 
. ?, 
"(A) FIRST TIER.—Any insured credit union which, and 
any institution-affiliated party who— 
"(i) violates any law or regulation; 
"(ii) violates any final order or temporary order 
issued pursuant to subsection (e), (f), (g), (i), or (q); 
"(iii) violates any condition imposed in writing by the 
Board in connection with the grant of any application 
or other request by such credit union; or 
"(iv) violates any written agreement between such 
credit union and such agency, 
PUBLIC LAW 101-73-AUG. 9, 1989 
103 STAT. 465 
shall forfeit and pay a civil penalty of not more than $5,000 
for each day during which such violation continues. 
"(B) SECOND TIER.—Notwithstanding subparagraph (A), 
any insured credit union which, and any institution-affili- 
^
^ 
ated party who— 
"(i)(I) commits any violation described in any clause 
of subparagraph (A); 
"(II) recklessly engages in an unsafe or unsound 
practice in conducting the affairs of such credit union; 
or 
"(III) breaches any fiduciary duty; 
"(ii) which violation, practice, or breach— 
"(I) is part of a pattern of misconduct; 
,, 
"(II) causes or is likely to cause more than a 
minimal loss to such credit union; or 
"(III) results in pecuniary gain or other benefit 
to such party, 
shall forfeit and pay a civil penalty of not more than 
$25,000 for each day during which such violation, practice, 
or breach continues. 
"(C) THIRD TIER.—Notwithstanding subparagraphs (A) 
and (B), any insured credit union which, and any institu- 
^ 
tion-affiliated party who— 
"(i) knowingly— 
"(I) commits any violation described in any 
clause of subparagraph (A); 
"(II) engages in any unsafe or unsound practice 
in conducting the affairs of such credit union; or 
"(III) breaches any fiduciary duty; and 
"(ii) knowingly or recklessly causes a substantial loss 
to such credit union or a substantial pecuniary gain or 
other benefit to such party by reason of such violation, 
practice, or breach, 
shall forfeit and pay a civil penalty in an amount not to 
exceed the applicable maximum amount determined under 
subparagraph (D) for each day during which such violation, 
practice, or breach continues. 
"(D) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION 
DESCRIBED IN SUBPARAGRAPH (C).—The maximum daily 
amount of any civil penalty which may be assessed pursu-
ant to subparagraph (C) for any violation, practice, or 
breach described in such subparagraph is— 
"(i) in the case of any person other than an insured 
* 
credit union, an amount to not exceed $1,000,000; and 
"(ii) in the case of any insured credit union, an 
amount not to exceed the lesser of— 
"(I) $1,000,000; or 
"(II) 1 percent of the total assets of such credit 
union. 
"(E) ASSESSMENT.— 
"(i) WRITTEN NOTICE.—Any penalty imposed under 
subparagraph (A), (B), or (C) may be assessed and col-
lected by the Board by written notice. 
"(ii) FINALITY OF ASSESSMENT.—If, with respect to any 
assessment under clause (i), a hearing is not requested 
pursuant to subparagraph (H) within the period of time 
103 STAT. 466 
PUBLIC LAW 101-73—AUG. 9, 1989 
allowed under isuch subparagraph, the assessment shall 
constitute a final and unappealable order. 
• I 
"(F) AUTHORITY TO MODIFY O
R REMIT PENALTY.—The Board 
"• may compromise, modify, or remit any penalty which such 
agency may assess or had already assessed under subpara-
graph (A), (B), or (C). 
"(G) MITIGATING FACTORS.—In determining the amount of 
any penalty imposed under subparagraph (A), (B), or (C), 
the Board shall take into account the appropriateness of 
the penalty with respect to— 
"(i) the size of financial resources and good faith of 
the insured credit union or the person charged; 
"(ii) the gravity of the violation; 
"(iii) the history of previous violations; and 
"(iv) such other matters as justice may require. 
"(H) HEARING.—The insured credit union or other person 
against whom any penalty is assessed under this paragraph 
i - 
shall be afforded an agency hearing if such institution or 
person submits a request for such hearing within 20 days 
after the issuance of the notice of assessment. 
"(I) COLLECTION.— 
' 
"(i) REFERRAL.—If any insured credit union or other 
person fails to pay an assessment after any penalty 
assessed under this paragraph has become final, the 
^ 
Board shall recover the amount assessed by action in 
the appropriate United States district court. 
"(ii) APPROPRIATENESS OF PENALTY NOT REVIEWABLE.— 
In any civil action under clause (i), the validity and 
appropriateness of the penalty shall not be subject to 
review. 
"(J) 
DISBURSEMENT.—All 
penalties 
collected 
under 
authority of this paragraph shall be deposited into the 
Treasury. 
"(K) VIOLATE DEFINED.—For purposes of this section, the 
term 'violate' includes any action (alone or with another or 
others) for or toward causing, bringing about, participating 
in, counseling, or aiding or abetting a violation. 
"(L) REGULATIONS.—The Board shall prescribe regula-
tions establishing such procedures as may be necessary to 
carry out this paragraph.". 
(c) NONMEMBER INSURED B A N K S AND SAVINGS ASSOCIATIONS.— 
Paragraphs (4) and (5) of section 180") of the Federal Deposit Insur-
* 
ance Act (12 U.S.C. 18280')) are amended to read as follows: 
"(4) CIVIL MONEY PENALTY.— 
"(A) FIRST TIER.—Any nonmember insured bank or sav-
ings association which, and any institution-affiliated party 
who, violates any provision of section 22(h), 23A, or 23B of 
ii 
the Federal Reserve Act or any lawful regulation issued 
pursuant thereto, and any nonmember insured bank which, 
and any institution-affiliated party who, violates any provi-
sion of section 20 of the Banking Act of 1933, shall forfeit 
and pay a civil penalty of not more than $5,000 for each day 
during which such violation continues. 
"(B) SECOND TIER.—^Notwithstanding subparagraph (A), 
any nonmember insured bank or savings association which, 
>
; , 
and any institution-affiliated party who— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 467 
"(i)(I) commits any violation described in any clause 
of subparagraph (A); 
"(ID recklessly engages in an unsafe or unsound 
practice in conducting the affairs of such bank or 
association, as the case may be; or 
"(III) breaches any fiduciary duty; 
"(ii) which violation, practice, or breach— 
"(I) is part of a pattern of misconduct; 
"(II) results in more than a minimal loss to such 
bank or association, as the case may be; or 
"(III) causes or is likely to cause pecuniary gain 
or other benefit to such party, 
shall forfeit and pay a civil penalty of not more than 
$25,000 for each day during which such violation, practice, 
or breach continues. 
"(C) THIRD TIER.—Notwithstanding subparagraphs (A) 
and (B), any nonmember insured bank or savings associa-
tion which, and any institution-affiliated party who— 
"(i) knowingly— 
"(I) commits any violation described in any 
clause of subparagraph (A); 
"(II) engages in any unsafe or unsound practice 
in conducting the affairs of such bank or associa-
tion; or 
"(III) breaches any fiduciary duty; and 
1 
"(ii) knowingly or recklessly causes a substantial loss 
to such bank or association or a substantial pecuniary 
gain or other benefit to such party by reason of such 
violation, practice, or breach, 
shall forfeit and pay a civil penalty in an amount not to 
exceed the applicable maximum amount determined under 
subparagraph (D) for each day during which such violation, 
practice, or breach continues. 
"(D) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION 
DESCRIBED IN SUBPARAGRAPH (c).—The maximum daily 
amount of any civil penalty which may be assessed pursu-
ant to subparagraph (C) for any violation, practice, or 
breach described in such subparagraph is— 
"(i) in the case of any person other than a 
nonmember insured bank or savings association, an 
amount to not exceed $1,000,000; and 
"(ii) in the case of any nonmember insured bank or 
savings association, an amount not to exceed the lesser 
of— 
"(I) $1,000,000; or 
"(II) 1 percent of the total assets of such bank or 
association. 
"(E) ASSESSMENT; ETC.—Any penalty imposed under 
subparagraph (A), (B), or (C) shall be assessed and collected 
by the appropriate Federal banking agency in the manner 
provided in subparagraphs (E), (F), (G), and (I) of section 
8(i)(2) for penalties imposed (under such section) and any 
such assessment shall be subject to the provisions of such 
section. 
"(F) HEARING.—The nonmember insured bank, savings 
association, or other person against whom any penalty is 
assessed under this paragraph shall be afforded an agency 
• • V 
103 STAT. 468 
PUBLIC LAW 101-73—AUG. 9, 1989 
r 
hearing if such nonmember insured bank, savings associa-
tion, or other person submits a request for such hearing 
within 20 days after the issuance of the notice of assess-
ment. Section 8(h) shall apply to any proceeding under this 
paragraph. 
"(G) 
DISBURSEMENT.—All 
penalties 
collected 
under 
authority of this paragraph shall be deposited into the 
Treasury. 
"(5) REGULATIONS.—The appropriate Federal banking agency 
shall prescribe regulations establishing such procedures as may 
be necessary to carry out paragraph (4).". 
(d) CHANGE IN CONTROL OF DEPOSITORY INSTITUTION.—Section 
7(j)(16) of the Federal Deposit Insurance Act (12 U.S.C. 18170')(16)) is 
amended to read as follows: 
"(16) CIVIL MONEY PENALTY.— 
"(A) FIRST TIER.—Any person who violates any provision 
of this subsection, or any regulation or order issued by the 
appropriate Federal banking agency under this subsection, 
shall forfeit and pay a civil penalty of not more than $5,000 
for each day during which such violation continues. 
"(B) SECOND TIER.—Notwithstanding subparagraph (A), 
any person who— 
"(i)(I) commits any violation described in any clause 
of subparagraph (A); 
"(II) recklessly engages in an unsafe or unsound 
practice in conducting the affairs of a depository 
institution; or 
"(III) breaches any fiduciary duty; 
"(ii) which violation, practice, or breach— 
"(I) is part of a pattern of misconduct; 
"(II) causes or is likely to cause more than a 
minimal loss to such institution; or 
"(III) results in pecuniary gain or other benefit 
' 
to such person, 
shall forfeit and pay a civil penalty of not more than 
$25,000 for each day during which such violation, practice, 
or breach continues. 
"(C) THIRD TIER.—Notwithstanding subparagraphs (A) 
and (B), any person who— 
"(i) knowingly— 
"(I) commits any violation described in any 
. 
clause of subparagraph (A); 
"(II) engages in any unsafe or unsound practice 
in conducting the affairs of a depository institu-
tion; or 
"(III) breaches any fiduciary duty; and 
"(ii) knowingly or recklessly causes a substantial loss 
V 
to such institution or a substantial pecuniary gain or 
other benefit to such person by reason of such violation, 
practice, or breach, 
shall forfeit and pay a civil penalty in an amount not to 
exceed the applicable maximum amount determined under 
subparagraph (D) for each day during which such violation, 
practice, or breach continues. 
"(D) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION 
DESCRIBED IN SUBPARAGRAPH (C).—The maximum daily 
amount of any civil penalty which may be assessed pursu-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 469 
ant to subparagraph (C) for any violation, practice, or 
breach described in such subparagraph is— 
"(i) in the case of any person other than a depository 
institution, an amount to not exceed $1,000,000; and 
"(ii) in the case of a depository institution, an amount 
not to exceed the lesser of— 
^ 
"(I) $1,000,000; or 
"(II) 1 percent of the total assets of such institu-
tion. 
"(E) ASSESSMENT; ETC.—Any penalty imposed under 
subparagraph (A), (B), or (C) shall be assessed and collected 
by the appropriate Federal banking agency in the manner 
provided in subparagraphs (E), (F), (G), and (I) of section 
8(i)(2) for penalties imposed (under such section) and any 
such assessment shall be subject to the provisions of such 
section. 
"(F) HEARING.—The depository institution or other 
person against whom any penalty is assessed under this 
paragraph shall be afforded an agency hearing if such 
institution or other person submits a request for such hear-
ing within 20 days after the issuance of the notice of 
assessment. Section 8(h) shall apply to any proceeding 
under this paragraph. 
"(G) 
DISBURSEMENT.—All 
penalties 
collected 
under 
authority of this paragraph shall be deposited into the 
TreEisury.". 
(e) NATIONAL BANKS.—Section 5239(b) of the Revised Statutes (12 
U.S.C. 93(b)) is amended to read as follows: 
"(b) CIVIL MONEY PENALTY.— 
"(1) FIRST TIER.—Any national banking Eissociation which, and 
any institution-affiliated party (within the meaning of section 
3(u) of the Federal Deposit Insurance Act) with respect to such 
association who, violates any provision of this title or any of the 
provisions of the first section of the Act of September 28, 1962, 
(76 Stat. 668; 12 U.S.C. 92a), or any regulation issued pursuant 
thereto, shall forfeit and pay a civil penalty of not more than 
$5,000 for each day during which such violation continues. 
"(2) SECOND TIER.—Notwithstanding paragraph (1), any na-
tional banking association which, and any institution-affiliated 
party (within the meaning of section 3(u) of the Federal Deposit 
Insurance Act) with respect to such association who, commits 
any violation described in paragraph (1) which— 
"(A)(i) commits any violation described in any paragraph 
(1); 
"(ii) recklessly engages in an unsafe or unsound practice 
in conducting the affairs of such association; or 
"(iii) breaches any fiduciary duty; 
"(B) which violation, practice, or breach— 
"(i) is part of a pattern of misconduct; 
"(ii) causes or is likely to cause more than a minimal 
loss to such association; or 
> 
"(iii) results in pecuniary gain or other benefit to 
such party, 
shall forfeit and pay a civil penalty of not more than $25,000 for 
each day during which such violation, practice, or breach 
continues. 
103 STAT. 470 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(3) THIRD TIER.—Notwithstanding paragraphs (1) and (2), any 
national banking association which, and any institution-affili-
' 
ated party (within the meaning of section 3(u) of the Federal 
Deposit Insurance Act) with respect to such association who— 
"(A) knowingly— 
"(i) commits any violation described in paragraph (1); 
"(ii) engages in any unsafe or unsound practice in 
conducting the Eiffairs of such association; or 
"(iii) breaches any fiduciary duty; and 
' 
"(B) knowingly or recklessly causes a substantial loss to 
-' > 
such association or a substantial pecuniary gain or other 
* 
benefit to such party by reason of such violation, practice, 
or breach, 
shall forfeit and pay a civil penalty in an amount not to exceed 
the applicable maximum amount determined under paragraph 
(4) for each day during which such violation, practice, or breach 
continues. 
";i 
"(4) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION 
•
^ 
DESCRIBED IN PARAGRAPH (3).—The maximum daily amount of 
any civil penalty which may be assessed pursuant to paragraph 
(3) for any violation, practice, or breach described in such 
paragraph is— 
"(A) in the case of any person other than a national 
banking association, an amount to not exceed $1,000,000; 
and 
"(B) in the case of a national banking association, an 
amount not to exceed the lesser of— 
' 
^ 
"(i) $1,000,000; or 
"(ii) 1 percent of the total assets of such association. 
"(5) ASSESSMENT; ETC.—Any penalty imposed under paragraph 
• 
(1), (2), or (3) shall be assessed and collected by the Comptroller 
of the Currency in the manner provided in subparagraphs (E), 
(F), (G), and (I) of section 8(iX2) of the Federal Deposit Insurance 
Act for penalties imposed (under such section) and any such 
assessment shall be subject to the provisions of such section. 
"(6) HEARING.—The association or other person against whom 
any penalty is assessed under this subsection shall be afforded 
L- an agency hearing if such association or person submits a 
request for such hearing within 20 days after the issuance of the 
' 
notice of assessment. Section 8(h) of the Federal Deposit Insur-
ance Act shall apply to any proceeding under this subsection. 
"(7) DISBURSEMENT.—All penalties collected under authority 
of this subsection shall be deposited into the Treasury. 
., 
"(8) VIOLATE DEFINED.—For purposes of this section, the term 
Violate' includes any action (alone or with another or others) 
for or toward causing, bringing about, participating in, counsel-
ing, or aiding or abetting a violation. 
- 
"(12) REGULATIONS.—The Comptroller shall prescribe regula-
tions establishing such procedures as may be necessary to carry 
out this subsection.". 
(f) NATIONAL BANKS.—The 2d paragraph of section 5240 of the 
Revised Statutes (12 U.S.C. 481) is amended by striking "$100" and 
inserting "$5,000". 
(g) MEMBER BANKS.—Section 29 of the Federal Reserve Act (12 
U.S.C. 504) is amended to read as follows: 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 471 
"SEC. 29. CIVIL MONEY PENALTY. 
"(a) FIRST TIER.—Any member bank which, and any institution-
affiliated party (within the meaning of section 3(u) of the Federal 
Deposit Insurance Act) with respect to such member bank who, 
violates any provision of section 22, 23A, or 23B, or any regulation 
issued pursuant thereto, shall forfeit and pay a civil penalty of not 
more than $5,000 for each day during which such violation contin-
ues. 
"(b) SECOND TIER.—Notwithstanding subsection (a), any member 
bank which, and any institution-affiliated party (within the mean-
ing of section 3(u) of the Federal Deposit Insurance Act) with respect 
to such member bank who 
"(1)(A) commits any violation described in subsection (a); 
"(B) recklessly engages in an unsafe or unsound practice in 
conducting the affairs of such member bank; or 
"(C) breaches any fiduciary duty; 
"(2) which violation, practice, or breach— 
"(A) is part of a pattern of misconduct; 
"(B) causes or is likely to cause more than a minimal loss 
to such member bank; or 
"(C) results in pecuniary gain or other benefit to such 
^ 
party, 
shall forfeit and pay a civil penalty of not more than $25,000 for 
each day during which such violation, practice, or breach continues. 
"(c) THIRD TIER.—Notwithstanding subsections (a) and (b), any 
member bank which, and any institution-affiliated party (within the 
meaning of section 3(u) of the Federal Deposit Insurance Act) with 
respect to such member bank who— 
"(1) knowingly— 
"(A) commits any violation described in subsection (a); 
"(B) engages in any unsafe or unsound practice in 
conducting the affairs of such credit union; or 
^ 
"(C) breaches any fiduciary duty; and 
"(2) knowingly or recklessly causes a substantial loss to such 
credit union or a substantial pecuniary gain or other benefit to 
such party by reason of such violation, practice, or breach, 
shall forfeit and pay a civil penalty in an amount not to exceed the 
applicable maximum amount determined under subsection (d) for 
each day during which such violation, practice, or breach continues. 
"(d) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION DE-
SCRIBED IN SUBSECTION (C).—The msiximum daily amount of any civil 
penalty which may be assessed pursuant to subsection (c) for any 
violation, practice, or breach described in such subsection is— 
"(1) in the case of any person other than a member bank, an 
amount to not exceed $1,000,000; and 
"(2) in the case of a member bank, an amount not to exceed 
the lesser of— 
x 
"(A) $1,000,000; or 
"(B) 1 percent of the total assets of such member bank. 
"(e) ASSESSMENT; ETC.—Any penalty imposed under subsection (a), 
(b), or (c) shall be assessed and collected by 
"(1) in the case of a national bank, by the Comptroller of the 
Currency; and 
"(2) in the csise of a State member bank, by the Board, 
in the manner provided in subparagraphs (E), (F), (G), and (I) of 
section 8(i)(2) of the Federal Deposit Insurance Act for penalties 
103 STAT. 472 
PUBLIC LAW 101-73—AUG. 9, 1989 
imposed (under such section) and any such assessment shall be 
subject to the provisions of such section. 
"(f) HEARING.—The member bank or other person against whom 
any penalty is assessed under this section shall be afforded an 
agency hearing if such member bank or person submits a request for 
such hearing within 20 days after the issuance of the notice of 
assessment. Section 8(h) of the Federal Deposit Insurance Act shall 
apply to any proceeding under this section, 
"(g) DISBURSEMENT.—All penalties collected under authority of 
this paragraph shall be deposited into the Treasury. 
"(h) VIOLATE DEFINED.—For purposes of this section, the term 
'violate' includes any action (alone or with another or others) for or 
toward causing, bringing about, participating in, counseling, or 
aiding or abetting a violation. 
"(i) REGULATIONS.—The Comptroller of the Currency and the 
Board shall prescribe regulations establishing such procedures as 
may be necessary to carry out this section.". 
(h) MEMBER BANK.—Section 19(1) of the Federal Reserve Act (12 
U.S.C. 505(1)) is amended to read as follows: 
"(1) CIVIL MONEY PENALTY.— 
"(1) FIRST TIER.—Any member bank which, and any institu-
tion-affiliated party (within the meaning of section 3(u) of the 
Federal Deposit Insurance Act) with respect to such member 
bank who, violates any provision of this section, or any regula-
tion issued pursuant thereto, shall forfeit and pay a civil pen-
alty of not more than $5,000 for each day during which such 
violation continues. 
"(2) SECOND TIER.—Notwithstanding paragraph 
(1), any 
member bank which, and any institution-affiliated 
party 
(within the meaning of section 3(u) of the Federal Deposit 
Insurance Act) with respect to such member bank who— 
"(A)(i) commits any violation described in paragraph (1); 
"(ii) recklessly engages in an unsafe or unsound practice 
in conducting the affairs of such member bank; or 
"(iii) breaches any fiduciary duty; 
"(B) which violation, practice, or breach— 
: 
"(i) is part of a pattern of misconduct; 
"(ii) causes or is likely to cause more than a minimal 
loss to such member bank; or 
"(iii) results in pecuniary gain or other benefit to 
such party, 
shall forfeit and pay a civil penalty of not more than 
$25,000 for each day during which such violation, practice, 
J 
or breach continues. 
"(3) THIRD TIER.—Notwithstanding paragraphs (1) and (2), 
any member bank which, and any institution-affiliated 
party (within the meaning of section 3(u) of the Federal 
Deposit Insurance Act) with respect to such member bank 
> r 
who— 
"(A) knowingly— 
"(i) commits any violation described in paragraph (1); 
( 
"(ii) engages in any unsafe or unsound practice in 
conducting the affairs of such member bank; or 
"(iii) breaches any fiduciary duty; and 
"(B) knowingly or recklessly causes a substantial loss to 
such member bank or a substantial pecuniary gain or other 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 473 
benefit to such party by reason of such violation, practice, 
or breach, 
shall forfeit and pay a civil pensilty in an amount not to exceed 
the applicable maximum amount determined under paragraph 
(4) for each day during which such violation, practice, or breach 
continues. 
"(4) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION 
DESCRIBED IN PARAGRAPH (3).—The maximum daily amount of 
any civil penalty which may be gissessed pursuant to paragraph 
(3) for any violation, practice, or breach described in such 
paragraph is— 
"(A) in the case of any person other than a member bgink, 
an amount not to exceed $1,000,000; and 
"(B) in the case of a member bank, an amount not to 
exceed the lesser of— 
"(i) $1,000,000; or 
"(ii) 1 percent of the total assets of such member 
b£ink. 
"(5) ASSESSMENT; ETC.—Any penalty imposed under paragraph 
(1), (2), or (3) may be Eissessed and collected by the Board in the 
manner provided in subparagraphs (E), (F), (G), and (I) of section 
8(iX2) of the Federal Deposit Insurance Act for penalties im-
posed (under such section) and any such assessment shall be 
subject to the provisions of such section. 
"(6) HEARING.—The member bank or other person against 
whom any penalty is assessed under this subsection shall be 
afforded an agency hearing if such member bank or person 
submits a request for such hearing within 20 days after the 
issuance of the notice of assessment. Section 8(h) of the Federal 
Deposit Insurance Act shall apply to any proceeding under this 
subsection. 
"(7) DISBURSEMENT.—All penalties collected under authority 
of this subsection shall be deposited into the Treasury. 
"(8) VIOLATE DEFINED.—For purposes of this section, the term 
'violate' includes any action (alone or with another or others) 
for or toward causing, bringing about, participating in, counsel-
ing, or aiding or abetting a violation. 
(9) REGULATIONS.—The Board shall prescribe regulations 
establishing such procedures as may be necessary to carry out 
this subsection.", 
(i) BANKS.—Section 106(bX2)(F) of the Bank Holding Ck)mpany Act 
Amendments of 1970 (12 U.S.C. 1972(2XF)) is amended to read as 
follows: 
"(F) CIVIL MONEY PENALTY.— 
"(i) FIRST TIER.—Any bank which, and any institution-affili-
ated party (within the meaning of section 3(u) of the Federal 
Deposit Insurance Act) with respect to such bank who, violates 
any provision of this paragraph shall forfeit and pay a civil 
penalty of not more than $5,000 for each day during which such 
violation continues. 
"(ii) SECOND TIER.—Notwithstanding clause (i), any bank 
which, and any institution-affiliated party (within the meaning 
of section 3(u) of the Federal Deposit Insurance Act) with 
respect to such bank who— 
"(IXaa) commits any violation described in clause (i); 
"(bb) recklessly engages in an unsafe or unsound practice 
in conducting the affairs of such bank; or 
103 STAT. 474 
PUBLIC LAW 101-73—AUG. 9, 1989 
• -
^ 
"(cc) breaches any fiduciary duty; 
"(II) which violation, practice, or breach— 
"(aa) is part of a pattern of misconduct; 
"(bb) causes or is likely to cause more than a minimal 
' 
loss to such bank; or 
"(cc) results in pecuniary gain or other benefit to 
such party, 
shall forfeit and pay a civil penalty of not more than $25,000 for 
each day during which such violation, practice, or breach 
continues. 
"(iii) THIRD TIER.—Notwithstanding clauses (i) and (ii), any 
-'f 
bank which, and any institution-affiliated party (within the 
meaning of section 3(u) of the Federal Deposit Insurance Act) 
with respect to such bank who— 
"(I) knowingly— 
"(aa) commits any violation described in clause (i); 
•' 
"(bb) engages in any unsafe or unsound practice in 
conducting the affairs of such bank; or 
"(cc) breaches any fiduciary duty; and 
"(II) knowingly or recklessly causes a substantial loss to 
such bank or a substantial pecuniary gain or other benefit 
to such party by reason of such violation, practice, or 
breach, 
shall forfeit and pay a civil penalty in an amount not to exceed 
the applicable maximum amount determined under clause (iv) 
for each day during which such violation, practice, or breach 
continues. 
"(iv) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION 
DESCRIBED IN CLAUSE (iii).—The maximum daily amount of any 
, 
civil penalty which may be assessed pursuant to clause (iii) for 
any violation, practice, or breach described in such clause is— 
"(I) in the case of any person other than a bank, an 
amount to not exceed $1,000,000; and 
"(II) in the case of a bank, an amount not to exceed the 
1GSS6T* of""" 
"(aa) $1,000,000; or 
"(bb) 1 percent of the total Eissets of such bank. 
"(v) ASSESSMENT; ETC.—Any penalty imposed under clause (i), 
(ii), or (iii) may be assessed and collected— 
"(I) in the case of a national bank, by the Comptroller of 
the Currency; 
"(II) in the case of a State member bank, by the Board; 
and 
"(III) in the case of an insured nonmember State bank, by 
the Federal Deposit Insurance Corporation, 
in the manner provided in subparagraphs (E), (F), (G), and (I) of 
section 8(i)(2) of the Federal Deposit Insurance Act for penalties 
imposed (under such section) and any such assessment shall be 
subject to the provisions of such section. 
"(vi) HEARING.—The bank or other person against whom any 
penalty is assessed under this subparagraph shall be afforded 
an agency hearing if such bank or person submits a request for 
• such hearing within 20 days after the issuance of the notice of 
assessment. Section 8(h) of the Federal Deposit Insurance Act 
shall apply to any proceeding under this subparagraph. 
"(vii) DISBURSEMENT.—All penalties collected under authority 
of this subsection shall be deposited into the Treasury. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 475 
"(viii) VIOLATE DEFINED.—For purposes of this paragraph, the 
term 'violate' includes any action (alone or with another or 
others) for or toward causing, bringing about, participating in, 
counseling, or aiding or abetting a violation. 
"(ix) REGULATIONS.—The Comptroller of the Currency, the 
Board, and the Federal Deposit Insurance Corporation shall 
prescribe regulations establishing such procedures as may be 
necessary to carry out this subparagraph.'. 
(j) BANK HOLDING COMPANIES.—Section 8 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1847) is amended— 
(1) in subsection (a), by striking out the first 2 sentences and 
inserting in lieu thereof the following: 
"(a) CRIMINAL PENALTY.— 
"(1) Whoever knowingly violates any provision of this Act or, 
being a company, violates any regulation or order issued by the 
Board under this Act, shall be imprisoned not more than 1 year, 
fined not more than $100,000 per day for each day during which 
the violation continues, or both. 
"(2) Whoever, with the intent to deceive, defraud, or profit 
significantly, knowingly violates any provision of this Act shall 
be imprisoned not more than 5 years, fined not more than 
$1,000,000 per day for each day during which the violation 
continues, or both."; and 
(2) by amending subsection (b) to read as follows: 
"(b) CIVIL MONEY PENALTY.— 
"(1) PENALTY.—Any company which violates, and any individ-
ual who participates in a violation of, any provision of this Act, 
or any regulation or order issued pursuant thereto, shall forfeit 
and pay a civil penalty of not more than $25,000 for each day 
during which such violation continues. 
"(2) ASSESSMENT; ETC.—Any penalty imposed under paragraph 
(1) may be assessed and collected by the Board in the manner 
provided in subparagraphs (E), (F), (G), and (I) of section 8(i)(2) of 
the Federal Deposit Insurance Act for penalties imposed (under 
such section) and any such assessment shall be subject to the 
provisions of such section. 
"(3) HEARING.—The company or other person against whom 
any penalty is assessed under this subsection shall be afforded 
an agency hearing if such association or person submits a 
request for such hearing within 20 days after the issuance of the 
notice of assessment. Section 8(h) of the Federal Deposit Insur-
ance Act shall apply to any proceeding under this subsection. 
"(4) DISBURSEMENT.—All penalties collected under authority 
of this subsection shall be deposited into the Treasury. 
"(5) VIOLATE DEFINED.—For purposes of this section, the term 
'violate' includes any action (alone or with another or others) 
for or toward causing, bringing about, participating in, counsel-
ing, or aiding or abetting a violation. 
"(6) REGULATIONS.—The Board shall prescribe regulations 
establishing such procedures as may be necessary to carry out 
this subsection.". 
(k) SAVINGS AND LOAN HOLDING COMPANIES.—Section 10(i) of the 
Home Owners Loan Act of 1933 (as amended by section 301 of this 
Act) is amended— 
(1) by striking paragraphs (1) and (2) and inserting in lieu 
thereof the following: 
"(1) CRIMINAL PENALTY.— 
103 STAT. 476 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(A) Whoever knowingly violates any provision of this section 
or being a company, violates any regulation or order issued by 
the Director under this section, shall be imprisoned not more 
than 1 year, fined not more than $100,000 per day for each day 
during which the violation continues, or both. 
"(B) Whoever, with the intent to deceive, defraud, or profit 
significantly, knowingly violates any provision of this section 
shall be fined not more than $1,000,000 per day for each day 
during which the violation continues, imprisoned not more than 
5 years, or both."; 
" 
(2) by redesignating paragraphs (3) and (4) as paragraphs (2) 
and (3), respectively; and 
(3) by amending paragraph (3) (as so redesignated by para-
graph <2) of this subsection) to read £is follows: 
"(3) CIVIL MONEY PENALTY.— 
"(A) PENALTY.—Any company which violates, and any 
person who participates in a violation of, any provision of 
this section, or any regulation or order issued pursuant 
thereto, shall forfeit and pay a civil penalty of not more 
than $25,000 for each day during which such violation 
continues. 
"(B) ASSESSMENT; ETC.—Any penalty imposed under 
subparagraph (A) may be assessed and collected by the 
Director in the meinner provided in subparagraphs (E), (F), 
(G), and (I) of section 8(i)(2) of the Federal Deposit Insurance 
Act for penalties imposed (under such section) and any such 
assessment shall be subject to the provisions of such section. 
] 
"(C) HEARING.—The company or other person against 
I 
whom any penalty is assessed under this paragraph shall be 
afforded an agency hearing if such company or person 
submits a request for such hearing within 20 days after the 
issuance of the notice of assessment. Section 8(h) of the 
Federal Deposit Insurance Act shall apply to any proceed-
ing under this paragraph. 
(D) 
DISBURSEMENT.—All 
penalties 
collected 
under 
authority of this paragraph shall be deposited into the 
Treasury. 
"(E) VIOLATE DEFINED.—For purposes of this section, the 
term 'violate' includes any action (alone or with another or 
others) for or toward causing, bringing about, participating 
in, counseling, or aiding or abetting a violation. 
"(F) REGULATIONS.—The Director shall prescribe regula-
tions establishing such procedures as may be necessary to 
carry out this paragraph.". 
12 use 93 note. 
(1) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to conduct engaged in by any person after the 
date of the enactment of this Act, except that the increased maxi-
mum civil penalties of $5,000 and $25,000 per violation or per day 
may apply to such conduct engaged in before such date if such 
conduct— 
(1) is not already subject to a notice (initiating an administra-
tive proceeding) issued by the appropriate Federal banking 
agency (as defined in section 3(q) of the Federal Deposit Insur-
ance Act) or the National Credit Union Administration Board; 
and 
(2) occurred after the completion of the last report of exam-
ination of the institution involved by the appropriate Federal 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 477 
banking agency (as so defined) occurring before the date of the 
enactment of this Act. 
SEC. 908. CLARIFICATION OF CRIMINAL PENALTY PROVISIONS FOR VIO-
LATION OF CERTAIN ORDERS. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.—Section 8(j) of 
the Federal Deposit Insurance Act (12 U.S.C. 1818(j)) is amended to 
read as follows: 
V 
"(j) CRIMINAL PENALTY.—Whoever, being subject to an order in 
effect under subsection (e) or (g), without the prior written approval 
of the appropriate Federal financial institutions regulatory agency, 
knowingly participates, directly or indirectly, in any manner 
(including by engaging in an activity specifically prohibited in such 
an order or in subsection (eX6)) in the conduct of the affairs of— 
"(1) any insured depository institution; 
"(2) any institution treated as an insured bank under subsec-
tion (bX3) or (bX4), or as a savings association under subsection 
(bX8); 
"(3) any insured credit union (as defined in section 101(7) of 
the Federal Credit Union Act); 
"(4) any institution chartered under the Farm Credit Act of 
1971; or 
"(5) the Resolution Trust Corporation, 
^ 
shall be fined not more than $1,000,000, imprisoned for not more 
than 5 years, or both.". 
(b) CREDIT UNIONS INSURED BY THE NCUA.—Section 206(1) of the 
Federal Credit Union Act (12 U.S.C. 1786(1)) is amended to read as 
follows: 
"(1) CRIMINAL PENALTY FOR VIOLATION OF CERTAIN ORDERS.—Who-
ever— 
"(1) under this Act, is suspended or removed from, or prohib-
ited from participating in the affairs of any credit union de-
scribed in section 206(gX5); and 
"(2) knowingly participates, directly or indirectly, in any 
manner (including by engaging in an activity specifically 
prohibited in such an order or in subsection (gX5)) in the con-
duct of the Eiffairs of such a credit union; 
shall be fined not more than $1,000,000, imprisoned for not more 
than 5 years, or both.". 
SEC. 909. SUPERVISORY RECORDS. 
Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is 
amended by inserting after subsection (m) (as added by section 214 of 
this Act) the following new subsection: 
"(o) SUPERVISORY RECORDS.—In addition to the requirements of 
section 7(aX2) to provide to the (Dorporation copies of reports of 
' 
examination and reports of condition, whenever the Corporation has 
been appointed as receiver for an insured depository institution, the 
appropriate Federal banking agency shall make available all super-
visory records to the receiver which may be used by the receiver in 
any manner the receiver determines to be appropriate.". 
SEC. 910. INCREASED PENALTY FOR PARTICIPATION BY CONVICTED 
INDIVIDUALS. 
(a) BANKS INSURED BY THE FDIC.—Section 19 of the Federal 
Deposit Insurance Act (12 U.S.C. 1829) is amended to read as follows: 
103 STAT. 478 
PUBLIC LAW 101-73—AUG. 9, 1989 
"SEC. 19. PENALTY FOR UNAUTHORIZED PARTICIPATION BY CONVICTED 
INDIVIDUAL. 
"(a) PROHIBITION.—Except with the prior written consent of the 
Corporation— 
"(1) any person who has been convicted of any criminal 
offense involving dishonesty or a breach of trust may not 
participate, directly or indirectly, in any manner in the conduct 
of the affairs of an insured depository institution; and 
"(2) an insured depository institution may not permit such 
participation. 
"(b) PENALTY.—Whoever knowingly violates subsection (a) shall be 
fined not more than $1,000,000 for each day such prohibition is 
violated or imprisoned for not more than 5 years, or both.". 
^ 
(b) CREDIT UNIONS INSURED BY THE NCUA.—Section 205(d) of the 
Federal Credit Union Act (12 U.S.C. 1785(d)) is amended to read as 
follows: 
"(d) PENALTY FOR PROHIBITED PARTICIPATION.— 
"(1) PROHIBITION.—Except with the prior written consent of 
the Board— 
"(A) any person who has been convicted of any criminal 
i. 
offense involving dishonesty or a breach of trust may not 
participate, directly or indirectly, in any manner in the 
conduct of the affairs of an insured credit union; and 
"(B) an insured credit union may not permit such partici-
pation. 
"(2) PENALTY.—Whoever knowingly violates paragraph (1) 
,,/ 
shall be fined not more than $1,000,000 for each day such 
prohibition is violated or imprisoned for not more than 5 years, 
or both.". 
SEC. 911. AMENDMENTS TO VARIOUS PROVISIONS OF LAW RELATING TO 
REPORTS. 
(a) BANK PROTECTION ACT.—Section 3(b) of the Bank Protection 
Act of 1968 (12 U.S.C. 1882) is amended by striking out "and shall 
require the submission of periodic reports with respect to the 
installation, maintenance, and operation of security devices and 
procedures". 
(b) AMENDMENTS RELATING TO NATIONAL BANKS.— 
(1) Section 5211 of the Revised Statutes (12 U.S.C. 161) is 
amended— 
(A) in the 5th sentence of subsection (a), by striking out 
"within ten days after the receipt of a request therefor from 
him" and inserting in lieu thereof "within the period of 
* time specified by the Comptroller"; and 
(B) in subsection (c), by striking out the last sentence. 
(2) Section 5213 of the Revised Statutes (12 U.S.C. 164) is 
amended to read as follows: 
"SEC. 5213. P E N A L T Y FOR FAILURE TO MAKE REPORTS. 
"(a) FIRST TIER.—Any association which— 
"(1) maintains procedures reasonably adapted to avoid any 
inadvertent error and, unintentionally and as a result of such 
an error— 
"(A) fails to make, obtain, transmit, or publish any report 
or information required by the Comptroller of the Currency 
' 
under section 5211 of this chapter, within the period of time 
specified by the Comptroller; or 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 479 
"(B) submits or publishes any false or misleading report 
or information; or 
"(2) inadvertently transmits or publishes any report which 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 misleading 
information is not corrected. The association shall have the burden 
of proving that an error w£is inadvertent and that a report was 
inadvertently transmitted or published late. 
"Ot)) SECOND TIER.—Any association which— 
"(1) fails to make, obtain, transmit, or publish any report or 
information required by the Comptroller of the Currency under 
• 
section 5211 of this chapter, within the period of time specified 
by the Comptroller; or 
"(2) submits or publishes any false or misleading report or 
information, 
in a manner not described in subsection (a) 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. 
"(c) THIRD TIER.—Notwithstanding subsections (a) and (b), if any 
association knowingly or with reckless disregard for the accuracy of 
any information or report described in subsection (b) submits or 
publishes any false or misleading report or information, the 
Comptroller may sissess a penalty of not more than $1,000,000 or 1 
percent of total assets of the association, whichever is less, per day 
for each day during which such failure continues or such false or 
misleading information is not corrected. 
"(d) ASSESSMENT; ETC.—Any penalty imposed under subsection (a), 
(b), or (c) shall be assessed and collected by the Comptroller of the 
Currency in the manner provided in subparagraphs (E), (F), (G), and 
(I) of section 8(i)(2) of the Federal Deposit Insurance Act (for pen-
alties imposed under such section) and any such assessment (includ-
ing the determination of the amount of the penalty) shgill be subject 
to the provisions of such section. 
"(e) HEARING.—Any association against which any penalty is 
assessed under this subsection shall be afforded an agency hearing if 
such association submits a request for such hearing within 20 days 
after the issuance of the notice of assessment. Section 8(h) of the 
Federal Deposit Insurance Act shall apply to any proceeding under 
this section.". 
(c) 
AMENDMENT 
RELATING 
TO STATE 
NONMEMBER 
INSURED 
BANKS.—Section 7(aXl) of the Federal Deposit Insurance Act (12 
U.S.C. 1817(a)(1)) is amended by striking out the last sentence and 
inserting in lieu thereof the following new sentences: "Any such 
bank which (A) mainteuns procedures reasonably adapted to avoid 
any inadvertent error and, unintentionally and as a result of such 
an error, fails to make or publish any report required under this 
paragraph, within the period of time specified by the Corporation, or 
submits or publishes any false or misleading report or information, 
or (B) inadvertently transmits or publishes any report which is 
minimally late, shall be subject to a penalty of not more thsui $2,000 
for each day during which such failure continues or such false or 
misleading information is not corrected. Such bank shall have the 
burden of proving that an error was inadvertent and that a report 
was inadvertently transmitted or published late. Any such bank 
which fails to make or publish any report required under this 
103 STAT. 480 
PUBLIC LAW 101-73—AUG. 9, 1989 
paragraph, within the period of time specified by the Corporation, or 
submits or publishes any false or misleading report or information, 
in a manner not described in the 2nd preceding sentence 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. Notwithstanding the preceding sentence, if any 
such bank knowingly or with reckless disregard for the accuracy of 
any information or report described in such sentence submits or 
publishes any false or misleading report or information, the Cor-
poration may assess a penalty of not more than $1,000,000 or 1 
percent of total assets of such bank, whichever is less, per day for 
each day during which such failure continues or such false or 
misleading information is not corrected. Any penalty imposed under 
any of the 4 preceding sentences shall be assessed and collected by 
the Corporation in the manner provided in subparagraphs (E), (F), 
(G), and (I) of section 8(i)(2) (for penalties imposed under such 
section) and any such assessment (including the determination of 
the amount of the penalty) shall be subject to the provisions of such 
section. Any such bank against which any penalty is assessed under 
this subsection shall be afforded an agency hearing if such bank 
submits a request for such hearing within 20 days after the issuance 
of the notice of assessment. Section 8(h) shall apply to any proceed-
ing under this paragraph.". 
(d) AMENDMENT RELATING TO STATE MEMBER BANKS.—The 
6th 
undesignated paragraph of section 9 of the Federal Reserve Act (12 
U.S.C. 324) is amended by striking out the penultimate sentence and 
inserting in lieu thereof the following new sentences: "Any bank 
which (A) maintains procedures reasonably adapted to avoid any 
inadvertent error and, unintentionally and as a result of such an 
error, fails to make or publish any report required under this 
paragraph, within the period of time specified by the Board, or 
submits or publishes any false or misleading report or information, 
or (B) inadvertently transmits or publishes any report which 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 
misleading information is not corrected. The bank shall have the 
burden of proving that an error was inadvertent and that a report 
was inadvertently transmitted or published late. Any bank which 
fails to make or publish such reports within the period of time 
specified by the Board, or submits or publishes any false or mislead-
ing report or information, in a manner not described in the 2nd 
preceding sentence 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. Notwithstanding 
the preceding sentence, if any bank knowingly or with reckless 
disregard for the accuracy of any information or report described in 
such sentence submits or publishes any false or misleading report or 
information, the Board may assess a penalty of not more than 
$1,000,000 or 1 percent of total assets of such bank, whichever is less, 
per day for each day during which such failure continues or such 
false or misleading information is not corrected. Any penalty im-
posed under any of the 4 preceding sentences shall be assessed and 
collected by the Board in the manner provided in subparagraphs (E), 
(F), (G), and (I) of section 8(i)(2) of the Federal Deposit Insurance Act 
(for penalties imposed under such section) and any such assessment 
(including the determination of the amount of the penalty) shall be 
subject to the provisions of such section. Any bank against which 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 481 
any penalty is assessed under this subsection shall be afforded an 
agency hearing if such bank submits a request for such hearing 
within 20 days after the issuance of the notice of assessment. Section 
8(h) of the Federal Deposit Insurance Act shall apply to any proceed-
ing under this paragraph.". 
(e) AMENDMENT RELATING TO BANK HOLDING COMPANIES.—Section 
8 of the Bank Holding Company Act of 1956 (12 U.S.C. 1847) is 
amended by adding after the subsection added by section 905(i) of 
this Act the following new subsection: 
"(d) PENALTY FOR FAILURE TO MAKE REPORTS.— 
"(1) FIRST TIER.—Any company which— 
"(A) maintains procedures reasonably adapted to avoid 
any inadvertent error and, unintentionally and as a result 
of such an 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 pursuant to 
1 
this Act, within the period of time specified by the 
Board; or 
"(ii) submits or publishes .any false or misleading 
report or information; or 
"(B) inadvertently transmits or publishes any report 
which 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 company 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 company which— 
"(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 pursuant to this Act, 
within the period of time specified by the Board; 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 may, in its discretion, assess a penalty of not more than 
-
$1,000,000 or 1 percent of total assets of such company, which-
ever is less, per day for each day during which such failure 
continues or such false or misleading information is not cor-
rected. 
"(4) ASSESSMENT; ETC.—Any penalty imposed under paragraph 
(1), (2), or (3) shall be assessed and collected by the Board in the 
manner provided in subsection (b) (for penalties imposed under 
such subsection) and any such assessment (including the deter-
mination of the amount of the penalty) shall be subject to the 
provisions of such subsection. 
"(5) HEARING.—Any company against which any penalty is 
assessed under this subsection shall be afforded an agency 
hearing if such company submits a request for such hearing 
103 STAT. 482 
PUBLIC LAW 101-73—AUG. 9, 1989 
within 20 days after the issuance of the notice of assessment. 
Section 8(h) of the Federal Deposit Insurance Act shall apply to 
-" 
any proceeding under this subsection.". 
(f) AMENDMENT RELATING TO CREDIT UNIONS.—Section 202(aX3) of 
the Federal Credit Union Act (12 U.S.C. 1782(a)(3)) is amended by 
striking out the 2nd sentence and inserting in lieu thereof the 
following new sentences: "Any insured credit union which main-
tains procedures reasonably adapted to avoid any inadvertent error 
and, unintentionally and as a result of such an error, fails to submit 
or publish any report required under this subsection or section 106, 
within the period of time specified by the Board, or submits or 
publishes any false or misleading report or information, or inadvert-
ently transmits or publishes any report which 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 misleading 
information is not corrected. The insured credit union shall have the 
burden of proving that an error was inadvertent and that a report 
was inadvertently transmitted or published late. Any insured credit 
union which fails to submit or publish any report required under 
this subsection or section 106, within the period of time specified by 
the Board, or submits or publishes any false or misleading report or 
information, in a manner not described in the 2nd preceding sen-
tence 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. Notwithstanding the preceding sen-
tence, if any insured credit union knowingly or with reckless dis-
regard for the accuracy of any information or report described in 
such sentence submits or publishes any false or misleading report or 
information, the Board may assess a penalty of not more than 
$1,000,000 or 1 percent of total assets of such credit union, which-
ever is less, per day for each day during which such failure contin-
ues or such false or misleading information is not corrected. Any 
penalty imposed under any of the 4 preceding sentences shall be 
assessed and collected by the Board in the manner provided in 
section 206(kX2) (for penalties imposed under such section) and any 
such assessment (including the determination of the amount of the 
penalty) shall be subject to the provisions of such section. Any 
insured credit union ag£iinst which any penalty is assessed under 
this subsection shall be afforded an agency hearing if such insured 
credit union submits a request for such hearing within 20 days after 
the issuance of the notice of assessment. Section 206(j) shall apply to 
any proceeding under this subsection.". 
12 use 161 note. 
(i) EFFECTIVE DATE.—The amendments made by this section shall 
apply with respect to reports filed or required to be filed after the 
date of the enactment of this Act. 
SEC. 912. AUTHORITY OF THE FDIC TO TAKE ENFORCEMENT ACTION 
AGAINST SAVINGS ASSOCIATIONS. 
Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) is 
amended by adding at the end thereof the following new subsection: 
"(t) AUTHORITY OF BOARD TO TAKE ENFORCEMENT ACTION AGAINST 
SAVINGS ASSOCIATIONS.— 
"(1) AUTHORITY TO RECOMMEND THAT DIRECTOR OF OFFICE OF 
THRIFT SUPERVISION TAKE ENFORCEMENT ACTION.—The Corpora-
tion, based on an examination of a savings association by the 
Corporation or by the Director of the Office of Thrift Super-
vision or on other information, may recommend that the Direc-
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 483 
tor take any enforcement action authorized under section 7(j), 
this section, or section 18(j) with respect to any savings associa-
tion. 
"(2) AUTHORITY OF BOARD TO ORDER CORPORATION TO TAKE 
ENFORCEMENT ACTION IF DIRECTOR OF OFFICE OF THRIFT SUPER-
VISION FAILS T
O FOLLOW RECOMMENDATION.—If the Director fails 
to take the recommended action or to provide an acceptable 
plan for addressing the concerns of the Corporation as set forth 
in its recommendation before the close of the 60-day period 
beginning on the date of the receipt of the formal recommenda-
tion from the Corporation, the Board of Directors may order the 
Corporation to take such action if the Board determines that— 
"(A) the association is in an unsafe or unsound condition; 
or 
"(B) failure to take the recommended action will result in 
continuance of unsafe or unsound practices in conducting 
the business of the savings association. 
"(3) EFFECT OF EXIGENT CIRCUMSTANCES.— 
"(A) AUTHORITY TO ACT.—Notwithstanding paragraphs (1) 
and (2), the Board of Directors may order the Corporation to 
exercise its authority, without regard to the time period set 
forth, in exigent circumstances after notifying the Director. 
"(B) AGREEMENT ON EXIGENT CIRCUMSTANCES.—The Cor-
poration shall, by agreement with the Director, set forth 
those exigent circumstances in which the Corporation may 
act without regard to the time period set forth above. 
"(4) REQUESTS FOR FORMAL ACTIONS AND INVESTIGATIONS.— 
"(A) SUBMISSION OF REQUESTS.—The regional offices of the 
Office of Thrift Supervision shall concurrently submit all 
requests for formal investigations or enforcement actions to 
both the Director and the Corporation. 
"(B) DIRECTOR REQUIRED TO REPORT ON REQUESTS.—The 
Director shall report semiannually to the Corporation the 
status or disposition of all such requests, including the 
reasons for the Director's decision to either approve or deny 
all such requests. 
"(5) NONDELEGATION.—Any decisions by the Board of Direc-
tors to order actions described in this subsection shall not be 
delegated.". 
SEC. 913. PUBLIC DISCLOSURE OF ENFORCEMENT ACTIONS REQUIRED. 
(a) ORDERS ISSUED BY APPROPRIATE FEDERAL BANKING AGENCIES.— 
Section 8 of the Federal Deposit Insurance Act is amended by adding 
after the subsection added by section 912 of this Act the following 
new subsection: 
"(u) PuBuc DISCLOSURE OF FINAL ORDERS.— 
"(1) IN GENERAL.—The appropriate Federal banking agency 
shall publish and make available to the public— 
• ( 
"(A) any final order issued with respect to any adminis-
trative enforcement proceeding initiated by such agency 
under this section or any other provision of law; and 
"(B) any modification to or termination of any final order 
described in subparagraph (A) of this paragraph. 
"(2) 
DELAY 
OP 
PUBUCATION 
UNDER 
EXCEPTIONAL 
CIR-
CUMSTANCES.—If the appropriate Federal banking agency 
makes a determination in writing that the publication of any 
final order pursuant to paragraph (1) would seriously threaten 
^ 
103 STAT. 484 
PUBLIC LAW 101-73—AUG. 9, 1989 
the safety or soundness of an insured depository institution, 
such agency may delay the publication of such order for a 
reasonable time.", 
(b) ORDERS ISSUED BY NCUA.—Section 206 of the Federal Credit 
Union Act (12 U.S.C. 1786) is amended by inserting after the subsec-
tion added by section 901(b) of this Act the following new subsection: 
"(s) PUBLIC DISCLOSURE OF FINAL ORDERS.— 
"(1) IN GENERAL.—The Board shall publish and make avail-
able to the public— 
"(A) any final order issued with respect to any adminis-
trative enforcement proceeding initiated by such agency 
under this section or any other provision of law; and 
"(B) any modification to or termination of any final order 
described in subparagraph (A). 
"(2) 
DELAY 
OF PUBLICATION 
UNDER 
EXCEPTIONAL 
CIR-
CUMSTANCES.—If the Board makes a determination in writing 
that the publication of any final order pursuant to paragraph (1) 
would seriously threaten the safety or soundness of an insured 
credit union or other federally regulated depository institution, 
the Board may delay the publication of such order for a reason-
; 
able time.". 
SEC. 914. AGENCY DISAPPROVAL OF DIRECTORS AND SENIOR EXECUTIVE 
OFFICERS OF CERTAIN DEPOSITORY INSTITUTIONS. 
(a) DEPOSITORY INSTITUTION INSURED BY THE FDIC.—The Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by adding 
after the section added by section 226 of this Act the following new 
section: 
12 use 18311. 
"SEC. 32. AGENCY DISAPPROVAL OF DIRECTORS AND SENIOR EXECUTIVE 
OFFICERS OF INSURED DEPOSITORY INSTITUTIONS OR 
DEPOSITORY INSTITUTION HOLDING COMPANIES. 
"(a) PRIOR NOTICE REQUIRED.—An insured depository institution 
or depository institution holding company shall notify the appro-
priate Federal banking agency of the proposed addition of any 
individual to the board of directors or the employment of any 
individual as a senior executive officer of such institution or holding 
company at least 30 days before such addition or employment 
becomes effective, if the insured depository institution or depository 
institution holding company— 
"(1) has been chartered less than 2 years in the case of an 
insured depository institution; 
"(2) has undergone a change in control within the preceding 2 
years; or 
"(3) is not in compliance with the minimum capital require-
ment applicable to such institution or is otherwise in a troubled 
condition, as determined by such agency on the basis of such 
institution's or holding company's most recent report of condi-
tion or report of examination or inspection. 
"(b) DISAPPROVAL BY AGENCY.—An insured depository institution 
or depository institution holding company may not add any individ-
ual to the board of directors or employ any individual as a senior 
executive officer if the appropriate Federal banking agency issues a 
notice of disapproval of such addition or employment before the end 
of the 30-day period beginning on the date the agency receives notice 
of the proposed action pursuant to subsection (a). 
"(c) EXCEPTION IN EXTRAORDINARY CIRCUMSTANCES.— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 485 
"(1) IN GENERAL.—Each appropriate Federal banking agency 
may prescribe by regulation conditions under which the prior 
notice requirement of subsection (a) may be waived in the event 
of extraordinary circumstances. 
"(2) N o EFFECT ON DISAPPROVAL AUTHORITY OF AGENCY.—Such 
waivers shall not affect the authority of each agency to issue 
notices of disapproval of such additions or employment of such 
individuals within 30 days after each such waiver. 
"(d) ADDITIONAL INFORMATION.—Any notice submitted to an 
appropriate Federal banking agency with respect to an individual by 
any insured depository institution or depository institution holding 
company pursuant to subsection (a) shall include— 
"(1) the information described in section 7(j)(6)(A) about the 
individual; and 
"(2) such other information as the agency may prescribe by 
regulation. 
"(e) STANDARD FOR DISAPPROVAL.—The appropriate Federal bank-
ing agency shall issue a notice of disapproval with respect to a notice 
submitted pursuant to subsection (a) if the competence, experience, 
character, or integrity of the individual with respect to whom such 
notice is submitted indicates that it would not be in the best 
interests of the depositors of the depository institution or in the best 
interests of the public to permit the individual to be employed by, or 
associated with, the depository institution or depository institution 
holding company. 
"(f) DEFINITION REGULATIONS.—Each appropriate Federal banking 
agency shall prescribe by regulation a definition for the terms 
'troubled condition' and 'senior executive officer' for purposes of 
subsection (a).". 
(b) CREDIT UNIONS INSURED BY THE NCUA.—Title II of the Federal 
Credit Union Insurance Act (12 U.S.C. 1781 et seq.) is amended by 
adding at the end thereof the following new section: 
"SEC. 212. BOARD DISAPPROVAL OF DIRECTORS, COMMITTEE MEMBERS, 12 USC 1790a. 
AND SENIOR EXECUTIVE OFFICERS OF INSURED CREDIT 
UNIONS. 
"(a) PRIOR NOTICE REQUIRED.—An insured credit union shall 
notify the Board of the proposed addition of any individual to the 
board of directors or committee or the emplojnnent of any individual 
as a senior executive officer of such credit union at legist 30 days 
before such addition or employment becomes effective, if the insured 
credit union— 
"(1) has been chartered less than 2 years; or 
"(2) is in troubled condition, as determined on the basis of 
such credit union's most recent report of condition or report of 
examination. 
"(b) DISAPPROVAL BY THE BOARD.—An insured credit union may 
not add any individual to the board of directors or employ any 
individual as a senior executive officer if the Board issues a notice of 
disapproval of such addition or employment before the end of the 30-
day period beginning on the date the agency receives notice of the 
proposed action pursuant to subsection (a). 
"(c) EXCEPTION IN EXTRAORDINARY CIRCUMSTANCES.— 
"(1) IN GENERAL.—The Board may prescribe by regulation 
conditions under which the prior notice requirement of subsec-
tion (a) may be waived in the event of extraordinary cir-
cumstances. 
103 STAT. 486 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(2) N o EFFECT ON DISAPPROVAL AUTHORITY OF BOARD.—Such 
waivers shall not affect the authority of the Board to issue 
notices of disapproval of such additions or employment of such 
individuals within 30 days after each such waiver, 
"(d) ADDITIONAL INFORMATION.—Any notice submitted to the 
Board by any insured credit union pursuant to subsection (a) shall 
include— 
"(1) the information described in section 7(jX6)(A) of the Fed-
eral Deposit Insurance Act about the individual; and 
"(2) such other information as the Board may prescribe by 
regulation. 
"(e) STANDARD FOR DISAPPROVAL.—The Board shall issue a notice 
of disapproval with respect to a notice submitted pursuant to subsec-
tion (a) if the competence, experience, character, or integrity of the 
individual with respect to whom such notice is submitted indicates 
that it would not be in the best interests of the depositors of the 
insured credit union or in the best interests of the public to permit 
the individual to be employed by, or associated with, such insured 
credit union. 
"(f) DEFINITION REGULATIONS.—The Board shall prescribe by regu-
lation a definition for the terms 'troubled condition' and 'senior 
executive officer' for purposes of subsection (a).". 
SEC. 915. CLARIFICATION OF NCUA'S AUTHORITY TO CONDUCT COMPLI-
ANCE INVESTIGATIONS. 
(a) EXAMINATIONS.—Section 204(b) of the Federal Credit Union 
Act (12 U.S.C. 1784(b)) is amended— 
(1) by inserting after "insured credit unions," the following: 
"or with other types of investigations to determine compliance 
with applicable law and regulations,"; and 
(2) by inserting after "subpena duces tecum" the following: 
"and to exercise such others powers as are set forth in section 
206(p)". 
(b) ENFORCEMENT.—Section 206(p) of the Federal Credit Union Act 
(12 U.S.C. 1786(p)) is amended in the 1st sentence— 
(1) by inserting after "any proceeding under this section" the 
following: "or in connection with any claim for insured deposits 
or any examination or investigation under section 204(b)"; 
(2) by inserting after "the Board" the 1st place such term 
appears the following: ", in conducting the proceeding, examina-
tion, or investigation or considering the claim for insured de-
posits,"; and 
(3) by inserting ", claims, examinations, or investigations" 
before the period. 
(c) PAYMENT OF CLAIMS.—Section 207(c)(1) of the Federal Credit 
Union Act (12 U.S.C. 1787(c)(1)) is amended in the last sentence by 
inserting after "before paying the insured accounts," the following: 
"may investigate said claims under section 206(p),". 
12 u s e 1818 
SEC. 916. IMPROVED ADMINISTRATIVE HEARINGS AND PROCEDURES. 
Before the close of the 24-month period beginning on the date of 
the enactment of this Act, the appropriate Federal banking agencies 
(as defined in section 3(q) of the Federal Deposit Insurance Act) and 
the National Credit Union Administration Board shall jointly— 
(1) establish their own pool of administrative law judges, and 
(2) develop a set of uniform rules and procedures for adminis-
trative hearings, including provisions for summary judgment 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 487 
rulings where there are no disputes as to material facts of the 
case. 
SEC. 917. TASK FORCE STUDY OF DELEGATION OF ENFORCEMENT 12 USC 1818 
ACTIONS. 
"°*® 
(a) CREATION OF TASK FORCE.—The appropriate Federal banking 
agencies (as defined in section 3(q) of the Federal Deposit Insurance 
Act) and the National Credit Union Administration Board shall 
create a joint task force to study the desirability and feasibility of 
delegating investigation and enforcement authority to their regional 
or district offices or banks. 
(b) COMPOSITION OF TASK FORCE.—The composition of the task 
force shall be reasonably balanced between officials from head-
quarters and officials from the regions, districts, or district banks. 
(c) REPORT.—Not later than September 30, 1990, the task force 
shall report to the Congress the findings and recommendations of 
the Tgisk Force, together with the responses of the Comptroller of 
the Currency, the Director of the Office of Thrift Supervision, the 
Chairperson of the Federal Deposit Insurance Corporation, the 
Chairman of the Board of Governors of the Federal Reserve System, 
and the Chairman of the National Credit Union Administration. 
SEC. 918. ANNUAL REPORT TO CONGRESS. 
12 USC1833. 
(a) IN GENERAL.—Each agency described in subsection (b) shall 
submit an annual report to the Congress which shall contain the 
following information with respect to the 12-month period for which 
such report is made: 
(1) The number of formal and informal supervisory, adminis-
trative, and civil enforcement actions initiated by such agency 
during such 12-month period, and the number of such actions 
completed by such agency during such 12-month period, includ-
ing actions initiated or taken with respect to memoranda of 
understanding, written agreements, cease and desist orders 
(including temporary orders), suspension orders, removal or 
prohibition orders, and civil money penalty assessments. 
(2) The number of individuals and institutions against whom 
civil money penalties were assessed by such agency during such 
12-month period, the amount of each such penalty, the total 
amount of all such penalties, and data on uncollected penalties 
for such period and prior years. 
(3) A description of all other enforcement efforts and initia-
tives relating to unsafe and unsound practices, criminal mis-
conduct, and insider abuse which were undertaken by such 
agency during such 12-month period. 
(4) The number of criminal referrals made to the Department 
of Justice. 
(5) With respect to the criminal referrals received by the 
Department of Justice and with respect to investigations of 
similar matters initiated without such a referral, the number 
and status of grand jury investigations and investigations being 
conducted by the Federal Bureau of Investigation, and the 
number and disposition of prosecutions and civil actions com-
menced by the Attorney General. 
(6) Recommendations concerning the need for additional legis-
lation or financial resources. 
(b) AGENCIES REQUIRED TO SUBMIT REPORTS.—The agencies re-
ferred to in subsection (a) are as follows: 
103 STAT. 488 
PUBLIC LAW 101-73—AUG. 9, 1989 
(1) The Comptroller of the Currency. 
(2) The Board of Governors of the Federal Reserve System. 
(3) The Federal Deposit Insurance Corporation. 
(4) The Federal Housing Finance Board. 
(5) The Office of Thrift Supervision. 
(6) The National Credit Union Administration. 
(7) The Attorney General of the United States. 
SEC. 919. CREDIT UNION AUDIT REQUIREMENTS. 
Section 202(a) of the Federal Credit Union Act (12 U.S.C. 1782(a)) 
is amended by adding at the end thereof the following new para-
graph: 
"(6) AUDIT REQUIREMENT.— 
Regulations. 
"(A) IN GENERAL.—Before the end of the 120-day period 
beginning on the date of the enactment of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989 and notwithstanding any other provision of Federal or 
State law, the Board shall prescribe, by regulation, audit 
standards which require an outside, independent audit of 
any insured credit union by a certified public accountant 
for any fiscal year (of such credit union)— 
"(i) for which such credit union has not conducted an 
annual supervisory committee audit; 
"(ii) for which such credit union has not received a 
complete and satisfactory supervisory committee audit; 
or 
"(iii) during which such credit union has experienced 
persistent and serious recordkeeping deficiencies, as 
determined by the Board. 
"(B) UNSAFE OR UNSOUND PRACTICE.—The Board may 
treat the failure of any insured credit union to obtain an 
outside, independent audit for any fiscal year for which 
such audit is required under subparagraph (A) as an unsafe 
or unsound practice within the meaning of section 206(b).". 
SEC. 920. TECHNICAL AMENDMENTS RELATING TO ADMINISTRATIVE AND 
JUDICIAL REVIEW. 
(a) FDIA.—Section 8(h)(2) of the Federal Deposit Insurance Act (12 
U.S.C. 1818(h)(2)) is amended by striking "Any party" and all that 
follows through "therein," and inserting in lieu thereof "Any party 
to any proceeding under paragraph (1)". 
(b) FCUA.—Section 206(j)(2) of the Federal Credit Union Act (12 
U.S.C. 17860")(2)) is amended by striking "Any party" and all that 
follows through "therein," and inserting in lieu thereof "Any party 
to any proceeding under paragraph (1)". 
(c) MISCELLANEOUS CONFORMING AMENDMENT.—Section 8(k) of the 
Federal Deposit Insurance Act (12 U.S.C. 1818(k)) is amended by 
striking out all that follows "(k)". 
Subtitle B—Termination of Deposit Insurance 
SEC. 926. REVISION OF PROCEDURES FOR TERMINATION OF FDIC 
DEPOSIT INSURANCE. 
Section 8(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1818(a)) is amended— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 489 
(1) by striking out "(a) Any insured bank" and all that follows 
through the period at the end of the 4th sentence and inserting 
in lieu thereof the following: 
"(a) TERMINATION OF INSURANCE.— 
"(1) 
VOLUNTARY 
TERMINATION.—Any insured 
depository 
institution which is not— 
"(A) a national member bank; 
"(B) a State member bank; 
"(C) a Federal branch; 
"(D) a Federal savings association; or 
"(E) an insured branch which is required to be insured 
under subsection (a) or (b) of section 6 of the International 
Banking Act of 1978, 
may terminate such depository institution's status as an in-
sured depository institution if such insured institution provides 
written notice to the Corporation of the institution's intent to 
terminate such status not less than 90 days before the effective 
date of such termination. 
"(2) INVOLUNTARY TERMINATION.— 
"(A) NOTICE TO PRIMARY REGULATOR.—If the Board of 
Directors determines that— 
"(i) an insured depository institution or the directors 
or trustees of an insured depository institution have 
engaged or are engaging in unsafe or unsound practices 
in conducting the business of the depository institution; 
"(ii) an insured depository institution is in an unsafe 
or unsound condition to continue operations as an in-
sured institution; or 
"(iii) an insured depository institution or the direc-
tors or trustees of the insured institution have violated 
any applicable law, regulation, order, condition im-
posed in writing by the (Dorporation in connection with 
the approval of any application or other request by the 
insured depository institution, or written agreement 
entered into between the insured depository institution 
and the Corporation, 
the Board of Directors shall notify the appropriate Federal 
banking agency with respect to such institution (if other 
than the Corporation) or the State banking supervisor of 
such institution (if the Corporation is the appropriate Fed-
eral banking agency) of the Board's determination and the 
facts and circumstances on which such determination is 
based for the purpose of securing the correction of such 
practice, condition, or violation. Such notice shall be given 
to the appropriate Federal banking agency not less than 30 
days before the notice required by subparagraph (B), except 
that this period for notice to the appropriate Federal bank-
ing agency may be reduced or eliminated with the agree-
ment of such agency. 
"(B) NOTICE OF INTENTION TO TERMINATE INSURANCE.—If, 
after giving the notice required under subparagraph (A) 
with respect to an insured depository institution, the Board 
of Directors determines that any unsafe or unsound prac-
tice or condition or any violation specified in such notice 
requires the termination of the insured status of the in-
sured depository institution, the Board shall— 
103 STAT. 490 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(i) serve written notice to the insured depository 
institution of the Board's intention to terminate the 
insured status of the institution; 
"(ii) provide the insured depository institution with a 
statement of the charges on the beisis of which the 
determination to terminate such institution's insured 
status was made (or a copy of the notice under subpara-
graph (A)); and 
"(iii) notify the insured depository institution of the 
date (not less than 30 days after notice under this 
*
* 
subparagraph) and place for a hearing before the Board 
of Directors (or any person designated by the Board) 
with respect to the termination of the institution's 
insured status. 
"(3) HEARING; TERMINATION.—If, on the basis of the evidence 
presented at a hearing before the Board of Directors (or any 
person designated by the Board for such purpose), in which all 
issues shall be determined on the record pursuant to section 554 
of title 5, United States Code, and the written findings of the 
Board of Directors (or such person) with respect to such evi-
dence (which shall be conclusive), the Board of Directors finds 
that any unsafe or unsound practice or condition or any viola-
tion specified in the notice to an insured depository institution 
under subparagraph (B) has been established, the Board of 
Directors may issue an order terminating the insured status of 
such depository institution effective as of a date subsequent to 
such finding."; 
(2) by striking out "Unless the" and inserting in lieu thereof 
the following: 
"(4) 
APPEARANCE; CONSENT TO TERMINATION.—Unless 
the"; 
(3) by striking out "Any insured" and all that follows through 
"status" the 1st place such term appears and inserting in lieu 
thereof the following: 
"(5) JUDICIAL REVIEW.—Any insured depository institution 
whose insured status"; 
(4) by striking out "The Corporation may publish" and insert-
ing in lieu thereof the following: 
"(6) PUBLICATION OF NOTICE OF TERMINATION.—The Corpora-
tion may publish"; 
(5) by striking out "After the termination of the insured 
status" and inserting in lieu thereof the following: 
"(7) TEMPORARY INSURANCE OF DEPOSITS INSURED AS OF TERMI-
NATION.—After the termination of the insured status"; 
(6) in paragraph (7) (as so designated by the amendment made 
by paragraph (5) of this section)— 
(A) by striking out "of two years" the 1st place such term 
appears and inserting in lieu thereof "of at least 6 months 
or up to 2 years, within the discretion of the Board of 
Directors"; 
(B) by striking out "of two years" the 2nd place such term 
appears and inserting in lieu thereof "the period referred to 
in the 1st sentence"; and 
(C) by striking out "of two years" the 3rd place such term 
appears; 
(7) by adding at the end the following new paragraphs: 
"(8) TEMPORARY SUSPENSION OF INSURANCE.— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 491 
"(A) IN GENERAL.—If the Board of Directors initiates a 
termination proceeding under paragraph (2), and the Board 
of Directors, after consultation with the appropriate Fed-
eral banking agency, finds that an insured depository 
institution (other than a savings association to which 
subparagraph (B) applies) has no tangible capital under the 
capital guidelines or regulations of the appropriate Federal 
banking agency, the Corporation may issue a temporary 
order suspending deposit insurance on all deposits received 
by the institution. 
"(B) SPECIAL RULE FOR CERTAIN SAVINGS INSTITUTIONS.— 
"(i) CERTAIN GOODWILL INCLUDED IN TANGIBLE CAP-
ITAL.—In determining the tangible capital of a savings 
association for purposes of this paragraph, the Board of 
Directors shall include goodwill to the extent it is 
considered a component of capital under section 5(t) of 
the Home Owners' Loan Act. Any savings association 
which would be subject to a suspension order under 
subparagraph (A) but for the operation of this subpara-
graph, shall be considered by the Corporation to be a 
Special supervisory association'. 
"(ii) SUSPENSION ORDER.—The Corporation may issue 
a temporary order suspending deposit insurance on all 
deposits received by a special supervisory association 
whenever the Board of Directors determines that— 
"(I) the capital of such association, as computed 
utilizing applicable accounting standards, has suf-
fered a material decline; 
"(II) that such association (or its directors or 
officers) is engaging in an unsaJFe or unsound prac-
tice in conducting the business of the association; 
"(III) that such association is in an unsafe or 
unsound condition to continue operating as an in-
sured association; or 
"(IV) that such association (or its directors or 
officers) has violated any applicable law, rule, regu-
lation, or order, or any condition imposed in writ-
ing by a Federal banking agency, or any written 
agreement including a capital improvement plan 
entered into with any Federal banking £igency, or 
that the association has failed to enter into a cap-
ital improvement plan which is acceptable to the 
CJorporation within the time period set forth in 
section 5(t) of the Home Owners' Loan Act. 
Nothing in this paragraph limits the right of the Cor-
poration or the Director of the Office of Thrift Super-
vision to enforce a contractual provision which au-
thorizes the Corporation or the Director of the Office of 
Thrift Supervision, as a successor to the Federal Sav-
ings and Loan Insurance dlorporation or the Federal 
Home Loan Bank Board, to require a savings associa-
tion to write down or amortize goodwill at a faster rate 
than otherwise required under this Act or under ap-
plicable accounting standards. 
"(C) EFFECTIVE PERIOD OF TEMPORARY ORDER.—Any order 
issued under subparagraph (A) shall become effective not 
earlier than 10 days from the date of service upon the 
103 STAT. 492 
PUBLIC LAW 101-73—AUG. 9, 1989 
institution and, unless set aside, limited, or suspended by a 
^ 
court in proceedings authorized hereunder, such temporary 
order shall remain effective and enforceable until an order 
of the Board under paragraph (3) becomes final or until the 
Corporation dismisses the proceedings under paragraph (3). 
"(D) JUDICIAL REVIEW.—Before the close of the 10-day 
period beginning on the date any temporary order has been 
served upon an insured depository institution 
under 
subparagraph (A), such institution may apply to the United 
States District Court for the District of Columbia, or the 
United States district court for the judicieil district in which 
the home office of the institution is located, for an injunc-
tion setting aside, limiting, or suspending the enforcement, 
operation, or effectiveness of such order, and such court 
shall have jurisdiction to issue such injunction. 
"(E) CONTINUATION OF INSURANCE FOR PRIOR DEPOSITS.— 
The insured deposits of each depositor in such depository 
institution on the effective date of the order issued under 
this paragraph, minus all subsequent withdrawals from any 
deposits of such depositor, shall continue to be insured, 
subject to the administrative proceedings as provided in 
this Act. 
"(F) PuBUCATiON OF ORDER.—The depository institution 
shall give notice of such order to each of its depositors in 
such manner and at such times as the Board of Directors 
may find to be necessary and may order for the protection 
of depositors. 
"(G) NoncE B
Y CORPORATION.—If the Corporation deter-
mines that the depository institution has not substantially 
complied with the notice to depositors required by the 
Board of Directors, the Corporation may provide such 
notice in such manner £is the Board of Directors may find to 
be necessary and appropriate. 
"(H) LACK OF NOTICE.—Notwithstanding subparagraph 
(A), any deposit made after the effective date of a suspen-
sion order issued under this paragraph shall remain 
insured to the extent that the depositor establishes that— 
(i) such deposit consists of additions made by auto-
matic deposit the depositor was unable to prevent; or 
(ii) such depositor did not have actual knowledge of 
the suspension of insurance. 
"(9) FINAL DECISIONS TO TERMINATE INSURANCE.—Any decision 
by the Board of Directors to— 
"(A) issue a temporary order terminating deposit insur-
ance; or 
"(B) issue a final order terminating deposit insurance 
(other than under subsection (p) or (q)); 
shall be made by the Board of Directors and may not be 
delegated. 
"(10) L o w - TO MODERATE-INCOME HOUSING LENDER.—In m a k i n g 
any determination regarding the termination of insurance of a 
solvent savings association, the Corporation may consider the 
extent of the association's low- to moderate-income housing 
loans.". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 493 
Subtitle C—Improving Early Detection of 
Misconduct and Encouraging Informants 
SEC. 931. INFORMATION REQUIRED TO BE MADE AVAILABLE TO OUTSIDE 
AUDITORS. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.—Section 7(a) 
of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)) is amended 
by adding at the end thereof the following new paragraph: 
"(8) REPORT TO INDEPENDENT AUDITOR.— 
"(A) IN GENERAL.—Each insured depository institution 
which has engaged the services of an independent auditor 
to audit such depository institution within the past 2 years 
shall transmit to such auditor a copy of the the most recent 
report of condition made by such depository institution 
(pursuant to this Act or any other provision of law) and a 
copy of the most recent report of examination received by 
such depository institution. 
"(B) ADDITIONAL INFORMATION.—In addition to the copies 
of the reports required to be provided to an auditor under 
subparagraph (A), each insured depository institution shall 
provide such auditor with— 
"(i) a copy of any supervisory memorandum of under-
standing with such depository institution and any writ-
ten agreement between a Federal or State banking 
agency and the depository institution which is in effect 
during the period covered by the audit; and 
"(ii) a report of any action initiated or taken by a 
Federal banking agency during such period under 
subsection (a), (b), (c), (e), (g), (i), or (s) of section 8, or of 
any similar action taken by a State banking agency 
under State law, or any other civil money penalty 
assessed under any other provision of law with respect 
to— 
"(I) the depository institution; or 
"(II) any institution-affiliated party.". 
(b) INSTITUTIONS INSURED BY THE NCUA.—Section 202(a) of the 
Federal Credit Union Act (12 U.S.C. 1782(a)) is amended by adding 
after the paragraph added by section 922 of this Act the following 
new paragraph: 
"(7) REPORT TO INDEPENDENT AUDITOR.— 
"(A) IN GENERAL.—Each insured credit union which has 
engaged the services of an independent auditor to audit 
such depository institution within the past 2 years shall 
transmit to such auditor a copy of the most recent report of 
condition made by such credit union (pursuant to this Act 
or any other provision of law) and a copy of the most recent 
report of examination received by such credit union. 
"(B) ADDITIONAL INFORMATION.—In addition to the copies 
of the reports required to be provided to an auditor under 
subparagraph (A), each insured credit union shall provide 
such auditor with— 
"(i) a copy of any supervisory memorandum of under-
standing with such credit union and any written agree-
ment between the Board or a State regulatory agency 
103 STAT. 494 
PUBLIC LAW 101-73—AUG. 9, 1989 
and the credit union which is in effect during the 
period covered by the audit; and 
"(ii) a report of any action initiated or taken by the 
Board during such period under subsection (e), (f), (g), 
(i), (1), or (q) of section 206, or any similar action taken 
by a State regulatory agency under State law, or any 
other civil money penalty assessed by the Board under 
this Act, with respect to— 
"(I) the credit union; or 
"(II) any institution-affiliated party.". 
SEC. 932. DEPOSITORY INSTITUTION EMPLOYEE PROTECTION REMEDY. 
(a) EMPLOYEES OF DEPOSITORY INSTITUTIONS INSURED BY THE 
FDIC—The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by adding after the section added by section 914(a) of this 
Act the following new section: 
12 use 1831J. 
"SEC. 33. DEPOSITORY INSTITUTION EMPLOYEE PROTECTION REMEDY. 
"(a) 
PROHIBITION AGAINST DISCRIMINATION AGAINST WHISTLE-
BLOWERS.—No federally insured depository institution may dis-
charge 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 bginking 
agency or to the Attorney General regarding a possible violation of 
any law or regulation by the depository institution or £iny of its 
officers, directors, or employees. 
"(b) ENFORCEMENT.—Any employee or former employee who be-
lieves he has been discharged or discriminated against in violation 
of subsection (a) may file a civil action in the appropriate United 
States district court before the close of the 2-year period beginning 
on the date of such discharge or discrimination. The complainant 
shall gdso file a copy of the complaint initiating such action with the 
appropriate Federal banking agency. 
'(c) REMEDIES.—If the district court determines that a violation of 
subsection (a) has occurred, it may order the depository institution 
which committed the violation— 
"(1) to reinstate the employee to his former position, 
"(2) to pay compensatory damages; or 
"(3) take other appropriate actions to remedy any past 
discrimination. 
"(d) LIMITATION.—The protections of this section shall not apply to 
any employee who— 
(1) deliberately causes or participates in the alleged violation 
of law or regulation; or 
"(2) knowingly or recklessly provides substantially false 
information to such an agency or the Attorney General.". 
(b) EMPLOYEES OF CREDIT UNIONS INSURED BY THE NCUA.—The 
Federal Credit Union Act (12 U.S.C. 1751 et seq.) is amended by 
inserting after the section added by section 914(b) of this Act the 
following new section: 
12 use 1790b. 
"SEC. 213. CREDIT UNION EMPLOYEE PROTECTION REMEDY. 
"(a) 
PROHIBITION AGAINST DISCRIMINATION AGAINST WHISTLE-
BLOWERS.—No federally insured credit union may discharge or 
otherwise discriminate against any employee with respect to com-
pensation, terms, conditions, or privileges of employment because 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 495 
the employee (or any person acting pursuant to the request of the 
employee) provided information to the Board or to the Attorney 
General regarding a possible violation of any law or regulation by 
the credit union or any of its officers, directors, or employees. 
"(b) ENFORCEMENT.—Any employee or former employee who be-
lieves he has been discharged or discriminated against in violation 
of subsection (a) may file a civil action in the appropriate United 
States district court before the close of the 2-year period beginning 
on the date of such discharge or discrimination. The complainant 
shall also file a copy of the complaint initiating such action with the 
Board. 
"(c) REMEDIES.—If the district court determines that a violation of 
subsection (a) has occurred, it may order the credit union which 
committed the violation— 
"(1) to reinstate the employee to his former position, 
"(2) to pay compensatory damages, or 
"(3) take other appropriate actions to remedy any past 
discrimination. 
"(d) LIMITATIONS.—The protections of this section shall not apply 
to any employee who— 
"(1) deliberately causes or participates in the alleged violation 
of law or regulation, or 
"(2) knowingly or recklessly provides substantially false 
information to such an agency or the Attorney General.". 
SEC. 933. REWARD FOR INFORMATION LEADING TO RECOVERIES OR CIVIL 
PENALTIES. 
(a) DEPOSITORY INSTITUTIONS INSURED BY THE FDIC.—The Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by adding 
after the section added by section 932(a) of this Act the following 
new section: 
"SEC. 34. REWARD FOR INFORMATION LEADING TO RECOVERIES OR 
12 USC 1831k. 
CIVIL PENALTIES. 
"(a) IN GENERAL.—An appropriate Federal banking agency, with 
the concurrence of the Attorney General, may pay a reward to a 
person who provides original information which leads to— 
"(1) recovery, in an amount that exceeds $50,000, of a criminal 
fine, restitution, or civil penalty— 
"(A) under— 
"(i) the Federal Deposit Insurance Act; 
"(ii) the Federal Credit Union Act; 
"(iii) sections 5213, 5239(b), and 5240 of the Revised 
Statutes; 
"(iv) the Federal Reserve Act; 
"(v) the Bank Holding Company Act Amendments of 
1970; 
"(vi) the Bank Holding Company Act of 1956; 
"(vii) the Home Owners' Loan Act; or 
"(viii) section 3663 of title 18, United States Code, 
pursuant to a conviction for an offense referred to in 
subparagraph (B) of this paragraph, 
"(B) pursuant to a conviction for an offense under section 
215, 656, 657, 1005, 1006, 1007, 1014, 1341, 1343, or 1344 of 
title 18, United States Code, affecting a depository institu-
tion insured by the Federal Deposit Insurance Corporation, 
or for a conspiracy to commit such an offense; or 
103 STAT. 496 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(C) under section 951 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989; or 
"(2) a forfeiture under section 981 or 982 of title 18, United 
States Code, that— 
"(A) arises in connection with a depository institution 
insured by the Federal Deposit Insurance Corporation; and 
"(B) exceeds $50,000. 
"(b) PERCENTAGE LIMITATION.—An appropriate Federal banking 
agency may not pay a reward under subsection (a) of more than 25 
percent of the amount of the fine, penalty, restitution, or forfeiture 
or $100,000, whichever is less. 
"(c) OFFICIALS AND PERSONS INEUGIBLE.—An appropriate Federal 
banking agency may not pay a reward under subsection (a) to— 
"(1) an officer or employee of the United States or of a State 
or local government who provides information described in 
subsection (a), obtained in the performance of official duties; or 
"(2) a person who— 
"(A) deliberately causes or participates in the alleged 
violation of law or regulation, or 
"(B) knowingly or recklessly provides substantially false 
information to such an agency or the Attorney General. 
"(d) NONREVIEWABIUTY.—Any agency decision under this section 
is final and not reviewable by any court.". 
(b) CREDIT UNIONS INSURED BY THE NCUA.—Title II of the Federal 
Credit Union Act (12 U.S.C. 1790 et seq.) is amended by inserting 
after the section added by section 932(b) of this Act the following 
new section: 
12 use 1790c. 
"SEC. 214. REWARD FOR INFORMATION LEADING TO RECOVERIES OR 
CIVIL PENALTIES. 
"The Board may pay rewards in connection with an offense 
affecting an insured credit union, under the same circumstances and 
subject to the same limitations that a Federal banking agency may 
pay rewards under section 33 of the Federal Deposit Insurance Act 
in connection with an offense affecting a depository institution 
insured by the Federal Deposit Insurance Corporation.". 
Subtitle D—Right to Financial Privacy Act 
Amendments 
SEC. 941. DEFINITIONS. 
Section 1101 of the Right to Financial Privacy Act of 1978 (12 
U.S.C. 3401), as amended by section 744(b) of this Act, is amended— 
(1) by redesignating paragraphs (6) and (7) as paragraphs (7) 
and (8), respectively; and 
(2) in paragraph (7) (as so redesignated), by striking all that 
precedes subparagraph (A) and inserting in lieu thereof the 
following: 
"(7) 'supervisory agency' means with respect to any particular 
financial institution, holding company, or any subsidiary of a 
financial institution or holding company, any of the following 
which has statutory authority to examine the financial condi-
tion, business operations, or records or transactions of that 
institution, holding company, or subsidiary—"; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 497 
(3) by inserting after paragraph (5) the following new para-
graph: 
"(6) 'holding company' means— 
"(A) any bank holding company (as defined in section 2 of 
the Bank Holding Company Act of 1956); 
"(B) any company described in section 3(fXl) of the Bank 
Holding Company Act of 1956; and 
"(C) any savings and loan holding company (as defined in 
the Home Owners' Loan Act);". 
SEC. 942. ADDITIONAL EXCEPTIONS. 
Section 1113 of the Right to Financial Privacy Act of 1978 (12 
U.S.C. 3413(b)) is amended— 
(1) by amending subsection (b) to read as follows: 
"(b) This chapter shall not apply to the examination by or disclo-
sure to any supervisory agency of financial records or information in 
the exercise of its supervisory, regulatory, or monetary functions, 
including conservatorship or receivership functions, with respect to 
any financial institution, holding company, subsidiary of a financial 
institution or holding company, institution-affiliated party (within 
the meaning of section 3(u) of the Federal Deposit Insurance Act) 
with respect to a financial institution, holding company, or subsidi-
ary, or other person participating in the conduct of the eiffairs 
thereof."; and 
(2) by adding at the end the following new subsections: 
"(m) This title shall not apply to the examination by or disclosure 
to employees or agents of the Board of Governors of the Federal 
Reserve System or gmy Federal Reserve Bank of financial records or 
information in the exercise of the Federal Reserve System's author-
ity to extend credit to the financial institutions or others. 
"(n) This title shall not apply to the examination by or disclosure 
to the Resolution Trust Corporation or its employees or agents of 
financial 
records 
or 
information 
in 
the 
exercise 
of 
its 
conservatorship, receivership, or liquidation functions with respect 
to a financial institution. 
"(o) This title shall not apply to the examination by or disclosure 
to the Federal Housing Finance Board or any of the Federal home 
loan banks of financial records or information in the exercise of the 
Federal Housing Finance Board's authority to extend credit (either 
directly or through a Federal home loan bank) to financial institu-
tions or others.". 
SEC. 943. PROHIBITION. 
Section 1120 of the Right to Financial Privacy Act of 1978 (12 
U.S.C. 3420) is redesignated as section 1120(a) and is amended by 
adding at the end the following new subsection: 
"(b)(1) No officer, director, partner, employee, or shareholder of, or 
agent or attorney for, a financial institution shall, directly or in-
directly, notify any person named in a grand jury subpoena served 
on such institution in connection with an investigation relating to a 
possible— 
"(A) crime against any financial institution or supervisory 
agency; or 
"(B) conspiracy to commit such a crime, 
about the existence or contents of such subpoena, or information 
that has been furnished to the grand jury in response to such 
subpoena. 
103 STAT. 498 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(2) Section 8 of the Federal Deposit Insurance Act and section 
206(kX2) of the Federal Credit Union Act shall apply to any violation 
of this subsection.". 
SEC. 944. MISCELLANEOUS PROVISIONS. 
Section 1112(e) of the Right to Financial Privacy Act of 1978 (12 
U.S.C. 3412(e)) is amended— 
(1) by inserting after "with respect to a depository institution" 
the following: ", holding company, or any subsidiary of a deposi-
tory institution or holding company,"; and 
(2) by striking out "Council" and inserting in lieu thereof 
"Council and the Securities and Exchange Commission". 
Subtitle E—Civil Penalties For Violations 
Involving Financial Institutions 
12 use 1833a. 
SEC. 951. CIVIL PENALTIES. 
(a) IN GENERAL.—Whoever violates any provision of law to which 
this section is made applicable by subsection (c) shall be subject to a 
civil penalty in an amount assessed by the court in a civil action 
under this section. 
(b) MAXIMUM AMOUNT OF PENALTY.— 
(1) GENERALLY.—The amount of the civil penalty shall not 
exceed $1,000,000. 
(2) SPECIAL RULE FOR CONTINUING VIOLATIONS.—In the case of 
a continuing violation, the amount of the civil penalty may 
exceed the amount described in paragraph (1) but may not 
exceed the lesser of $1,000,000 per day or $5,000,000. 
(3) SPECIAL RULE FOR VIOLATIONS CREATING GAIN OR LOSS.—(A) 
If any person derives pecuniary gain from the violation, or if the 
violation results in pecuniary loss to a person other than the 
violator, the amount of the civil penalty may exceed the 
amounts described in paragraphs (1) and (2) but may not exceed 
the amount of such gain or loss. 
(B) As used in this paragraph, the term "person" includes the 
Bank Insurance Fund, the Savings Association Insurance Fund, 
and the National Credit Union Share Insurance Fund. 
(c) VIOLATIONS TO WHICH PENALTY Is APPLICABLE.—This section 
applies to a violation of, or a conspiracy to violate— 
(1) section 215, 656, 657, 1005, 1006,1007,1014, or 1344 of title 
18, United States Code; or 
(2) section 1341 or 1343 of title 18, United States Code, affect-
ing a federally insured financial institution. 
(d) ATTORNEY GENERAL TO BRING ACTION.—A civil action to re-
cover a civil penalty under this section shall be commenced by the 
Attorney General. 
(e) BURDEN OF PROOF.—In a civil action to recover a civil penalty 
under this section, the Attorney General must establish the right to 
recovery by a preponderance of the evidence. 
if) ADMINISTRATIVE SUBPOENAS.— 
(1) IN GENERAL.—For the purpose of conducting a civil inves-
tigation in contemplation of a civil proceeding under this sec-
tion, the Attorney General may— 
(A) administer oaths and affirmations; 
(B) take evidence; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 499 
(C) by subpoena, summon witnesses £ind require the 
production of any books, papers, correspondence, memo-
remda, or other records which the Attorney General deems 
relevant or material to the inquiry. Such subpoena may 
require the attendance of witnesses and the production of 
any such records from any place in the United States at any 
place in the United States designated by the Attorney 
General. 
(2) PROCEDURES 
APPUCABLE.—The same procedures and 
limitations as are provided with respect to civil investigative 
demands in subsections (g), (h), and (j) of section 1968 of title 18, 
United States Code, apply with respect to a subpoena issued 
under this subsection. Process required by such subsections to 
be served upon the custodian shall be served on the Attorney 
General. Failure to comply with an order of the court to enforce 
such subpoena shall be punishable as contempt. 
(3) LIMITATION.—In the case of a subpoena for which the 
return date is less than 5 days after the date of service, no 
person shall be found in contempt for failure to comply by the 
return date if such person files a petition under paragraph (2) 
not later than 5 days after the date of service. 
Subtitle F—Criminal Law and Procedure 
SEC. 961. INCREASED CRIMINAL PENALTIES FOR CERTAIN FINANCIAL 
INSTITUTION OFFENSES. 
(a) RECEIPT OF COMMISSIONS OR GIFTS FOR PROCURING LOANS.— 
Section 215(a) of title 18, United States Code, is amended— 
(1) by striking "$5,000" and inserting "$1,000,000"; and 
(2) by striking "five" and inserting '^0". 
OJ) THEFT, EMBEZZLEMENT, OR MISAPPUCATION BY BANK OFFICER 
OR EMPLOYEE.—Section 656 of title 18, United States Code, is amend-
ed— 
(1) by striking "$5,000" and inserting "$1,000,000"; and 
(2) by striking "five" and inserting '^0". 
(c) LENDING, CREDIT, AND INSURANCE INSTITUTIONS.—Section 657 of 
title 18, United States Code, is amended— 
(1) by striking "$5,000" and inserting "$1,000,000"; and 
(2) by striking "five" and inserting "20". 
(d) BANK ENTRIES, REPORTS, AND TRANSACTIONS.—Section 1005 of 
title 18, United States Code, is amended— 
(1) in the 1st paragraph, by inserting "bank or savings and 
loan holding company," after member bank,"; 
(2) in the 3rd paragraph— 
(A) by inserting or company" after "bank" each place it 
appears; and 
(B) by striking the "—" at the end and inserting a 
semicolon; 
(3) by adding after the 3rd paragraph the following: 
"Whoever with intent to defraud the United States or any agency Fraud, 
thereof, or any financial institution referred to in this section, 
participates or shares in or receives (directly or indirectly) any 
money, profit, property, or benefits through any transaction, loan, 
commission, contract, or any other act of any such financial institu-
tion—"; 
(4) by striking "$5,000" and inserting "$1,000,000"; and 
103 STAT. 500 
PUBLIC LAW 101-73—AUG. 9, 1989 
(5) by striking "five" and inserting "20". 
(e) FEDERAL CREDIT INSTITUTION ENTRIES, REPORTS, AND TRANS-
ACTIONS.—Section 1006 of title 18, United States Code, is amended— 
(1) by striking "$10,000" and inserting "$1,000,000"; and 
(2) by striking "five" and inserting "20". 
(f) FEDERAL DEPOSIT INSURANCE CORPORATION TRANSACTIONS.— 
Section 1007 of title 18, United States Code, is amended to read as 
follows: 
"§ 1007. Federal Deposit Insurance Corporation Transactions 
Fraud. 
"Whoever, for the purpose of influencing in any way the action of 
the Federal Deposit Insurance Corporation, knowingly makes or 
invites reliance on a false, forged, or counterfeit statement, docu-
ment, or thing shall be fined not more than $1,000,000 or imprisoned 
not more than 20 years, or both.". 
(g) FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION TRANS-
ACTIONS.— 
(1) IN GENERAL.—Chapter 47 of title 18, United States Code, is 
amended by striking section 1008. 
(2) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 47 of title 18, United States Code, is amended by 
striking the item relating to section 1008. 
(h) LOAN AND CREDIT APPLICATIONS GENERALLY; RENEWALS AND 
DISCOUNTS; CROP INSURANCE.—Section 1014 of title 18, United States 
Code, is amended— 
(1) by striking "a Federal Home Loan Bank, the Federal 
Home Loan Bank Board, the Home Owners' Loan Corporation, 
a Federal Saving and Loan Association"; 
(2) by striking "the Federal Saving and Loan Insurance Cor-
poration, any bank the deposits of which are insured by"; 
(3) by striking "any member of; 
(4) by inserting 'the Resolution Trust Corporation" after 
"Federal Deposit Insurance Corporation,"; 
(5) by striking "$5,000" and inserting "$1,000,000"; and 
(6) by striking "two" and inserting "20". 
(i) FRAUDS AND SWINDLES.—Section 1341 of title 18, United States 
Code, is amended by adding at the end: "If the violation affects a 
financial institution, such person shall be fined not more than 
$1,000,000 or imprisoned not more than 20 years, or both.". 
(j) FRAUD BY WIRE, RADIO, OR TELEVISION.—Section 1343 of title 18, 
United States Code, is amended by adding at the end: "If the 
violation affects a financial institution, such person shall be fined 
not more than $1,000,000 or imprisoned not more than 20 years, or 
both.". 
(k) BANK FRAUD.—Section 1344 of title 18, United States Code, is 
amended to read as follows: 
"§ 1344. Bank fraud 
"Whoever knowingly executes, or attempts to execute, a scheme 
or artifice— 
"(1) to defraud a financial institution; or 
"(2) to obtain any of the moneys, funds, credits, assets, securi-
ties, or other property owned by, or under the custody or control 
of, a financial institution, by means of false or fraudulent 
pretenses, representations, or promises; 
shall be fined not more than $1,000,000 or imprisoned not more than 
20 years, or both.". 
PUBLIC LAW 101-73—AUG. 9,1989 
103 STAT. 501 
G) LIMITATIONS.— 
(1) IN GENERAL.—Chapter 213 of title 18, United States Code, 
is amended by adding at the end the following: 
"§ 3293. Financial institution offenses 
"No person shall be prosecuted, tried, or punished for a violation 
of, or a conspiracy to violate— 
"(1) section 215, 656, 657, 1005, 1006, 1007, 1008, 1014, or 1344; 
or 
"(2) section 1341 or 1343, if the offense affects a financial 
institution; 
unless the indictment is returned or the information is filed within 
10 years after the commission of the offense.". 
(2) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 213 of title 18, United States Code, is amended 
by adding at the end the following new item: 
"3293. Financial institution offenses.". 
(3) EFFECT OF AMENDMENTS ON OFFENSES FOR WHICH THE CUR- 
18 u s e 3293 
RENT PERIOD OF UMiTATiONS HAD NOT RUN.—The amendments ^'^^• 
made by this subsection shall apply to an offense committed 
before the effective date of this section, if the statute of limita-
tions applicable to that offense under this chapter had not run 
as of such date, 
(m) SENTENCING GUIDELINES.—Pursuant to section 994 of title 28, 
28 USC 994 note. 
United States Code, £ind section 21 of the Sentencing Act of 1987, the 
United States Sentencing Commission shall promulgate guidelines, 
or amend existing guidelines, to provide for a substantial period of 
incarceration for a violation of, or a conspiracy to violate, section 
215, 656, 657, 1005, 1006, 1007, 1014, 1341, 1343, or 1344 of title 18, 
United States Code, that substantially jeopardizes the safety and 
soundness of a federally insured finsincial institution. 
SEC. 962. MISCELLANEOUS REVISIONS TO TITLE 18. 
(a) SPECIFIC TERMINOLOGY CHANGES AND REPEAL.— 
(1) SECTION 212.—Section 212 of title 18, United States Code, is 
amended— 
(A) by striking "bank" the first place it appears and 
inserting "financial institution" in lieu thereof; 
(B) by striking "land bank" and all that follows through 
"farm credit examiner" and inserting "Farm Credit Bank, 
bank for cooperatives, production credit association, Fed-
eral land bank association, agriculturgd credit association, 
Federal land credit association, service organization char-
tered under section 4.26 of the Farm Credit Act of 1971, the 
Farm Credit System Financial Assistance Corporation, the 
> 
FederEil Agricultural Mortgage Credit Corporation, the Fed-
eral Farm Credit Banks Funding Corporation, the National 
Consumer Cooperative Bank, or other institution subject to 
examination by a Farm Credit Administration examiner"; 
(C) in the 2nd undesignated paragraph, by striking "in-
sured banks" and inserting "insured financial institutions" 
in lieu thereof; and 
(D) in the 2nd undesignated paragraph, by striking "or by 
the Federal Deposit Insurance Corporation" and inserting 
in lieu thereof ", by the Federal Deposit Insurance Corpora-
103 STAT. 502 
PUBLIC LAW 101-73—AUG. 9, 1989 
^ 
tion, by the Office of Thrift Supervision, or by the Federal 
' 
Housing Finance Board". 
(2) SECTION 213.—Section 213 of title 18, United States Code, is 
amended by striking "banks the deposits of which" and insert-
ing "financial institutions the deposits of which". 
(3) REPEAL OF SECTION IOO9.—Title 18, United States Code, is 
amended by striking out section 1009. 
(4) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 47 of title 18, United States Code, is amended by 
striking out the item relating to section 1009. 
(5) SECTION 1030(e)(4).—Section 1030(eX4) of title 18, United 
States Code, is amended— 
(A) in subparagraph (A), by striking "a bank" and insert-
ing "an institution, ; 
: 
(B) by striking subparagraph (C); and 
(C) by redesignating subparagraphs (D), (E), (F), (G), and 
(H), as subparagraphs (C), (D), (E), (F), and (G), respectively. 
(6) SECTION IH4.—Section 1114 of title 18, United States Code, 
is amended— 
(A) by striking "the Federal Savings and Loan Insurance 
Corporation,"; and 
(B) by striking "the Federal Home Loan Bank Board" and 
inserting "the Office of Thrift Supervision, the Federal 
Housing Finance Board, the Resolution Trust Corporation". 
(7) CHANGES RELATING TO NATIONAL CREDIT UNION ADMINISTRA-
TION.—Sections 657, 1006, 1014, and 2113(h) of title 18, United 
States Code, are each amended by striking "Administrator of 
the National Credit Union Administration' and inserting "Na-
tional Credit Union Administration Board". 
. (8) CHANGES RELATING TO THE FARM CREDIT SYSTEM,— 
(A) Sections 657 and 1006 of title 18, United States Code, 
are each amended by striking "any land bank, intermediate 
credit bank," and inserting in lieu thereof "the Farm Credit 
System Insurance Corporation, a Farm Credit Bank, a". 
(B) Section 1014 of title 18, United States Code, is amend-
; 
r 
ed— 
(i) by striking "any Federal intermediate credit 
bank" and all that follows through "Title 12" and 
inserting in lieu thereof "any Farm Credit Bank, 
production 
credit 
association, 
agricultural 
credit 
,, 
association, bank for cooperatives, or any division, offi-
cer, or employee thereof ; and 
(ii) by striking "Federal Savings and Loan Insurance 
Corporation" and inserting "Farm Credit System 
Insurance Corporation" in lieu thereof. 
(b) CROSS REFERENCE CHANGE.—Section 1306 of title 18, United 
States Code, is amended by striking "section 20 of the Federal 
Deposit Insurance Act, or section 410 of the National Housing Act" 
and inserting "or section 20 of the Federal Deposit Insurance Act". 
(c) OBSTRUCTION OF CRIMINAL INVESTIGATIONS.—Section 1510 
of 
title 18, United States Code, is amended— 
(1) by redesignating subsection (b) as subsection (c); and 
(2) by inserting after subsection (a) the following: 
"(b)(1) Whoever, being an officer of a financial institution, with 
the intent to obstruct a judicial proceeding, directly or indirectly 
notifies any other person about the existence or contents of a 
subpoena for records of that financial institution, or information 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 503 
that has been furnished to the grand jury in response to that 
subpoena, shall be fined under this title or imprisoned not more 
than 5 years, or both. 
"(2) Whoever, being an officer of a financial institution, directly or 
indirectly notifies— 
"(A) a customer of that financial institution whose records are 
sought by a grand jury subpoena; or 
"(B) any other person named in that subpoena; 
about the existence or contents of that subpoena or information that 
has been furnished to the grand jury in response to that subpoena, 
shall be fined under this title or imprisoned not more than one year, 
or both. 
"(3) As used in this subsection— 
"(A) the term *an officer of a financial institution' means an 
officer, director, partner, employee, agent, or attorney of or for a 
financial institution; and 
"(B) the term 'subpoena for records' means a Federal grand 
jury subpoena for customer records that has been served relat-
ing to a violation of, or a conspiracy to violate— 
"(i) section 215, 656, 657,1005,1006,1007,1014, or 1344; or 
"(ii) section 1341 or 1343 affecting a financial institu-
tion.". 
(d) CONFORMING TERMINOLOGY IN BANK ROBBERY SECTION.—Sec-
tion 2113 of title 18, United States Code, is amended— 
(1) in subsection (f), by striking "any bank the deposits of 
which" and inserting "any institution the deposits of which"; 
(2) by adding before the period at the end of subsection (h) ", 
and any 'Federal credit union' as defined in section 2 of the 
Federal Credit Union Act"; and 
(3) by striking subsection (g) and redesignating subsection (h) 
as subsection (g). 
(e) CREATION OF GENERAL DEFINITION OF FINANCIAL INSTITUTION 
FOR TITLE 18.— 
(1) IN GENERAL.—Subsection (b) of section 215 of title 18, 
United States Code, is transferred to the end of chapter 1 of 
such title. 
(2) UPDATING AND TECHNICAL AMENDMENTS.—Such subsection 
(b), as so transferred, is amended— 
(A) by inserting at the beginning the following section 
; 
heading: 
"§ 20. Financial institution deflned" 
(B) by striking "(b)"; 
(C) by striking "this section" and inserting "this title"; 
(D) so that paragraph (1) reads as follows: 
"(1) an insured depository institution (as defined in section 3(cX2) 
of the Federal Deposit Insurance Act);"; 
(E) by striking paragraphs (2) and (8); 
(F) so that paragraph (5) reads as follows: 
"(5) a System institution of the Farm Credit System, as defined in 
section 5.35(3) of the Farm Credit Act of 1971;"; 
(G) so that paragraph (7) reads as follows: 
"(7) a depository institution holding company (as defined in sec-
tion 3(wXl) of the Federal Deposit Insurance Act."; 
and 
103 STAT. 504 
PUBLIC LAW 101-73—AUG. 9, 1989 
(H) by redesignating paragraphs (3), (4), (5), (6), and (7) (as 
amended by this paragraph) as paragraphs (2), (3), (4), (5), 
. 
and (6), respectively. 
(3) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 1 of title 18, United States Code, is amended by 
adding at the end the following new item: 
"20. Financial institution defined.". 
SEC. 963. CIVIL AND CRIMINAL FORFEITURE. 
(a) CIVIL FORFEITURE.—Section 981(a)(1) of title 18, United States 
Code, is amended by adding at the end the following: 
Real property. 
"(C) Any property, real or personal, which constitutes or is 
derived from proceeds traceable to a violation of section 215, 
656, 657,1005,1006,1007,1014, or 1344 of this title.". 
(b) TRANSFER OF PROPERTY UNDER CIVIL FORFEITURE.—Section 
981(e) of title 18, United States Code, is amended— 
(1) in the matter before paragraph (1), by striking out "deter-
mine to—" and inserting in lieu thereof "determine—"; 
(2) by striking out paragraphs (1) and (2) and inserting in lieu 
thereof the following: 
"(1) to any other Federal agency; 
"(2) to any State or local law enforcement agency which 
participated directly in any of the acts which led to the seizure 
or forfeiture of the property; 
"(3) in the case of property referred to in subsection (a)(1)(C) 
(if the affected financial institution is in receivership or liquida-
tion), to any Federal financial institution regulatory agency— 
"(A) to reimburse the agency for payments to claimants 
or creditors of the institution; and 
"(B) to reimburse the insurance fund of the agency for 
losses suffered by the fund £is a result of the receivership or 
liquidation; 
"(4) in the C£ise of property referred to in subsection (aXl)(C) 
(if the affected financial institution is not in receivership or 
liquidation), upon the order of the appropriate Federal financial 
institution regulatory agency, to the financial institution as 
restitution, with the value of the property so transferred to be 
set off against any amount later recovered by the 
financial 
institution as compensatory damages in any State or Federal 
proceeding; or 
"(5) in the case of property referred to in subsection (aXl)(C), 
to any Federal financial institution regulatory agency, to the 
extent of the agency's contribution of resources to, or expenses 
involved in, the seizure and forfeiture, and the investigation 
leading directly to the seizure and forfeiture, of such property."; 
and 
(3) by adding at the end the following new sentence: "The 
United States shall not be liable in any action arising out of a 
transfer under paragraph (3), (4), or (5) of this subsection.". 
(c) CRIMINAL FORFEITURE.—Section 982 of title 18, United States 
Code, is amended— 
(1) in subsection (a)— 
(A) by inserting "(1)" after "(a)"; and 
(B) by adding at the end the following: 
"(2) The court, in imposing sentence on a person convicted of a 
violation of, or a conspiracy to violate, section 215, 656, 657, 1005, 
1006,1007,1014,1341, 1343, or 1344 of this title, affecting a financial 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 505 
institution, shall order that the person forfeit to the United States 
any property constituting, or derived from, proceeds the person 
obtained directly or indirectly, as the result of such violation."; and 
(2) in subsection (b), by striking "(b) The provisions" and all 
that follows through "However, the" and inserting in lieu 
thereof the following: 
"(b)(1) Property subject to forfeiture under this section, any sei-
zure and disposition thereof, and any administrative or judicial 
proceeding in relation thereto, shall be governed— 
"(A) in the c£ise of a forfeiture under subsection (a)(1) of this 
section, by subsections (c) and (e) through (p) of section 413 of 
the Comprehensive Drug Abuse Prevention and Control Act of 
1970 (21 U.S.C. 853); and 
"(B) in the case of a forfeiture under subsection (aX2) of this 
section, by subsections (b), (c), (e), and (g) through (p) of section 
413 of such Act. 
"(2) The". 
SEC. 964. GRAND JURY SECRECY. 
(a) IN GENERAL.—Chapter 215 of title 18, United States Code, is 
amended by striking section 3322 and all that follows through 
section 3328 and inserting the following: 
"§ 3322. Disclosure of certain matters occurring before grand jury 
"(a) A person who is privy to grand jury information concerning a 
banking law violation— 
(1) received in the course of duty as an attorney for the 
government; or 
"(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal Rules of 
Criminal Procedure; 
may disclose that information to an attorney for the government for 
use in enforcing section 951 of the Financial Institutions Reform, 
Recovery and Enforcement Act of 1989 or for use in connection with 
civil forfeiture under section 981 of title 18, United States Code, of 
property described in section 981(a)(1)(C) of such title. 
"(b)(1) Upon motion of an attorney for the government, a court 
may direct disclosure of matters occurring before a grand jury 
during an investigation of a banking law violation to identified 
personnel of a financial institution regulatory agency— 
"(A) for use in relation to any matter within the jurisdiction 
of such regulatory agency; or 
"(B) to assist an attorney for the government to whom mat-
ters have been disclosed under subsection (a). 
"(2) A court may issue an order under paragraph (1) upon a 
finding of a substantial need. 
"(c) A person to whom matter has been disclosed under this 
section shall not use such matter other than for the purpose for 
which such disclosure was authorized. 
"(d) As used in this section— 
"(1) the term 'banking law violation' means a violation of, or a 
conspiracy to violate— 
"(A) section 215, 656, 657, 1005, 1006, 1007, 1014, or 1344; 
or 
"(B) section 1341 or 1343 affecting a financial institution; 
"(2) the term 'attorney for the government' has the meaning 
given such term in the Federal Rules of Criminal Procedure; 
and 
103 STAT. 506 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(3) the term 'grand jury information' means matters occur-
ring before a grand jury other than the deliberations of the 
grand jury or the vote of any grand juror.". 
(b) CLERICAL AMENDMENT.—The table of sections at the beginning 
of chapter 215 of title 18, United States Code, is amended by striking 
out the item relating to sections 3322 through 3328 and inserting the 
following: 
"3322. Disclosure of certain matters occurring before grand jury.". 
(c) FAIR CREDIT REPORTING ACT AMENDMENT.—Paragraph (1) of 
section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is 
amended by inserting before the period at the end the following: ", 
or a subpoena issued in connection with proceedings before a Fed-
eral grand jury". 
SEC. 965. CRIMINAL DIVISION FRAUD SECTION REGIONAL OFFICE. 
Texas. 
(a) EsTABUSHMENT.—Not later than 120 days after the date of 
enactment of this Act, the Department of Justice shall create a 
regional office of the Fraud Section of the Criminal Division in the 
Northern District of Texas, and maintain such office, by providing 
sufficient legal and other staff and office space, through fiscal year 
1992. 
Reports. 
(b) STUDY.—Not later than 180 days after the date of the enact-
ment of this Act, the Comptroller General shall study and report to 
the Congress on whether additional regional offices of the Fraud 
Section of the Criminal Division should be established in other parts 
of the country. 
SEC. 966. DEPARTMENT OF JUSTICE APPROPRIATION AUTHORIZATION. 
(a) IN GENERAL.—There is authorized to be appropriated to the 
Attorney General, without fiscal year limitation— 
(1) $65,000,000 for each of fiscal years 1990 through 1992, for 
purposes of investigations and prosecutions involving financial 
institutions to which this Act and amendments made by this 
Act apply; and 
(2) $10,000,000 for each of fiscal years 1990 through 1992, for 
purposes of civil proceedings involving financial institutions to 
which this Act and amendments made by this Act apply. 
(b) SUPPLANTATION AND REALLOCATION PROHIBITED.—SumS au-
thorized by this section— 
(1) are in addition to any other sums authorized to be appro-
priated for such purposes; 
(2) shall not be used to supplant sums otherwise available for 
such purposes; and 
(3) shall not be reallocated for any other purpose. 
SEC. 967. AUTHORIZATION OF ADDITIONAL APPROPRIATIONS FOR THE 
JUDICIARY. 
There is authorized to be appropriated to the Federal courts 
system $10,000,000, to carry out such system's duties under this Act, 
for each of fiscal years 1990 through 1992. 
SEC. 
9
6
8
. 
RACKETEER 
INFLUENCED 
AND 
CORRUPT 
ORGANIZATIONS. 
Section 1961(1) of title 18, United States Code, is amended by 
inserting "section 1344 (relating to financial institution fraud),' 
after "(relating to wire fraud),". 
PUBLIC LAW 101-73-AUG. 9, 1989 
103 STAT. 507 
TITLE X—STUDIES OF FEDERAL DEPOSIT i2usci8ii 
INSURANCE, BANKING SERVICES, AND 
THE SAFETY AND SOUNDNESS OF GOV-
ERNMENT-SPONSORED ENTERPRISES 
SEC. 1001. STUDY OF FEDERAL DEPOSIT INSURANCE SYSTEM. 
(a) IN GENERAL.—The Secretary of the Treasury, in consultation 
with the Comptroller of the Currency, the Chairman of the Board of 
Governors of the Federal Reserve System, the Director of the Office 
of Thrift Supervision, the Chairperson of the Federal Deposit Insur-
ance Corporation, the Chairman of the National Credit Union 
Administration Board, the Director of the Office of Management 
and Budget, and individuals from the private sector, shall conduct a 
study of the Federal deposit insurance system. 
(b) TOPICS.—As part of the study required under subsection (a), the 
Secretary of the Treasury shall investigate, review, and evaluate the 
following: 
(1) The feasibility of establishing a deposit insurance pre-
mium rate structure which would take into account, on an 
institution-by-institution basis— 
(A) asset quality risk; 
(B) interest rate risk; 
(C) quality of management; and 
(D) profitability and capital. 
(2) Incentives for market discipline, including the advantages 
of— 
(A) limiting each depositor to 1 insured account per 
institution; 
(B) reducing the amount insured, or providing for a grad-
uated decrease in the percentage of the amounts deposited 
which are insured as the amounts deposited increase; 
(C) combining Federal with private insurance in order to 
bring the market discipline of private insurance to bear on 
the management of the depository institution; and 
(D) ensuring, by law or regulation, that on the closing of 
any insured depository institution, the appropriate Federal 
insurance fund will honor only its explicit liabilities, and 
will never make good any losses on deposits not explicitly 
covered by Federal deposit insurance. 
(3) The scope of deposit insurance coverage and its impact on 
the liability of the insurance fund. 
(4) The feasibility of market value accounting, assessments on 
foreign deposits, limitations on brokered deposits, the addition 
of collateralized borrowings to the deposit insurance base, and 
multiple insured accounts. 
(5) The impact on the deposit insurance funds of varjring State 
and Federal bankruptcy exemptions and the feasibility of— 
(A) uniform exemptions; 
(B) limits on exemptions when necessary to repay obliga-
tions owed to federally insured depository institutions; and 
(C) requiring borrowers from federally insured depository 
institutions to post a personal or corporate bond when 
obt£dning a mortgage on real property. 
note. 
103 STAT. 508 
PUBLIC LAW 101-73—AUG. 9, 1989 
(6) Policies to be followed with respect to the recapitalization 
or closure of insured depository institutions whose capital is 
* 
depleted to, or near the point of, insolvency. 
(7) The efficiency of housing subsidies through the Federal 
home loan bank system. 
(8) Alternatives to Federal deposit insurance. 
(9) The feasibility of developing and administering, through 
the appropriate Federal banking agency, an examination of the 
principles and techniques of risk management and the applica-
tion of such principles and techniques to the management of 
insured institutions. 
(10) The adequacy of capital of insured credit unions and the 
National Credit Union Share Insurance Fund, including 
whether the supervision of such fund should be separated from 
the other functions of the National Credit Union Administra-
tion. 
(11) The feasibility of requiring, by statute or other means, 
that— 
(A) independent auditors and accountants of a depository 
institution report the results of any audit of the institution 
to the relevant regulatory agency or agencies; 
(B) a regulator share reports on a depository institution 
with the institution's independent auditors and account-
ants; and 
(C) independent auditors and accountants participate in 
conferences between the regulator and the depository 
institution. 
(12) The feasibility of adopting regulations which are the 
same as or similar to the provisions of England's Banking Act, 
1987, ch. 22 (4 Halsbury's Statutes of England and Wales 527-
650 (1987)), enacted on May 15, 1987, relating to the Bank of 
England's relationship with auditors and reporting accountants 
(including sections 8, 39, 41, 45, 46, 47, 82, 83, 85, and 94 of such 
Act). 
(c) FINAL REPORT.—Not later than the close of the 18-month period 
beginning on the date of the enactment of this Act, the Secretary of 
the Treasury shall submit to the Congress a final report containing 
a detailed statement of findings made, and conclusions drawn from, 
the study conducted under this section, including such recommenda-
tions for administrative and legislative action as the Secretary 
determines to be appropriate. 
SEC. 1002. SURVEY OF BANK FEES AND SERVICES. 
(a) ANNUAL SURVEY REQUIRED.—The Board of Governors of the 
Federal Reserve System shall obtain a sample, which is representa-
tive by geographic location and size of institution, of— 
(1) certain retail banking services provided by insured deposi-
tory institutions; and 
(2) the fees, if any, which are imposed by such institutions for 
providing such services. 
(b) ANNUAL REPORT TO CONGRESS REQUIRED.— 
(1) PREPARATION.—The Board of Governors of the Federal 
Reserve System shall prepare a report of the results of each 
survey conducted pursuant to subsection (a). 
(2) CONTENTS OF REPORT.—Each report prepared pursuant to 
paragraph (1) shall include— 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 509 
(A) a description of any discernable trends in the cost and 
availability of retail banking services; and 
(B) a description of the correlation, if any, between— 
(i) any increase in the amount of any deposit 
insurance premium assessed by the Federal Deposit 
Insurance Corporation against insured 
depository 
institutions; 
(ii) any increase in the amount of the fees imposed by 
such institutions for providing reteiil banking services; 
and 
^ 
(iii) any decrease in the availability of such services, 
(3) SUBMISSION TO CONGRESS.—The Board of Governors of the Reports. 
Federal Reserve System shall submit— 
(A) the first annual report required under paragraph (1) 
not later than June 1,1990; and 
(B) each subsequent annual report not later than June 1 
of each calendar year beginning after 1990. 
(c) SUNSET.—The requirements of subsection (a) shall terminate at 
the end of the 2-year period beginning on the later of— 
(1) the 5-year period beginning on the date of the enactment 
of this Act; or 
(2) the date (if any) during the 2-year period beginning at the 
end of such 5-year period, on which deposit insurance premiums 
are increased under section 7 of the Federal Deposit Insurance 
Act. 
SEC. 1003. GENERAL ACCOUNTING OFFICE STUDY. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a study of deposit insurance issues raised by section 
1001 emphasizing in particular— 
(1) analysis of the policy considerations affecting the scope of 
deposit insurance coverage; 
(2) evEduation of the risks associated with bank insurance 
contracts both as to the issuing institution and the deposit 
insurance funds; and 
(3) the effect of proposed changes in the definition of "deposit" 
on— 
(A) market discipline; and 
(B) the ability of other participants in capital markets to 
raise funds. 
(b) REPORT.—Not later than the close of the 18-month period 
beginning on the date of the enactment of this Act, the Comptroller 
General shall submit to the Congress the results of the study 
required by subsection (a). 
SEC. 1004. STUDY REGARDING CAPITAL REQUIREMENTS FOR GOVERN-
MENT-SPONSORED ENTERPRISES. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a study of the risks undertaken by all government-
sponsored enterprises and the appropriate level of capital for such 
enterprises consistent with— 
(1) the financial soundness and stability of the government-
sponsored enterprises; 
(2) minimizing any potential financial exposure of the Federal 
Government; and 
(3) minimizing any potential impact on borrowing of the 
Federal Government. 
103 STAT. 510 
PUBLIC LAW 101-73—AUG. 9, 1989 
(b) CONSULTATION AND COOPERATION WITH OTHER AGENCIES.—The 
Comptroller Greneral shall determine the structure and methodology 
of the study under this section in consultation with and with the 
cooperation of the Secretary of Agriculture and the Farm Credit 
Administration (with respect to the Farm Credit Banks, the Banks 
for Cooperatives, and the Federal Agricultural Mortgage Corpora-
tion), the Secretary of Education (with respect to the Student Loan 
Marketing Association and the College Construction Loan Corpora-
tion), the Secretary of Housing and Urban Development (with re-
spect to the Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation), and the government-sponsored 
enterprises. 
(c) ACCESS TO RELEVANT INFORMATION.—Each government-spon-
sored enterprise shall provide full and prompt access to the 
Ck)mptroller General to its books and records and shall promptly 
provide any other information requested by the Comptroller Gen-
eral. In conducting the study under this section, the (DomptroUer 
General may request information from, or the assistance of, any 
department or agency of the Federal Government that is authorized 
by law to supervise or approve any of the activities of any govern-
ment-sponsored enterprise. 
(d) SPECIFIC REQUIREMENTS.—The study shall examine and evalu-
ate— 
(1) the degrees and types of risks that are undertaken by the 
government-sponsored enterprises in the course of their oper-
ations, including credit risk, interest rate risk, management and 
operational risk, and business risk; 
(2) the most appropriate method or methods for quantifying 
the types of risks undertaken by the government-sponsored 
enterprises; 
(3) the actual level of risk that exists with respect to each 
government-sponsored enterprise, which shall take into account 
factors including the volume and type of securities outstanding 
that are issued or guaranteed by each government-sponsored 
enterprise and the extent of off-bgJance sheet expense of each 
government-sponsored enterprise; 
(4) the appropriateness of appl3dng a risk-based capital stand-
ard to each government-sponsored enterprise, taking into ac-
count the nature of the business each government-sponsored 
enterprise conducts; 
(5) the costs and benefits to the public from application of a 
risk-based capital standard to the government-sponsored enter-
prises and the impact of such a standard on the capability of 
each government-sponsored enterprise to carry out its purpose 
under law; 
(6) the impact, if any, of the operation of the government-
sponsored enterprises on borrowing of the Federal Government; 
(7) the overall level of capital appropriate for each of the 
government-sponsored enterprises; and 
(8) the quality and timeliness of information currently avail-
able to the public and the Federal (Jovemment concerning the 
extent and nature of the activities of government-sponsored 
enterprises and the financial risk associated with such activi-
ties. 
(e) REPORTS TO CONGRESS.—The Comptroller General shall submit 
to the Congress 2 reports regarding the study under this section. The 
first report shall be submitted to the Congress not later than 9 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 511 
months after the date of the enactment of this Act and the second 
report shall be submitted to the Congress not later than 21 months 
after the date of the enactment of this Act. Each report shall set 
forth— 
(1) the results of the study under this section; 
(2) any recommendations of the Comptroller General with 
respect to appropriate capital standards for each government-
sponsored enterprise; 
(3) any recommendations of the Comptroller General with 
respect to information that, in the determination of the 
Comptroller General, should be provided to the Congress 
concerning— 
(A) the extent and nature of the activities of the govern-
ment-sponsored enterprises; and 
(B) the nature of any periodic reports that the Comptrol-
ler General believes should be submitted to the Congress 
relating to the capital condition and operations of the 
government-sponsored enterprises; and 
(4) any recommendations and opinions of the Secretary of 
Agriculture, the Secretary of Education, the Secretary of Hous-
ing and Urban Development, and the Secretary of the Treasury 
regarding the report, to the extent that the recommendations 
and views of such officers differ from the recommendations and 
opinions of the Comptroller General. 
(f) DEFINITION.—For purposes of this section, the term "govern-
ment-sponsored enterprises" means the Federal Home Loan Mort-
gage Corporation, the Federal National Mortgage Association, the 
Federal Home Loan Bank System, the Farm Credit Banks, the 
Banks for Cooperatives, the Federal Agricultural Mortgage Corpora-
tion, the College Construction Loan Insurance Corporation, the 
Student Loan Marketing Association. 
TITLE XI—REAL ESTATE APPRAISAL 
REFORM AMENDMENTS 
SEC. 1101. PURPOSE. 
12 USC 3331. 
The purpose of this title is to provide that Federal financial and 
public policy interests in real estate related transactions will be 
protected by requiring that real estate appraisals utilized in connec-
tion with federally related transactions are performed in writing, in 
accordance with uniform standards, by individuals whose com-
petency has been demonstrated and whose professional conduct will 
be subject to effective supervision. 
SEC. 1102. ESTABLISHMENT OF APPRAISAL SUBCOMMITTEE OF THE FED-
ERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL. 
The Federal Financial Institutions Examination Council Act of 
1978 (12 U.S.C. 3301 et seq.) is amended by adding at the end thereof 
the following new section: 
"SEC. 1011. ESTABLISHMENT OF APPRAISAL SUBCOMMITTEE. 
12 USC 3310. 
"There shall be within the Council a subcommittee to be known as 
the 'Appraisal Subcommittee', which shall consist of the designees of 
the heads of the Federal financial institutions regulatory agencies. 
103 STAT. 512 
PUBLIC LAW 101-73—AUG. 9, 1989 
Each such designee shall be a person who has demonstrated knowl-
edge and competence concerning the appraisal profession.". 
12 use 3332. 
SEC. 1103. FUNCTIONS OF APPRAISAL SUBCOMMITTEE. 
(a) IN GENERAL.—The Appraisal Subcommittee shall— 
(1) monitor the requirements established by States for the 
certification and licensing of individuals who are qualified to 
perform appraisals in connection with federally related trans-
actions, including a code of professional responsibility; 
(2) monitor the requirements established by the Federal 
' financial institutions regulatory agencies and the Resolution 
Trust Corporation with resj)ect to— 
(A) appraisal standards for federally related transactions 
under their jurisdiction, and 
(B) determinations as to which federally related trans-
actions under their jurisdiction require the services of a 
State certified appraiser and which require the services of a 
State licensed appraiser; 
(3) maintain a national registry of State certified and licensed 
appraisers who are eligible to perform appraisals in federally 
related transactions; and 
Reports. 
(4) transmit an annual report to the Congress not later than 
January 31 of each year which describes the manner in which 
each function assigned to the Appraisal Subcommittee has been 
carried out during the preceding year. 
(b) MONITORING AND REVIEWING FOUNDATION.—The Appraisal 
Subcommittee shall monitor and review the practices, procedures, 
activities, and organizational structure of the Appraisal Foundation. 
12 use 3333. 
SEC. 1104. CHAIRPERSON OF APPRAISAL SUBCOMMITTEE; TERM OF 
CHAIRPERSON; MEETINGS. 
(a) CHAIRPERSON.—The Council shall select the Chairperson of the 
subcommittee. The term of the Chairperson shall be 2 years. 
(b) MEETINGS; QUORUM; VOTING.—The Appraisal Subcommittee 
shall meet at the call of the Chairperson or a majority of its 
members when there is business to be conducted. A majority of 
members of the Appraisal Subcommittee shall constitute a quorum 
but 2 or more members may hold hearings. Decisions of the Ap-
praisal Subcommittee shall be made by the vote of a majority of its 
members. 
12 use 3334. 
SEC. 1105. OFFICERS AND STAFF. 
The Chairperson of the Appraisal Subcommittee shall appoint 
such officers and staff as may be necessary to carry out the func-
tions of this title consistent with the appointment and compensation 
practices of the Council. 
12 use 3335. 
SEC. 1106. POWERS OF APPRAISAL SUBCOMMITTEE. 
The Appraisal Subcommittee may, for the purpose of carrying out 
this title, establish advisory committees, hold hearings, sit and act 
at times and places, take testimony, receive evidence, provide 
information, and perform research, as the Appraisal Subcommittee 
considers appropriate. 
PUBLIC LAW 101-73-AUG. 9, 1989 
103 STAT. 513 
SEC. 1107. PROCEDURES FOR ESTABLISHING APPRAISAL STANDARDS AND 
12 USC 3336. 
REQUIRING THE USE OF CERTIFIED AND LICENSED 
APPRAISERS. 
Appraisal standards and requirements for using State certified 
and licensed appraisers in federally related transactions pursuant to 
this title shall be prescribed in accordance with procedures set forth 
in section 553 of title 5, United States Code, including the publica-
tion of notice and receipt of written comments or the holding of 
public hearings with respect to any standards or requirements 
proposed to be established. 
SEC. 1108. STARTUP FUNDING. 
12 USC 3337. 
(a) IN GENERAL.—For purposes of this title, the Secretary of the 
Treasury shall pay to the Appraisal Subcommittee a one-time pay-
ment of $5,000,000 on the date of the enactment of this Act. There-
after, expenses of the subcommittee shall be funded through the 
collection of registry fees from certain certified and licensed apprais-
ers pursuant to section 1109 or, if required, pursuant to section 
1122(b) of this title. 
0?) ADDITIONAL FUNDS.—Except as provided in section 1122(b) of 
this title, funds in addition to the funds provided under subsection 
(a) may be made available to the Appraisal Subcommittee only if 
authorized and appropriated by law. 
SEC. 1109. ROSTER OF STATE CERTIFIED OR LICENSED APPRAISERS; 12 USC 3338. 
AUTHORITY TO COLLECT AND TRANSMIT FEES. 
(a) IN GENERAL.—Each State with an appraiser certifying and 
licensing agency whose certifications and licenses comply with this 
title, shall— 
(1) transmit to the Appraisal Subcommittee, no less than 
annually, a roster listing individuals who have received a State 
certification or license in accordance with this title; and 
(2) collect from such individuals who perform or seek to 
perform appraisals in federally related transactions, an annual 
registry fee of not more than $25, such fees to be transmitted by 
the State agencies to the Council on an annual basis. 
Subject to the approval of the Council, the Appraisal Subcommittee 
may adjust the dollar amount of registry fees, up to a maximum of 
$50 per annum, as necessary to carry out its functions under this 
title. 
(b) USE OF AMOUNTS APPROPRIATED OR COLLECTED.—Amounts 
appropriated for or collected by the Appraisal Subcommittee under 
this section shall be used— 
(1) to maintain a registry of individuals who are qualified and 
eligible to perform appraisals in connection with federally re-
lated transactions; 
(2) to support its activities under this title; 
(3) to reimburse the general fund of the Treasury for amounts 
appropriated to and expended by the Appraisal Subcommittee 
during the 24-month startup period following the date of the 
enactment of this title; and 
(4) to make grants in such amounts as it deems appropriate to 
the Appraisal Foundation, to help defray those costs of the 
foundation relating to the activities of its Appraisal Standards 
and Appraiser Qualification Boards. 
103 STAT. 514 
PUBLIC LAW 101-73—AUG. 9, 1989 
12 use 3339. 
SEC. 1110. FUNCTIONS OF THE FEDERAL FINANCIAL INSTITUTIONS REGU-
LATORY AGENCIES RELATING TO APPRAISAL STANDARDS. 
Each Federal financial institutions regulatory agency and the 
Resolution Trust Corporation shall prescribe appropriate standards 
for the performance of real estate appraisals in connection with 
federally related transactions under the jurisdiction of each such 
agency or instrumentality. These rules shall require, at a mini-
mum— 
(1) that real estate appraisals be performed in accordance 
with generally accepted appraisal standards as evidenced by the 
appraisal standards promulgated by the Appraisal Standards 
Board of the Appraisal Foundation; and 
(2) that such appraisals shall be written appraisals. 
Each such agency or instrumentality may require compliance with 
additional standards if it makes a determination in writing that 
such additional standards are required in order to properly carry 
out its statutory responsibilities. 
12 use 3340. 
SEC. 1111. TIME FOR PROPOSAL AND ADOPTION OF STANDARDS. 
Appraisal standards established under this title shall be proposed 
not later than 6 months and shall be adopted in final form and 
become effective not later than 12 months after the date of the 
enactment of this Act. 
12 u s e 3341. 
SEC. 1112. FUNCTIONS OF THE FEDERAL FINANCIAL INSTITUTIONS REGU-
LATORY AGENCIES RELATING TO APPRAISER QUALIFICA-
TIONS. 
Each Federal financial institutions regulatory agency and the 
Resolution Trust Corporation shall prescribe, in accordance with 
sections 1113 and 1114 of this title, which categories of federally 
related transactions should be appraised by a State certified ap-
praiser and which by a State licensed appraiser under this title. 
12 use 3342. 
SEC. 1113. TRANSACTIONS REQUIRING THE SERVICES OF A STATE CER-
TIFIED APPRAISER. 
In determining whether an appraisal in connection with a feder-
ally related transaction shall be performed by a State certified 
appraiser, an agency or instrumentality under this title shall con-
sider whether transactions, either individually or collectively, are of 
sufficient financial or public policy importance to the United States 
that an individual who performs an appraisal in connection with 
such transactions should be a State certified appraiser, except 
that— 
(1) a State certified appraiser shall be required for all feder-
ally related transactions having a value of $1,000,000 or more; 
and 
Housing. 
(2) l-to-4 unit, single family residential appraisals may be 
performed by State licensed appraisers unless the size and 
complexity requires a State certified appraiser. 
12 u s e 3343. 
SEC. 1114. TRANSACTIONS REQUIRING THE SERVICES OF A STATE LI-
CENSED APPRAISER. 
All federally related transactions not requiring the services of a 
State certified appraiser shall be performed by either a State cer-
tified or licensed appraiser. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 515 
SEC. 1115. TIME FOR PROPOSAL AND ADOPTION OF RULES. 
12 USC 3344. 
As appropriate, rules issued under sections 1113 and 1114 shall be 
proposed not later than 6 months and shall be effective upon 
adoption in final form not later than 12 months after the date of the 
enactment of this Act. 
SEC. 1116. CERTIFICATION AND LICENSING REQUIREMENTS. 
12 USC 3345. 
(a) IN GENERAL.—For purposes of this title, the term "State 
certified real estate appraiser" means any individual who has satis-
fied the requirements for State certification in a State or territory 
whose criteria for certification as a real estate appraiser currently 
meets the minimum criteria for certification issued by the Appraiser 
Qualification Board of the Appraisal Foundation. 
(b) RESTRICTION.—No individual shall be a State certified real 
estate appraiser under this section unless such individual has 
achieved a passing grade upon a suitable examination administered 
by a State or territory that is consistent with and equivalent to the 
Uniform State Certification Examination issued or endorsed by the 
Appraiser Qualification Board of the Appraisal Foundation. 
(c) DEFINITION.—As used in this section, the term "State licensed 
appraiser" means an individual who has satisfied the requirements 
for State licensing in a State or territory. 
(d) ADDITIONAL QUAUFICATION CRITERIA.—Nothing in this title 
shall be construed to prevent any Federal Eigency or instrumentality 
under this title from establishing such additional qualification cri-
teria as may be necessary or appropriate to carry out the statutory 
responsibilities of such department, agency, or instrumentality. 
SEC. 1117. ESTABLISHMENT OF STATE APPRAISER CERTIFYING AND 
12 USC 3346. 
LICENSING AGENCIES. 
To assure the avEiilability of State certified and licensed apprais-
ers for the performance in a State of appraisals in federally related 
transactions and to assure effective supervision of the activities of 
certified and licensed appraisers, a State may establish a State 
appraiser certifying and licensing agency. 
SEC. 1118. MONITORING OF STATE APPRAISER CERTIFYING AND LICENS- 
12 USC 3347. 
ING AGENCIES. 
(a) IN GENERAL.—The Appraisal Subcommittee shall monitor 
State appraiser certifying and licensing agencies for the purpose of 
determining whether a State agency's policies, practices, and proce-
dures are consistent with this title. The Appraisal Subcommittee 
and all agencies, instrumentalities, and federally recognized entities 
under this title shall not recognize appraiser certifications and 
licenses from States whose appraisal policies, practices, or proce-
dures are found to be inconsistent with this title. 
0>) DISAPPROVAL BY APPRAISAL SUBCOMMITTEE.—The Federal 
financial institutions, regulatory agencies, the Federal National 
Mortgage Association, the Federal Home Loan Mortgage Corpora-
tion, and the Resolution Trust Corporation shall accept certifi-
cations and licenses awarded by a State appraiser certifying the 
licensing agency unless the Appraisal Subcommittee issues a writ-
ten finding that— 
(1) the State agency fails to recognize and enforce the stand-
ards, requirements, and procedures prescribed pursuant to this 
title; 
103 STAT. 516 
PUBLIC LAW 101-73—AUG. 9, 1989 
(2) the State agency is not granted authority by the State 
which is adequate to permit the agency to carry out its func-
tions under this title; or 
(3) decisions concerning appraisal standards, appraiser quali-
fications and supervision of appraiser practices are not made in 
a manner that carries out the purposes of this title. 
(c) REJECTION OF STATE CERTIFICATIONS AND LICENSES.— 
(1) OPPORTUNITY TO BE HEARD OR CORRECT CONDITIONS.—Before 
refusing to recognize a State's appraiser certifications or li-
censes, the Appraisal Subcommittee shall provide that State's 
certifying and licensing agency a written notice of its intention 
not to recognize the State's certified or licensed appraisers and 
ample opportunity to provide rebuttal information or to correct 
the conditions causing the refusal. 
(2) ADOPTION OF PROCEDURES.—The Appraisal Subcommittee 
shall adopt written procedures for taking actions described in 
this section. 
(3) JUDICIAL REVIEW.—A decision of the subcommittee under 
this section shall be subject to judicial review. 
12 use 3348. 
SEC. 1119. RECOGNITION OF STATE CERTIFIED AND LICENSED APPRAIS-
ERS FOR PURPOSES OF THIS TITLE. 
(a) EFFECTIVE DATE FOR USE OF CERTIFIED OR LICENSED APPRAISERS 
ONLY.— 
(1) IN GENERAL,—Not later than July 1, 1991, all appraisals 
performed in connection with federally related transactions 
shall be performed only by individuals certified or licensed in 
accordance with the requirements of this title. 
(2) EXTENSION OF EFFECTIVE DATE.—Subject to the approval of 
the council, the Appraisal Subcommittee may extend, until 
December 31, 1991, the effective date for the use of certified or 
licensed appraisers if it makes a written finding that a State has 
made substantial progress in establishing a State certification 
and licensing system that appears to conform to the provisions 
of this title. 
(b) TEMPORARY WAIVER OF APPRAISER CERTIFICATION OR LICENSING 
REQUIREMENTS FOR STATE HAVING SCARCITY OF QUALIFIED APPRAIS-
ERS.—Subject to the approval of the Council, the Appraisal Sub-
committee may waive any requirement relating to certification or 
licensing of a person to perform appraisals under this title if the 
Appraisal Subcommittee or a State agency whose certifications and 
licenses are in compliance with this title, makes a written deter-
mination that there is a scarcity of certified or licensed appraisers to 
perform appraisals in connection with federally related transactions 
in a State leading to inordinate delays in the performance of such 
appraisals. The waiver terminates when the Appraisal Subcommit-
tee determines that such inordinate delays have been eliminated. 
(c) REPORTS TO STATE CERTIFYING AND LICENSING AGENCIES.—The 
Appraisal Subcommittee, any other Federal agency or instrumental-
ity, or any federally recognized entity shall report any action of a 
State certified or licensed appraiser that is contrary to the purposes 
of this title, to the appropriate State agency for a disposition of the 
subject of the referral. The State agency shall provide the Appraisal 
Subcommittee or the other Federal agency or instrumentality with 
a report on its disposition of the matter referred. Subsequent to such 
disposition, the subcommittee or the agency or instrumentality may 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 517 
take such further action, pursuant to written procedures, it deems 
necessary to carry out the purposes of this title. 
SEC. 1120. VIOLATIONS IN OBTAINING AND PERFORMING APPRAISALS IN 12 USC 3349. 
FEDERALLY RELATED TRANSACTIONS. 
(a) VIOLATIONS.—Except as authorized by the Appraisal Sub-
committee in exercising its waiver authority pursuant to section 
1119(b), it shall be a violation of this section— 
(1) for a financial institution to seek, obtain, or give money or 
any other thing of value in exchange for the performance of an 
appraisal by a person who the institution knows is not a State 
certified or licensed appraiser in connection with a federally 
related transaction; and 
(2) for the Federal National Mortgage Association, the Fed-
eral Home Loan Mortgage Corporation, or the Resolution Trust 
Corporation to knowingly contract for the performance of any 
appraisal by a person who is not a State certified or licensed 
appraiser in connection with a real estate related financial 
transaction defined in section 1121(5) to which such association 
or corporation is a party. 
(b) PENALTIES.—A financial institution that violates subsection 
(a)(1) shall be subject to civil penalties under section 8(i)(2) of the 
Federal Deposit Insurance Act or section 206(kX2) of the Federal 
Credit Union Act, as appropriate. 
(c) PROCEEDING.—A proceeding with respect to a violation of this 
section shall be an administrative proceeding which may be con-
ducted by a Federal financial institutions regulatory agency in 
accordance with the procedures set forth in subchapter II of chapter 
5 of title 5, United States (Dode. 
SEC. 1121. DEFINITIONS. 
12 USC 3350. 
For purposes of this title: 
(1) STATE APPRAISER CERTIFYING AND LICENSING AGENCY.—The 
term "State appraiser certifying and licensing agency" means a 
State agency established in compliance with this title. 
(2) APPRAISAL SUBCOMMITTEE; SUBCOMMITTEE.—The terms 
"Appraisal Subcommittee" and "subcommittee" mean the Ap-
praisal Subcommittee of the Federal Financial Institutions 
Examination Council. 
(3) COUNCIL.—The term "Council" means the Federal Finan-
cial Institutions Examinations Clouncil. 
(4) FEDERALLY RELATED TRANSACTION.—The term "federally 
related transaction" means any real estate-related 
financial 
transaction which— 
(A) a federal financial institutions regulatory agency or 
the Resolution Trust (Dorporation engEiges in, contracts for, 
or regulates; and 
(B) requires the services of an appraiser. 
(5) REAL ESTATE RELATED FINANCIAL TRANSACTION.—The term 
"real estate-related financial transaction" means any trans-
action involving— 
(A) the sale, lease, purchase, investment in or exchange of 
real property, including interests in property, or the financ-
ing thereof; 
(B) the refinancing of real property or interests in real 
property; and 
103 STAT. 518 
PUBLIC LAW 101-73-AUG. 9, 1989 
(C) the use of real property or interests in property as 
security for a loan or investment, including mortgage-
backed securities. 
(6) FEDERAL FINANCIAL INSTITUTIONS REGULATORY AGENCIES.— 
The term "Federal financial institutions regulatory agencies" 
means the Board of Governors of the Federal Reserve System, 
the Federal Deposit Insurance Corporations, the Office of the 
Comptroller of the Currency, the Office of Thrift Supervision, 
and the National Credit Union Administration. 
(7) FINANCIAL INSTITUTION.—The term "financial institution" 
means an insured depository institution as defined in section 3 
of the Federal Deposit Insurance Act or an insured credit union 
as defined in section 101 of the Federal Credit Union Act. 
(8) CHAIRPERSON.—The term "Chairperson" means the Chair-
person of the Appraisal Subcommittee selected by the council. 
(9) FOUNDATION.—The terms "Appraisal Foundation" and 
"Foundation" means the Appraisal Foundation established on 
November 30, 1987, as a not for profit corporation under the 
laws of Illinois. 
(10) WRITTEN APPRAISAL.—The term "written appraisal" 
means a written statement used in connection with a federally 
related transaction that is independently and impartially pre-
pared by a licensed or certified appraiser setting forth an 
opinion of defined value of an adequately described property as 
of a specific date, supported by presentation and analysis of 
relevant market information. 
12 u s e 3351. 
SEC. 1122. MISCELLANEOUS PROVISIONS. 
(a) TEMPORARY PRACTICE.—A State appraiser certifying or licens-
ing agency shall recognize on a temporary basis the certification or 
license of an appraiser issued by another State if— 
(1) the property to be appraised is part of a federally related 
transaction, 
(2) the appraiser's business is of a temporary nature, and 
(3) the appraiser registers with the appraiser certifying or 
licensing agency in the State of temporary practice. 
(b) SUPPLEMENTAL FUNDING.—Funds available to the Federal 
financial institutions regulatory agencies may be made available to 
the Federal Financial Institutions Examination Council to support 
the council's functions under this title. 
(c) PROHIBITION AGAINST DISCRIMINATION.—Criteria established by 
the Federal financial institutions regulatory agencies, the Federal 
National Mortgage Association, the Federal Home Loan Mortgage 
Corporation, and the Resolution Trust Corporation for appraiser 
qualifications in addition to State certification or licensing shall not 
exclude a certified or licensed appraiser for consideration for an 
assignment solely by virtue of membership or lack of membership in 
any particular appraisal organization. 
(d) OTHER REQUIREMENTS.—A corporation, partnership, or other 
business entity may provide appraisal services in connection with 
federally related transactions if such appraisal is prepared by 
individuals certified or licensed in accordance with the require-
ments of this title. An individual who is not a State certified or 
licensed appraiser may assist in the preparation of an appraisal if— 
(1) the assistant is under the direct supervision of a licensed 
or certified individual; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 519 
(2) the final appraisal document is approved and signed by an 
individual who is certified or licensed, 
(e) STUDIES.— 
(1) STUDY.—The Appraisal Subcommittee shall— 
(A) conduct a study to determine whether real estate 
sales and financing information and data that is available 
to real estate appraisers in the States is sufficient to permit 
appraisers to properly estimate the values of properties in 
connection with federally related transactions; and 
(B) study the feasibility and desirability of extending the 
provisions of this title to the function of personal property 
appraising and to personal property appraisers in connec-
tion with Federal fineuicial and public policy interests. 
(2) REPORT.—The Appraisal Subcommittee shall— 
(A) report its findings to the Congress with respect to the 
study described in pargigraph (1)(A) no later than 12 months 
after the date of the enactment of this title, and 
(B) report its findings with respect to the study described 
in paragraph (IXB) to Congress not later than 18 months 
after the date of the enactment of this title. 
TITLE XII—MISCELLANEOUS PROVISIONS 
SEC. 1201. GAO STUDY OF CREDIT UNION SYSTEM. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a comprehensive study of the Nation's credit union 
system. In conducting the study, the Comptroller Greneral shall 
examine— 
(1) credit unions' present and future role in the 
financial 
marketplace; 
(2) the financial condition of credit unions; 
(3) credit union capital; 
(4) credit union regulation and supervision on both the Fed-
eral and State levels; 
(5) whether the National Credit Union Administration 
examinations of credit unions are comparable in frequency and 
quality to supervisory examinations of insured banks and sav-
ings associations; 
(6) the structure and financial condition of the National 
Credit Union Share Insurance Fund, including whether super-
vision of that Fund should be separated from the other func-
tions of the National Credit Union Administration Board; and 
(7) whether the common bond rules regarding credit union 
membership continue to serve their originsd purpose. 
Comparative information with other t3rpes of depository institutions 
should be included. 
(b) SUBMISSION.—Before the close of the 18-month period begin-
ning on the date of the enactment of this Act, the Comptroller 
General shall submit to 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 a final report 
which shall contain a detailed statement of findings and conclu-
sions, including recommendations for such administrative and legis-
lative action as the Comptroller General deems advisable. 
12 u s e 1752a 
note. 
Reports. 
103 STAT. 520 
PUBLIC LAW 101-73—AUG. 9, 1989 
SEC. 1202. OCC EMPLOYMENT PROVISION. 
The 3rd undesignated paragraph of section 5240 of the Revised 
Statutes (12 U.S.C. 482) is amended— 
(1) by striking out the 1st sentence and inserting in lieu 
thereof the following: 
"Notwithstanding any of the preceding provisions of this section 
to the contrary, the Comptroller of the Currency shall fix the 
compensation and number of, and appoint and direct, all employees 
of the Office of the Comptroller of the Currency. Rates of basic pay 
for all employees of the Office may be set and adjusted by the 
Comptroller without regard to the provisions of chapter 51 or sub-
chapter III of chapter 53 of title 5, United States Code. The 
Comptroller may provide additional compensation and benefits to 
employees of the Office if the same type of compensation or benefits 
are then being provided by any other Federal bank regulatory 
agency or, if not then being provided, could be provided by such an 
agency under applicable provisions of law, rule, or regulation. In 
setting and adjusting the total amount of compensation and benefits 
for employees of the Office, the Comptroller shall consult with, and 
seek to maintain comparability with, other Federal banking 
agencies."; and 
(2) by redesignating the remaining sentences of such undesig-
nated paragraph as a new undesignated paragraph. 
SEC. 1203. NCUA EMPLOYMENT PROVISION. 
Section 120 of the Federal Credit Union Act (12 U.S.C. 1766) is 
amended by adding at the end thereof the following new subsection: 
"0) STAFF.— 
"(1) APPOINTMENT AND COMPENSATION.—The Board shall fix 
the compensation and number of, and appoint and direct, 
employees of the Board. Rates of basic pay for employees of the 
Board may be set and adjusted by the Board without regard to 
the provisions of chapter 51 or subchapter HI of chapter 53 of 
title 5, United States Code. 
"(2) ADDITIONAL COMPENSATION AND BENEFITS.—The Board 
may provide additional compensation and benefits to employees 
of the Board if the same type of compensation or benefits are 
then being provided by any other Federal bank regulatory 
agency or, if not then being provided, could be provided by such 
an agency under applicable provisions of law, rule, or regula-
tion. In setting and adjusting the total amount of compensation 
and benefits for employees of the Board, the Board shall seek to 
maintain comparability with other Federal bank regulatory 
agencies. 
"(3) FUNDING.—The salaries and expenses of the Board and 
employees of the Board shall be paid from fees and assessments 
(including income earned on insurance deposits) levied on in-
sured credit unions under this Act.". 
12 use 1811 
SEC. 1204. EXPANSION OF USE OF UNDERUTILIZED MINORITY BANKS, 
note. 
WOMEN'S BANKS, AND LOW-INCOME CREDIT UNIONS. 
(a) CONSULTATION ON EXPANDED USE.—The Secretary of the Treas-
ury shall consult with the appropriate Federal banking agencies and 
the National Credit Union Administration Board on methods for 
increasing the use of underutilized minority banks, women's banks, 
and limited income credit unions as depositaries or financial agents 
of Federal agencies. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 521 
(b) REPORT TO CONGRESS.—The Secretary of the Treasury shall 
include, in the 1st annual report submitted to the Congress under 
section 331(a) of title 31, United States Code, after the completion of 
the consultation required by subsection (a), a report of the actions 
taken by the Secretary to increase the use of underutilized minority 
banks, women's banks, and limited income credit unions as deposi-
taries or financial agents of Federal agencies. 
(c) 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) MINORITY BANK.—The term "minority bank" means any 
depository institution described in clause (i), (ii), or (iii) of 
section 19(bXlXA) of the Federal Reserve Act— 
(A) more than 50 percent of the ownership or control of 
which is held by 1 or more minority individuals; and 
(B) more than 50 percent of the net profit or loss of which 
accrues to 1 or more minority individuals. 
(3) MINORITY.—The term "minority" means any Black Amer-
ican, Native American, Hispanic American, or Asian American. 
(4) LOW-INCOME CREDIT UNION.—The term "low-income credit 
union" means any depository institution described in section 
19(bXlXAXiv) of the Federal Reserve Act which serves predomi-
nately low-income members (as defined by the National Credit 
Union Administration Board pursuant to section 101(5) of the 
Federal Credit Union Act). 
(5) WOMEN'S BANK.—The term "women's bank" means any 
depository institution described in clause (i), (ii), or (iii) of 
section 19(bXlXA) of the Federal Reserve Act— 
(A) more than 50 percent of the outstanding shares of 
which are held by 1 or more women; 
(B) a majority of the directors on the board of directors of 
which are women; and 
(C) a significant percentage of senior management posi-
tions of which are held by women. 
SEC. 1205. CREDIT STANDARDS ADVISORY COMMITTEE. 
12 USC 1818 
(a) ESTABLISHMENT.—There is hereby established the Credit Stand-
ards Advisory Committee (in this section referred to as the 
"Committee"). 
(b) MEMBERSHIP.— 
(1) APPOINTMENT.—The Committee shall consist of 11 mem-
bers, as follows: 
(A) The Chairman of the Board of Governors of the 
Federal Reserve System, or the Clhairman's designee. 
(B) The Director of the Office of Thrift Supervision, or the 
Director's designee. 
(C) The CJhairperson of the Federal Deposit Insurance 
(Dorporation, or the (Chairperson's designee. 
(D) The Comptroller of the Currency, or the CJomptroUer's 
designee. 
(E) The Chairman of the National Credit Union Adminis-
tration, or the Chairman's designee. 
(F) 6 members of the public appointed by the President 
who are knowledgeable with the credit standards and lend-
103 STAT. 522 
PUBLIC LAW 101-73—AUG. 9, 1989 
ing practices of insured depository institutions, no more 
than 3 of whom shall be from the same political party. 
(2) TERMS.—Each member appointed under paragraph (IXF) 
shall serve for the life of the Committee. 
(3) CHAIRPERSON.—The members shall elect a chairperson of 
the Committee who shall serve for a term of 1 year. 
(4) VACANCIES.—Any vacancy on the Committee shall be filled 
in the manner in which the original appointment was made. 
(5) PAY AND EXPENSES.—Members of the Committee shall 
serve without pay but each member of the Committee shall be 
reimbursed for expenses incurred in connection with attend-
ance of such members at meetings of the Committee. All ex-
penses of the Committee shall be shared on a pro rata basis, 
based upon each agency's total budget for the preceding year by 
the Federal financial regulators specified in subparagraphs (A) 
through (E) of paragraph (1). 
(6) MEETINGS.—TTie Committee shall meet, not less frequently 
than quarterly, at the call of the chairperson or a majority of 
the members. 
(c) DUTIES OP THE COMMITTEE.—The Committee shall do the 
following: 
(1) REVIEW CREDIT STANDARDS, LENDING PRACTICES, AND SUPER-
VISION B
Y FEDERAL REGULATORS.—Review the credit standards 
and lending practices of insured depository institutions and the 
supervision of such standards and practices by the Federal 
financial regulators. 
(2) PREPARE RECOMMENDATIONS.—Prepare written comments 
and recommendations for the Federal financial regulators to 
ensure that insured depository institutions adhere to prudential 
credit standards and lending practices that are consistent for 
all insured depository institutions, to the maximum extent 
possible. 
(3) MONITOR CREDIT STANDARDS, LENDING PRACTICES, AND 
SUPERVISION BY FEDERAL REGULATORS.—Monitor the credit 
standards and lending practices of insured depository institu-
tions, and the supervision of such standards and practices by 
the Federal financial regulators, to ensure that insured deposi-
tory institutions can meet the demands of a modem and glob-
ally competitive financial world. 
(d) ANNUAL REPORT.— 
(1) REQUIRED.—Not later than January 30 of each year, the 
Committee shall submit a report to 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. 
(2) CONTENTS.—The report required by paragraph (1) shall 
describe the activities of the Committee during the preceding 
year and the reports and recommendations made by the 
Committee to the Federal financial regulators. 
(e) CoNPUCT OF INTEREST GUIDELINES.—The Committee shall pre-
scribe such guidelines as the Committee determines to be appro-
priate to avoid conflicts of interest with respect to the disclosure to 
and use by members of the Committee of information relating to 
insured depository institutions and the Federal financial regulators. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 523 
SEC. 1206. COMPARABILITY IN COMPENSATION SCHEDULES. 
12 USC 1833b. 
The Federal Deposit Insurance Coriwration, the Comptroller of 
the Currency, the National Credit Union Administration Board, the 
Federal Housing Finance Board, the Oversight Board of the Resolu-
tion Trust Corporation, the Farm Credit Administration, and the 
Office of Thrift Supervision, in establishing and adjusting schedules 
of compensation and benefits which are to be determined solely by 
each agency under applicable provisions of law, shall inform the 
heads of the other agencies and the Congress of such compensation 
and benefits and shall seek to maintain comparability regarding 
compensation and benefits. 
SEC. 1207. STUDY BY SECRETARY OF THE TREASURY. 
Reports. 
12 use 1811 
Not later than the close of the 18-month period beginning on the note. 
date of the enactment of this Act, the Secretary of the Treasury 
shall conduct a study and report to the Congress on— 
(1) whether, and to what extent, the issuance of securities by 
the United States Government in small denominations benefite 
small investors, increases the participation of small investors in 
United States Government securities offerings, and promotes 
savings and thrift by the average United States taxpayer; and 
(2) additional measures the Secretary recommends be taken 
to expand the availability of securities issued by the United 
States Government to benefit small investors, increase their 
participation in United States Grovemment securities offerings, 
and to promote savings and thrift by the average United States 
taxpayer. 
SEC. 1208. EXPENDITURE OF TAXPAYER MONEY ONLY FOR DEPOSIT 
12 USC 1811 
INSURANCE PURPOSES. 
note. 
Funds appropriated to the Secretary of the Treasury pursuant to 
an authorization contained in this Act, and any amount authorized 
to be borrowed from the Secretary of the Treasury by any entity 
pursuant to this Act, may only be used as permitted by law, and 
may not otherwise be used for making any payment to any share-
holder in, or creditor to, any insured depository institution. 
SEC. 1209. AMENDMENT TO SECTION 5373 OF TITLE 5, UNITED STATES 
CODE. 
Paragraph (2) of section 5373 of title 5, United States Code, is 
amended to read as follows: 
"(2) sections 248, 482,1766, and 1819 of title 12, section 206 of 
the Bank Conservation Act, sections 2B(b) and 21A(eX4) of the 
Federal Home Loan Bank Act, section 2A(i) of the Home 
Owners'Loan Act, and sections 5.11 and 5.58 of the Farm Credit 
Act of 1971;". 
SEC. 1210. FARM CREDIT ADMINISTRATION AND FARM CREDIT SYSTEM 
INSURANCE CORPORATION EMPLOYMENT PROVISION. 
Section 5.11(cX2) of the Farm Credit Act of 1971 (12 U.S.C. 2245) is 
amended to read as follows: 
"(2) OFFICERS AND EMPLOYEES.— 
"(A) APPOINTMENT, COMPENSATION, AND BENEFITS.—The 
Chairman shall fix the compensation and number of, and 
appoint and direct, employees of the Administration. The 
Chairman may set and adjust the rates of basic pay for 
employees of the Administration without regard to the 
103 STAT. 524 
PUBLIC LAW 101-73—AUG. 9, 1989 
provisions of chapter 51, or subchapter III of chapter 53, of 
title 5, United States Code. The Chairman may provide 
such additional compensation and benefits to employees of 
the Administration as is necessary to maintain comparabil-
ity with the total amount of compensation and benefits 
provided by other Federal bank regulatory agencies. In 
setting and adjusting the total amount of compensation and 
benefits for employees of the Administration, the Chairman 
shall consult with, and seek to maintain comparability 
with, other Federal bank regulatory agencies, 
"(B) OTHER FEDERAL BANK REGULATORY AGENCIES DE-
FINED.—For purposes of this subsection, the term 'other 
Federal bank regulatory agencies' has the same meaning 
• 
given to the term 'appropriate Federal banking agency' in 
section 3(q) of the Federal Deposit Insurance Act. 
"(C) ETHICS IN GOVERNMENT.—The officers and employees 
of the agency shall be— 
"(i) subject to the Ethics in Government Act of 1978; 
and 
' 
"(ii) considered officers or employees of the United 
States for the purposes of sections 201 through 203, and 
sections 205 through 209, of title 18, United States 
Code.". 
SEC. 1211. FAIR LENDING OVERSIGHT AND ENFORCEMENT. 
(a) INFORMATION REGARDING INCOME LEVEL, RACIAL CHARACTERIS-
TICS, AND GENDER OF MORTGAGORS AND MORTGAGE APPLICANTS.— 
Section 3040)) of the Home Mortgage Disclosure Act of 1975 (12 
U.S.C. 2803(b)) is amended— 
(1) in paragraph (2), by striking out "and" after the semicolon 
at the end; 
(2) in paragraph (3), by striking out the period at the end and 
inserting in lieu thereof "; and"; and 
(3) by adding at the end the following new paragraph: 
"(4) the number and dollar amount of mortgage loans and 
completed applications involving mortgagors or mortgage ap-
plicants grouped according to census tract, income level, racial 
characteristics, and gender.". 
(b) SUBMISSION TO AGENCIES.—Section 304 of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2803) is amended by adding at the 
end the following: 
"(h) SUBMISSION TO AGENCIES.—The data required to be disclosed 
under subsection (bX4) shall be submitted to the appropriate agency 
Regulations. 
for each institution reporting under this title. Notwithstanding the 
Public ^ 
requirement of section 304(aX2XA) for disclosure by census tract, the 
Board, in cooperation with other appropriate regulators, including— 
"(1) the Comptroller of the Currency for national banks; 
"(2) the Director of the Office of Thrift Supervision for savings 
associations; 
"(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, and any other depository institution described in section 
303(2XA) which is not otherwise referred to in this paragraph; 
"(4) the National Credit Union Administration Board for 
credit unions; and 
information. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 525 
"(5) the Secretary of Housing and Urban Development for 
other lending institutions not regulated by the agencies referred 
to in paragraphs (1) through (4), 
shall develop regulations prescribing the format for such disclo-
sures, the method for submission of the data to the appropriate 
regulatory agency, and the procedures for disclosing the information 
to the public. These regulations shall also require the collection of 
data required to be disclosed under subsection (b)(4) with respect to 
loans sold by each institution reporting under this title, and, in 
addition, shall require disclosure of the class of the purchaser of 
such loans. Any reporting institution may submit in writing to the 
appropriate agency such additional data or explanations as it deems 
relevant to the decision to originate or purchase mortgage loans.". 
(c) INFORMATION REGARDING LOAN APPUCATIONS.— 
(1) GENERAL REPORTING REQUIREMENT.—Section 304(a)(1) of 
the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(a)(1)) 
is amended by striking out "originated, or" and inserting in lieu 
thereof "originated (or for which the institution received com-
pleted applications), or". 
(2) CONFORMING AMENDMENTS.— 
(A) The last sentence of section 304(a)(2) of the Home 
Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(a)(2)) is 
amended by inserting after "originated or purchased" the 
following: "(or for which completed applications were 
received)". 
(B) Section 304(g)(1) of the Home Mortgage Disclosure Act 
of 1975 (12 U.S.C. 2803(g)(1)) is amended by inserting after 
"made" the following: "(or for which completed applications 
are received)". 
(C) Section 304(g)(2) of the Home Mortgage Disclosure Act 
of 1975 (12 U.S.C. 2803(g)(2)) is amended by inserting after 
"approved" the following: "(or for which completed applica-
tions are received)". 
(D) The first sentence of section 311 of the Home Mort-
gage Disclosure Act of 1975 (12 U.S.C. 2810) is amended by 
inserting after "approved" the following: "(or for which 
completed applications are received)". 
(d) APPLICABIUTY OF REPORTING REQUIREMENTS TO ALL MORTGAGE 
LENDERS.—Section 303(2) of the Home Mortgage Disclosure Act of 
1975 (12 U.S.C. 2802(2)) is amended to read as follows: 
"(2) the term 'depository institution'— 
"(A) means— 
"(i) any bank (as defined in section 3(a)(1) of the 
Federal Deposit Insurance Act); 
"(ii) any savings association (as defined in section 
3(b)(1) of the Federal Deposit Insurance Act); and 
"(iii) any credit union, 
which makes federally related mortgage loans as deter-
mined by the Board; and 
"(B) includes any other lending institution (as defined in 
paragraph (4)) other than any institution described in 
subparagraph (A);". 
(e) COMPLETED APPLICATION DEFINED.—Section 303 of the Home 
Mortgage Disclosure Act of 1975 (12 U.S.C. 2802) is amended— 
(1) by redesignating paragraphs (3) and (4) as paragraphs (5) 
and (6), respectively; and 
103 STAT. 526 
PUBLIC LAW 101-73-AUG. 9, 1989 
(2) by inserting after paragraph (2) the following new 
paragraphs: 
"(3) the term 'completed application' means an application in 
which the creditor has received the information that is regu-
larly obtained in evaluating applications for the amount and 
type of credit requested; 
"(4) the term 'other lending institutions' means any person 
engaged for profit in the business of mortgage lending;". 
(f) APPLICABILITY OF HOME MORTGAGE DISCLOSURE ACT.—Section 
304(aX2) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 
2803(a)(2)) is amended by inserting at the end the following new 
sentence: "For purposes of this paragraph, other lending institutions 
shall be deemed to have a home office or branch office within a 
primary metropolitan statistical area, metropolitan statistical area, 
or consolidated metropolitan statistical area that is not comprised of 
designated primary metropolitan statistical areas if such institu-
tions have originated or purchased or received completed applica-
tions for at least 5 mortgage loans in such area in the preceding 
calendar year.". 
(g) AMENDMENT TO ENFORCEMENT PROVISIONS.—Section 305(b) of 
the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2804(b)) is 
amended— 
(1) by striking out "and" at the end of paragraph (2); 
(2) by striking out the period at the end of paragraph (3) and 
inserting in lieu thereof "; and"; and 
(3) by adding at the end the following new paragraph: 
"(4) other lending institutions, by the Secretary of Housing 
and Urban Development.". 
(h) REPORT ON UTILITY OF DATA.—Section 308 of the Home Mort-
gage Disclosure Act of 1975 (12 U.S.C. 2807) is amended to read as 
follows: 
"SEC. 308. REPORT. 
"The Board, in consultation with the Secretary of Housing and 
Urban Development, shall report annually to the Congress on the 
utility of the requirements of section 304(b)(4).". 
(i) CONFORMING AMENDMENT TO FORMAT REQUIREMENT.—Section 
304(e) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 
2803(e)) is amended by striking out "The Board" and inserting in 
lieu thereof "Subject to subsection (h), the Board". 
(j) EXEMPTION FROM CERTAIN DISCLOSURE REQUIREMENTS.—Section 
304 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803) is 
amended by inserting after subsection (h) (as added by subsection (b) 
of this section) the following new subsection: 
"(i) EXEMPTION FROM CERTAIN DISCLOSURE REQUIREMENTS.—The 
requirements of subsection (bX4) shall not apply with respect to any 
depository institution described in section 303(2)(A) which has total 
assets, as of the most recent full fiscal year of such institution, of 
$30,000,000 or less.". 
12 use 2802 
(k) EFFECTIVE DATE.—The amendments made by this section shall 
"ote. 
apply to each calendar year beginning after December 31, 1989. 
SEC. 1212. AMENDMENT TO THE COMMUNITY REINVESTMENT ACT OF 1977. 
(a) CONFORMING AMENDMENT TO DEFINITION OF REGULATED FINAN-
CIAL INSTITUTION.—Section 803(2) of the Community Reinvestment 
Act of 1977 (12 U.S.C. 2902(2)) is amended by striking out "insured 
bank as defined in section 3 of the Federal Deposit Insurance Act or 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 527 
an insured institution as defined in section 401 of the National 
Housing Act" and inserting in lieu thereof "insured depository 
institution (as defined in section 3 of the Federal Deposit Insurance 
Act)". 
(b) EXAMINATION IBO»ROVEMKNT.—^The Community Reinvestment 
Act of 1977 (12 U.S.C. 2901 et seq.) is amended by adding at the end 
the following new section: 
"SEC. 807. WRITTEN EVALUATIONS. 
12 USC 2906. 
"(a) REQUIRED.— 
"(1) IN GENERAL.—^Upon the conclusion of each examination 
Disadvantaged 
of an insured depository institution imder section 804, the persons. 
appropriate Federal depository institutions r^fulatory agency 
shall prepare a written evaluation of the institution's record of 
meeting the credit needs of its entire community, including low-
and moderate-income neighborhoods. 
"(2) PuBuc AND coNFmENTiAL SEC?noNS.—Each written 
evaluation required under paragraph (1) shall have a public 
section and a confidential section. 
"(b) PuBuc SECTION OF REPORT.— 
"(1) FINDINGS AND CONCLUSIONS.—^The public section of the 
written evaluation shall— 
"(A) state the appropriate Federal depository institutions 
r^ulatory agency's conclusions for each assessment factor 
identified in the r^ulations prescribed by the Federal 
depository institutions regulatory agencies to implement 
this Act; 
"(B) discuss the facts supporting such conclusions; and 
"(C) contain the institution's rating and a statement 
describing the basis for the rating. 
"(2) ASSIGNED RATING.—^The institution's rating referred to in 
paragraph (IXC) shall be 1 of the following: 
"(A) 'Outstanding record of meeting community credit 
needs'. 
"(B) 'Satisfactory record of meeting community credit 
needs'. 
"(C) 'Needs to improve record of meeting community 
credit needs'. 
"(D) 'Substantial noncompliance in meeting community 
credit needs'. 
Such ratings shsill be disclosed to the public on and after July 1, 
1990. 
"(c) (DONFIDENTIAL SECTION OP REPORT.— 
"(1) PRIVACY OF NAMED INDIVIDUALS.—The confidential sec-
tion of the written evaluation shall contain all references that 
identify any customer of the institution, any employee or officer 
of the institution, or any person or organization that has pro-
vided information in confidence to a Federal or State depository 
institutions regulatory agency. 
"(2) TOPICS NOT SUITABLE FOR DISCLOSURE.—The confidential 
section shall also contain any statements obtained or made by 
the appropriate Federal depository institutions regulatory 
agency in the course of an examination which, in the judgment 
of the agency, are too sensitive or speculative in nature to 
disclose to the institution or the public. 
"(3) DISCLOSURE TO DEPOSITORY INSTTTUTION.—The confidential 
section may be disclosed, in whole or part, to the institution, if 
103 STAT. 528 
PUBLIC LAW 101-73—AUG. 9, 1989 
the appropriate Federal depository institutions regulatory 
agency determines that such disclosure will promote the objec-
tives of this Act. However, disclosure under this paragraph shall 
not identify a person or organization that has provided informa-
tion in confidence to a Federal or State depository institutions 
regulatory agency.". 
12 use 1833c. 
SEC. 1213. COMPTROLLER GENERAL AUDIT AND ACCESS TO RECORDS. 
(a) AUDIT OF AGENCIES OR OTHER PERSONS PERFORMING FUNCTIONS 
UNDER BANKING LAWS.— 
(1) IN GENERAL.—Except as provided in paragraph (2), all 
agencies, corporations, organizations, and other persons of any 
description which perform any function or activity under this 
Act, or any other Act which is amended by this Act, shall be 
subject to audit by the Comptroller General of the United States 
with respect to such function or activity. 
(2) EXCEPTIONS.—Paragraph (1) shall not apply to— 
(A) any function or activity of the Board of Governors of 
the Federal Reserve System or the Federal Reserve banks 
that is described in any paragraph of section 714(b) of title 
31, United States Code; and 
(B) any function or activity of the Federal National Mort-
gage Association, except as provided in section 309(j) of the 
Federal National Mortgage Association Charter Act. 
(b) AUDIT OF PERSONS PROVIDING CERTAIN GOODS OR SERVICES.— 
All persons and organizations which, by contract, grant, or other-
wise, provide goods or services to, or receive financial assistance 
from, any agency or other person performing functions or activities 
under this Act shall be subject to audit by the Comptroller General 
with respect to such provision of goods or services or receipt of 
financial assistance. 
(c) PROVISIONS APPUCABLE TO AUDITS UNDER THIS SECTION.— 
(1) NATURE AND SCOPE OF AUDIT.—The Comptroller General 
shall determine the nature, scope, and terms and conditions of 
audits conducted under this section. 
(2) 
COORDINATION WITH OTHER PROVISIONS OF LAW.—The 
authority of the Comptroller General under this section shall be 
in addition to any audit authority available to the Comptroller 
General under other provisions of this Act or any other law. 
(3) 
RIGHTS OF ACCESS, EXAMINATION, AND COPYING.—The 
Comptroller General, and any duly authorized representative of 
the Comptroller General, shall have access to, and the right to 
examine and copy, all records and other recorded information in 
any form, and to examine any property, within the possession or 
control of any agency or person which is subject to audit under 
this section which the Comptroller General deems relevant to 
an audit conducted under this section. 
(4) ENFORCEMENT OF RIGHT OF ACCESS.—The Comptroller Gen-
eral's right of access to information under this section shall be 
enforceable pursuant to section 716 of title 31, United States 
Code. 
(5) MAINTENANCE OF CONFIDENTIAL RECORDS.—The provisions 
of section 716(e) of title 31, United States Code, shall apply to 
information obtained by the Comptroller General under this 
section. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 529 
SEC. 1214. AMENDMENT RELATED TO THE HART-SCOTT-RODINO ACT. 
Section 7A(c) of the Clayton Act (15 U.S.C. 18a(c)) is amended— 
(1) in paragraph (7), by inserting "section 10(e) of the Home 
Owners' Loan Act," after "transactions which require agency 
approval under"; and 
(2) in paragraph (8), by striking out ", section 403 or 408(e) of 
the National Housing Act (12 U.S.C. 1726 and 1780a),". 
SEC. 1215. CAPITAL AND ACCOUNTING STANDARDS. 
Before the end of the 1-year period beginning on the date of the 
enactment of this Act, each appropriate Federal banking agency (as 
defined in section 3(q) of the Federal Deposit Insurance Act) shall 
establish uniform accounting standards to be used for determining 
the capital ratios of all federally insured depository institutions and 
for other regulatory purposes. Each such agency shall report an-
nually to the Chairman and ranking minority member of the 
Committee on Banking, Housing, and Urban Affairs of the Senate 
and the Chairman and ranking minority member of the Committee 
on Banking, Finance and Urban Affairs of the House of Representa-
tives any differences between the capital standard used by such 
agency and capital standards used by any other such agency. Each 
such report shall contain an explanation of the reasons for any 
discrepancy in such capital standards, and shall be published in the 
Federal Register. 
SEC. 1216. EQUAL OPPORTUNITY. 
(a) IN GENERAL.—For purposes of this Act, Executive Order Num-
bered 11478, providing for equal employment opportunity in the 
Federal Cjovernment, shall apply to— 
(1) the Comptroller of the Currency; 
(2) the Director of the Office of Thrift Supervision; 
(3) the Federal home loan banks; 
(4) the Federal Deposit Insurance Corporation; 
(5) the Oversight Board of the Resolution Trust Corporation; 
and 
(6) the Resolution Trust Corporation. 
(b) 
AFFIRMATIVE 
PROGRAM FOR EQUAL EMPLOYMENT 
OPPOR-
TUNITY.—For purposes of this Act, sections 1 and 2 of Executive 
Order Numbered 11478, providing for the adoption and implementa-
tion of equal employment opportunity, shall apply to the Federal 
National Mortgage Association and the Federal Home Loan Mort-
gage Corporation. 
(c) SouciTATiON OF CONTRACTS.—The Federal Deposit Insurance 
Corporation, the Comptroller of the Currency, the Director of the 
Office of Thrift Supervision, the Federal Housing Finance Board, 
the Oversight Board of the Resolution Trust Corporation, and the 
Resolution Trust Corporation shall each prescribe regulations to 
establish and oversee a minority outreach program within each such 
agency to ensure inclusion, to the maximum extent possible, of 
minorities and women, and entities owned by minorities and 
women, including financial institutions, investment banking firms, 
underwriters, accountants, and providers of legal services, in all 
contracts entered into by the agency with such persons or entities, 
public and private, in order to manage the institutions and their 
assets for which the agency is responsible or to perform such other 
functions authorized under any law applicable to such agency. 
12 u s e 1833d. 
Reports. 
Federal 
Register, 
publication. 
12 u s e 1833e. 
Regulations. 
Minorities. 
Women. 
103 STAT. 530 
PUBLIC LAW 101-73—AUG. 9, 1989 
(d) REPORT TO CONGRESS.—Before the end of the 180-day period 
beginning on the date of the enactment of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989— 
(1) the Federal Deposit Insurance Corporation; 
(2) the Comptroller of the Currency; 
(3) the Director of the Office of Thrift Supervision; 
(4) the Federal Housing Finance Board; 
(5) the Oversight Board of the Resolution Trust Corporation; 
(6) the Resolution Trust Corporation; 
(7) the Federal Home Loan Mortgage Corporation; and 
(8) the Federal National Mortgage Association, 
shall each submit to the Congress a report containing a complete 
description of the actions taken by such agency pursuant to subsec-
tions (a) and (b) and such recommendations for administrative and 
legislative action as each such agency may determine to be appro-
priate to carry out the purposes of such subsection. 
SEC. 1217. NCUA POWERS AS LIQUIDATING AGENT AND CONSERVATOR. 
(a) IN GENERAL.—Section 207 of the Federal Credit Union Act (12 
U.S.C. 1787) is amended— 
(1) in subsection (a), by striking paragraph (2) and by re-
designating paragraph (3) as paragraph (2); 
(2) by striking subsections (d) and 0); 
(3) by redesignating subsections (b), (c), (e), (f), (g), (h), and (i) as 
subsections Q), (k), (1), (m), (n), (o), and (p), respectively; 
(4) by inserting after subsection (a) the following new subsec-
tions: 
"(b) POWERS AND DUTIES OF BOARD AS CONSERVATOR OR LIQUIDAT-
ING AGENT.— 
"(1) RULEMAKING AUTHORITY OF BOARD.—The Board may pre-
scribe such regulations as the Board determines to be appro-
priate regarding the conduct of the Board as conservator or 
liquidating agent. 
"(2) GENERAL POWERS.— 
"(A) SUCCESSOR TO CREDIT UNION.—The Board shall, as 
conservatoi\or liquidating agent, and by operation of law, 
succeed to— 
"(i) all rights, titles, powers, and privileges of the 
credit union, and of any member, accountholder, offi-
cer, or director of such credit union with respect to the 
credit union and the assets of the credit union; and 
"(ii) title to the books, records, and assets of any 
previous conservator or other legal custodian of such 
credit union. 
"(B) OPERATE THE CREDIT UNION.—The Board may, as 
conservator or liquidating agent— 
"(i) take over the assets of and operate the credit 
union with all the powers of the members or sharehold-
ers, the directors, and the officers of the credit union 
and shall be authorized to conduct all business of the 
credit union; 
"(ii) collect all obligations and money due the credit 
union; 
"(iii) perform all functions of the credit union in the 
name of the credit union which is consistent with the 
appointment as conservator or liquidating agent; and 
PUBLIC LAW 101-73—AUG. 9,1989 
103 STAT. 531 
"(iv) preserve and conserve the assets Eind property of 
such credit union. 
"(C) FUNCTIONS OF CREDIT UNION'S OFFICERS, DIRECTORS, 
AND SHAREHOLDERS.—The Board may, by regulation or 
order, provide for the exercise of any function by any 
member or stockholder, director, or officer of any credit 
union for which the Board has been appointed conservator 
or liquidating agent. 
"(D) POWERS AS CONSERVATOR.—The Board may, as con-
servator, take such action as may be— 
"(i) necessary to put the credit union in a sound and 
solvent condition; and 
"(ii) appropriate to carry on the business of the credit 
union and preserve and conserve the assets and prop-
erty of the credit union. 
"(E) 
ADDITIONAL POWERS AS LIQUIDATING AGENT.—The 
Board may, £is liquidating agent, place the credit union in 
liquidation and proceed to realize upon the assets of the 
credit union, having due regard to the conditions of credit 
in the locality. 
"(F) PAYMENT OF VAUD OBUGATIONS.—The Board, as con-
servator or liquidating agent, shall pay all valid obligations 
of the credit union in accordance with the prescriptions and 
limitations of this Act. 
"(G) INCIDENTAL POWERS.—The Board may, as conserva-
tor or liquidating agent— 
"(i) exercise all powers and authorities specifically 
granted to conservators or liquidating eigents, respec-
tively, under this Act and such incidental powers as 
shall be necessary to carry out such powers; and 
"(ii) take any action authorized by this Act, 
which the Board determines is in the best interests of the 
credit union, its account holders, or the Board. 
"(3) 
AUTHORITY 
OF 
UQUIDATING 
AGENT 
TO 
DETERMINE 
CLAIMS.— 
"(A) IN GENERAL.—The Board may, as liquidating agent, 
determine claims in accordance with the requirements of 
this subsection and regulations prescribed under para-
graph (4). 
"(B) NOTICE REQUIREMENTS.—The liquidating agent, in 
any case involving the liquidation or winding up of the 
affairs of a closed credit union, shall— 
"(i) promptly publish a notice to the credit union's 
creditors to present their claims, together with proof, to 
the liquidating agent by a date specified in the notice 
which shall be not less than 90 days after the publica-
tion of such notice; and 
"(ii) republish such notice approximately 1 month 
and 2 months, respectively, after the publication under 
clause (i). 
"(C) MAILING REQUIRED.—The liquidating agent shall 
~ mail a notice similar to the notice published under subpara-
graph (BXi) at the time of such publication to any creditor 
shown on the credit union's books— 
"(i) at the creditor's last address appearing in such 
books; or 
103 STAT. 532 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(ii) upon discovery of the name and address of a 
claimant not appearing on the credit union's books 
within 30 days after the discovery of such name and 
address. 
"(4) RULEMAKING AUTHORITY RELATING TO DETERMINATION OF 
CLAIMS.—The Board may prescribe regulations regarding the 
allowance or disallowance of claims by the liquidating agent 
and providing for administrative determination of claims and 
review of such determination. 
"(5) PROCEDURES FOR DETERMINATION OF CLAIMS.— 
"(A) DETERMINATION PERIOD,— 
"(i) IN GENERAL.—Before the end of the 180-day 
period beginning on the date any claim against a credit 
union is filed with the Board as liquidating agent, the 
Board shall determine whether to allow or disallow the 
claim and shall notify the claimant of any determina-
tion with respect to such claim. 
"(ii) EXTENSION OF TIME.—The period described in 
clause (i) may be extended by a written agreement 
between the claimant and the Board. 
"(iii) MAILING OF NOTICE SUFFICIENT.—The require-
ments of clause (i) shall be deemed to be satisfied if the 
notice of any determination with respect to any claim 
is mailed to the last address of the claimant which 
appears— 
"(I) on the credit union's books; 
"(II) in the claim filed by the claimant; or 
"(III) in documents submitted in proof of the 
claim. 
"(iv) CONTENTS OF NOTICE OF DISALLOWANCE.—If any 
claim filed under clause (i) is disallowed, the notice to 
the claimant shall contain— 
"(I) a statement of each reason for the disallow-
ance; and 
"(II) the procedures available for obtaining 
agency review of the determination to disallow the 
claim or judicial determination of the claim. 
"(B) ALLOWANCE OF PROVEN CLAIMS.—The liquidating 
agent shall allow any claim received on or before the date 
specified in the notice published under paragraph (3)(B)(i) 
by the liquidating agent from any claimant which is proved 
to the satisfaction of the liquidating agent. 
"(C) DISALLOWANCE OF CLAIMS FILED AFTER END OF FIUNG 
PERIOD.— 
"(i) IN GENERAL.—Except as provided in clause (ii), 
claims filed after the date specified in the notice pub-
lished under paragraph (3)(B)(i) shall be disallowed and 
such disallowance shall be final, 
"(ii) CERTAIN EXCEPTIONS.—Clause (i) shall not apply 
with respect to any claim filed by any claimant after 
the date specified in the notice published under para-
graph (3)(B)(i) and such claim may be considered by the 
liquidating agent if— 
"(I) the claimant did not receive notice of the 
appointment of the liquidating agent in time to file 
such claim before such date; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 533 
"(11) such claim is filed in time to permit pay-
ment of such claim. 
"(D) AUTHORITY TO DISALLOW CLAIMS.—The liquidating 
agent may disallow any portion of any claim by a creditor 
or claim of security, preference, or priority which is not 
proved to the satisfaction of the liquidating agent. 
"(E) No JUDICIAL REVIEW OF DETERMINATION PURSUANT TO 
SUBPARAGRAPH (D).—No court may review the Board's 
determination pursuant to subparagraph (D) to disallow a 
claim. 
"(F) LEGAL EFFECT OF FILING.— 
"(i) STATUTE OF UMITATION TOLLED.—For purposes of 
any applicable statute of limitations, the filing of a 
claim with the liquidating agent shall constitute a 
commencement of an action. 
"(ii) NO PREJUDICE TO OTHER ACTIONS.—Subject to 
paragraph (12), the filing of a claim with the liquidat-
ing agent shall not prejudice any right of the claimant 
to continue any action which was filed before the 
appointment of the liquidating agent. 
"(6) PROVISION FOR AGENCY REVIEW OR JUDICIAL DETERMINA-
TION OF CLAIMS.— 
"(A) IN GENERAL.—Before the end of the 60-day period 
beginning on the earlier of— 
"(i) the end of the period described in paragraph 
(5XAXi) with respect to any claim against a credit union 
for which the Board is liquidating agent; or 
"(ii) the date of any notice of disallowance of such 
claim pursuant to paragraph (5)(AXi), 
the claimant may request administrative review of the 
claim in accordance with subparagraph (A) or (B) of para-
graph (7) or file suit on such claim (or continue an action 
commenced before the appointment of the liquidating 
agent) in the district or territorial court of the United 
States for the district within which the credit union's prin-
cipal place of business is located or the United States 
District Court for the District of Columbia (and such court 
shall have jurisdiction to hear such claim). 
"(B) STATUTE OF UMITATIONS.—If any claimant fails to— 
"(i) request administrative review of any claim in 
accordance with subparagraph (A) or (B) of pareigraph 
(7); or 
"(ii) file suit on such claim (or continue an action 
commenced before the appointment of the liquidating 
agent), 
before the end of the 60-day period described in subpara-
graph (A), the claim shall be deemed to be disallowed (other 
than any portion of such claim which was allowed by the 
liquidating agent) as of the end of such period, such dis-
allowance shall be final, and the claimant shall have no 
further rights or remedies with respect to such claim. 
"(7) REVIEW OF CLAIMS.— 
"(A) ADMINISTRATIVE HEARING.—If any claimant requests 
review under this subparagraph in lieu of filing or continu-
ing any action under paragraph (6) and the Board agrees to 
such request, the Board shall consider the claim after 
opportunity for a hearing on the record. The final deter-
103 STAT. 534 
PUBLIC LAW 101-73—AUG. 9, 1989 
mination of the Board with respect to such claim shall be 
subject to judicial review under chapter 7 of title 5, United 
States Code. 
"(B) OTHER REVIEW PROCEDURES.— 
"(i) IN GENERAL.—The Board shall also establish such 
alternative dispute resolution processes as may be 
appropriate for the resolution of claims filed under 
paragraph (5)(A)(i). 
"(ii) CRITERIA.—In establishing alternative dispute 
resolution processes, the Board shall strive for proce-
dures which are expeditious, fair, independent, and low 
cost. 
"(iii) VOLUNTARY BINDING OR NONBINDING PROCE-
DURES.—The Board may establish both binding and 
nonbinding processes, which may be conducted by any 
government or private party, but all parties, including 
the claimant and the Board, must agree to the use of 
the process in a particular case. 
"(iv) CONSIDERATION OF INCENTIVES.—The Board shall 
seek to develop incentives for claimants to participate 
in the alternative dispute resolution process. 
"(8) EXPEDITED DETERMINATION OF CLAIMS.— 
"(A) EsTABUSHMENT REQUIRED.—The Board shall estab-
lish a procedure for expedited relief outside of the routine 
claims process established under paragraph (5) for claim-
ants who— 
"(i) allege the existence of legally valid and enforce-
able or perfected security interests in assets of any 
credit union for which the Board has been appointed 
liquidating agent; and 
"(ii) allege that irreparable injury will occur if the 
routine claims procedure is followed. 
"(B) DETERMINATION PERIOD.—Before the end of the 90-
day period beginning on the date any claim is filed in 
accordance with the procedures established pursuant to 
subparagraph (A), the Board shall— 
"(i) determine— 
"(I) whether to allow or disallow such claim; or 
"(II) whether such claim should be determined 
pursuant to the procedures established pursuant to 
paragraph (5); or 
"(ii) notify the claimant of the determination, and if 
the claim is disallowed, a statement of each reason for 
' 
the disallowance and the procedure for obtaining 
agency review or judicial determination. 
"(C) PERIOD FOR FIUNG OR RENEWING SUIT.—Any claimant 
who files a request for expedited relief shall be permitted to 
file a suit, or to continue a suit filed before the appointment 
of the liquidating agent, seeking a determination of the 
claimant's rights with respect to such security interest after 
the earlier of— 
"(i) the end of the 90-day period beginning on the 
date of the filing of a request for expedited relief; or 
"(ii) the date the Board denies the claim. 
"(D) STATUTE OF UMITATIONS.—If an action described in 
subparagraph (C) is not filed, or the motion to renew a 
previously filed suit is not made, before the end of the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 535 
30-day period beginning on the date on which such action or 
motion may be filed in accordance with subparagraph (B), 
the claim shall be deemed to be disallowed as of the end of 
such period (other than any portion of such claim which 
was allowed by the liquidating agent), such disallowance 
shall be final, and the cledmant shall have no further rights 
or remedies with respect to such claim. 
"(E) LEGAL EFFECT OF FIUNG,— 
"(i) STATUTE OF UMITATION TOLLED.—For purposes of 
any applicable statute of limitations, the filing of a 
claim with the liquidating agent shall constitute a 
commencement of an action. 
"(ii) No PREJUDICE TO OTHER ACTIONS.—Subject to 
paragraph (12), the filing of a claim with the liquidat-
ing agent shall not prejudice any right of the claimsuit 
to continue any action which was filed before the 
appointment of the liquidating agent. 
'(9) AGREEMENT AS BASIS OF CLAIM.— 
"(A) REQUIREMENTS.—Except as provided in subpara-
graph (B), any eigreement which does not meet the require-
ments set forth in section 208(aX3) shall not form the basis 
of, or substantially comprise, a claim against the liquidat-
ing agent or the Board. 
(B) 
EXCEPTION 
TO 
CONTEMPORANEOUS 
EXECUTION 
REQUIREMENT.—Notwithstanding 
section 
208(aX3), 
any 
agreement between a Federal home loan bank or Federal 
Iteserve bank and any insured credit union which was 
executed before the extension of credit by such bank to such 
credit union shall be treated as having been executed 
contemporaneously with such extension of credit for pur-
poses of subparagraph (A). 
'(10) PAYMENT OF CLAIMS.— 
"(A) IN GENERAL.—The liquidating agent may, in the 
liquidating agent's discretion and to the extent funds are 
available, pay creditor claims which are allowed by the 
liquidating agent, approved by the Board pursuant to a 
fingil determination pursuant to paragraph (7) or (8), or 
determined by the final judgment of any court of competent 
jurisdiction in such manner and amounts as are authorized 
under this Act. 
"(B) PAYMENT OP DIVIDENDS ON CLAIMS.—The liquidating 
agent may, in the liquidating agent's sole discretion, pay 
dividends on proved claims at any time, and no liability 
shall attach to the Board (in such Board's corporate capac-
ity or as liquidating agent), by reason of £uiy such payment, 
for failure to pay dividends to a claimant whose claim is not 
proved at the time of any such pa)mient. 
'(11) DISTRIBUTION OF ASSETS.— 
"(A) 
SUBROGATED 
CLAIMS; 
CLAIMS 
OF 
UNINSURED 
ACCOUNTHOLDERS AND OTHER CREDITORS.—The liquidating 
agent shall— 
"(i) retain for the account of the Board such portion 
of the amounts realized from any liquidation as the 
Board may be entitled to receive in connection with the 
subrogation of the claims of accountholders; and 
"(ii) pay to accountholders and other creditors the 
net amounts available for distribution to them. 
103 STAT. 536 
PUBLIC LAW 101-73-AUG. 9, 1989 
"(B) DISTRIBUTION TO SHAREHOLDERS OF AMOUNTS REMAIN-
ING AFTER PAYMENT OF ALL OTHER CLAIMS AND EXPENSES.— 
In any case in which funds remain after all account-
holders, creditors, other claimants, and administrative ex-
penses are paid, the liquidating agent shall distribute such 
funds to the credit union's shareholders or members to-
gether with the accounting report required under para-
graph (14XC). 
"(12) SUSPENSION OF LEGAL ACTIONS.— 
"(A) IN GENERAL.—After the appointment of a conserva-
tor or liquidating agent for an insured credit union, the 
conservator or liquidating agent may request a stay for a 
period not to exceed— 
"(i) 45 days, in the case of any conservator; and 
"(ii) 90 days, in the case of any liquidating agent, 
in any judicial action or proceeding to which such credit 
union is or becomes a party. 
"(B) GRANT OF STAY BY ALL COURTS REQUIRED.—Upon 
receipt of a request by any conservator or liquidating agent 
pursuant to subparagraph (A) for a stay of any judicial 
action or proceeding in any court with jurisdiction of such 
action or proceeding, the court shall grant such stay as to 
all parties. 
"(13) ADDITIONAL RIGHTS AND DUTIES.— 
"(A) PRIOR FINAL ADJUDICATION.—The Board shall abide 
by any final unappealable judgment of any court of com-
petent jurisdiction which was rendered before the appoint-
ment of the Board as conservator or liquidating agent. 
"(B) RIGHTS AND REMEDIES OF CONSERVATOR OR UQUIDAT-
ING AGENT.—In the event of any appealable judgment, the 
Board as conservator or liquidating agent shall— 
"(i) have all the rights and remedies available to the 
credit union (before the appointment of such conserva-
tor or liquidating agent) £ind the Board in its corporate 
capacity, including removal to Federal court and all 
appellate rights; and 
"(ii) not be required to post any bond in order to 
pursue such remedies. 
"(C) No ATTACHMENT O
R EXECUTION.—No attachment or 
execution may issue by any court upon assets in the posses-
sion of the liquidating agent. 
"(D) LIMITATION ON JUDICIAL REVIEW.—Except as other-
wise provided in this subsection, no court shall have juris-
diction over— 
"(i) any claim or action for pa)rment from, or any 
action seeking a determination of rights with respect 
to, the assets of any credit union for which the Board 
has been appointed liquidating agent, including assets 
which the Board may acquire from itself as such liq-
uidating agent; or 
"(ii) any claim relating to any act or omission of such 
credit union or the Board as liquidating agent. 
"(14) STATUTE OF UMITATIONS FOR ACTIONS BROUGHT BY CON-
SERVATOR O
R UQUIDATING AGENT.— 
"(A) IN GENERAL.—Notwithstanding any provision of £uiy 
contract, the applicable statute of limitations with regard to 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 537 
£iny action brought by the Board as conservator or liquidat-
ing agent shall be— 
"(i) in the case of any contract claim, the longer o
f
— 
"(I) the 6-year period beginning on the date the 
claim accrues; or 
"(11) the period applicable under State law; and 
"(ii) in the case of any tort claim, the longer o
f
— 
"(I) the 3-year period beginning on the date the 
claim accrues; or 
"(II) the period applicable under State law. 
"(B) DETERMINATION OF THE DATE ON WHICH A CLAIM 
ACCRUES.—For purposes of subparagraph (A), the date on 
which the statute of limitation begins to run on any claim 
described in such subparsigraph shall be the later of— 
"(i) the date of the appointment of the Board as 
conservator or liquidating agent; or 
"(ii) the date on which the cause of action accrues. 
"(15) ACCOUNTING AND RECORDKEEPING REQUIREMENTS.— 
"(A) IN GENERAL.—The Board as conservator or liquidat-
ing agent shall, consistent with the accounting and report-
ing practices and procedures established by the Board, 
maintain a full accounting of each conservatorship and 
liquidation or other disposition of credit unions in default. 
"(B) ANNUAL ACCOUNTING OR REPORT.—With respect to 
each conservatorship or liquidation to which the Board was 
appointed, the Board shall make an annual accounting or 
report, as appropriate, available to the Comptroller General 
of the United States or, in the case of a State-chartered 
credit union, the authority which appointed the Board as 
conservator or liquidating agent. 
"(C) AVAILABILITY OF REPORTS.—Any report prepared 
pursuant to subparagraph (B) shall be made available by 
the Board upon request to any shareholder of the credit 
union for which the Board was appointed conservator or 
liquidating agent or any other member of the public. 
"(D) RECORDKEEPING REQUIREMENT.—After the end of the 
6-year period beginning on the date the Board is appointed 
as liquidating agent of an insured credit union, the Board 
may destroy any records of such credit union which the 
Board, in the Board's discretion, determines to be unneces-
sary unless directed not to do so by a court of competent 
jurisdiction or governmental agency, or prohibited by law. 
"(c) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE 
APPOINTMENT OF CONSERVATOR OR LIQUIDATING AGENT.— 
"(1) AUTHORITY TO REPUDIATE CONTRACTS.—In addition to any 
other rights a conservator or liquidating agent may have, the 
conservator or liquidating agent for any insured credit union 
may disaffirm or repudiate any contract or lease— 
"(A) to which such credit union is a party; 
"(B) the performance of which the conservator or liq-
uidating agent, in the conservator's or liquidating agent's 
discretion, determines to be burdensome; and 
"(C) the disaffirmance or repudiation of which the con-
servator or liquidating agent determines, in the conserva-
tor's or liquidating agent's discretion, will promote the 
orderly administration of the credit union's affairs. 
103 STAT. 538 
PUBLIC LAW 101-73—AUG. 9, 1989 
"(2) TIMING OF REPUDIATION.—The conservator or liquidating 
agent appointed for any insured credit union shall determine 
whether or not to exercise the rights of repudiation under this 
subsection within a reasonable period following such appoint-
ment. 
"(3) CLAIMS FOR D
A
M
A
G
E
S FOR REPUDIATION.— 
"(A) IN GENERAL.—Except as otherwise provided in 
subparagraph (C) and paragraphs (4), (5), and (6), the liabil-
ity of the conservator or liquidating agent for 
the 
disaffirmance or repudiation of any contract pursuant to 
paragraph (1) shall be— 
•y 
"(i) limited to actual direct compensatory damages; 
and 
"(ii) determined as of— 
"(I) the date of the appointment of the conserva-
tor or liquidating agent; or 
"(II) in the case of any contract or agreement 
referred to in paragraph (8), the date of the 
disaffirmance or repudiation of such contract or 
agreement. 
"(B) No LIABILITY FOR OTHER DAMAGES.—For purposes of 
subparagraph (A), the term 'actual direct compensatory 
damages' does not include— 
"(i) punitive or exemplary damages; 
"(ii) damages for lost profits or opportunity; or 
"(iii) damages for pain and suffering. 
"(C) MEASURE OF DAMAGES FOR REPUDIATION OF FINANCIAL 
CONTRACTS.—In the case of any qualified financial contract 
or agreement to which paragraph (8) applies, compensatory 
damages shall be— 
"(i) deemed to include normal and reasonable costs of 
cover or other reasonable measures of damages utilized 
in the industries for such contract and agreement 
claims; and 
"(ii) paid in accordance with this subsection and 
subsection (f) except as otherwise specifically provided 
in this section. 
"(4) LEASES UNDER WHICH THE CREDIT UNION IS THE LESSEE.— 
"(A) IN GENERAL.—If the conservator or liquidating agent 
disaffirms or repudiates a lease under which the credit 
union was the lessee, the conservator or liquidating agent 
shall not be liable for any damages (other than damages 
determined 
pursuant 
to 
subpargigraph 
(B)) for 
the 
disaffirmance or repudiation of such lease. 
"(B) PAYMENTS OF RENT.—Notwithstanding subparagraph 
(A), the lessor under a lease to which such subparagraph 
applies shall— 
"(i) be entitled to the contractual rent accruing 
before the later of the date— 
"(I) the notice of disaffirmance or repudiation is 
mailed; or 
"(II) the disaffirmance or repudiation becomes 
effective, 
unless the lessor is in default or breach of the terms of 
the lease; 
"(ii) have no claim for damages under any accelera-
tion clause or other penalty provision in the lease; and 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 539 
"(iii) have a claim for any unpaid rent, subject to all 
appropriate offsets and defenses, due as of the date of 
the appointment which shall be paid in accordance 
with this subsection and subsection Ot)). 
"(5) LEASES UNDER WHICH THE CREDIT UNION IS THE LESSOR.— 
"(A) IN GENERAL.—If the conservator or liquidating agent Real property, 
repudiates an unexpired written lease of real property of 
the credit union under which the credit union is the lessor 
and the lessee is not, as of the date of such repudiation, in 
default, the lessee under such lease may either— 
"(i) treat the lease as terminated by such repudi-
ation; or 
"(ii) remain in possession of the leasehold interest for 
the balance of the term of the lease unless the lessee 
defaults under the terms of the lease after the date of 
such repudiation. 
"(B) 
PROVISIONS APPLICABLE TO LESSEE REMAINING IN 
POSSESSION.—If any lessee under a lease described in 
subparagraph (A) remains in possession of a leasehold in-
terest pursuant to clause (ii) of such subparagraph— 
"(i) the lessee— 
"(I) shall continue to pay the contractual rent 
pursuant to the terms of the lease after the date of 
the repudiation of such lease; 
"(II) may offset against any rent payment which 
accrues after the date of the repudiation of the 
lease, any damages which accrue after such date 
due to the nonperformance of any obligation of the 
credit union under the lease after such date; and 
"(ii) the conservator or liquidating agent shall not be 
liable to the lessee for any damages arising after such 
date as a result of the repudiation other than the 
amount of any offset allowed under clause (i)(II). 
"(6) CONTRACTS FOR THE SALE OF REAL PROPERTY.— 
"(A) IN GENERAL.—If the conservator or liquidating agent 
repudiates any contract (which meets the requirements of 
each paragraph of section 208(aX3)) for the sale of real 
property and the purchaser of such real property under 
such contract is in possession and is not, as of the date of 
such repudiation, in default, such purchaser may either— 
'(i) treat the contract as terminated by such repudi-
ation; or 
"(ii) remain in possession of such real property. 
"(B) PROVISIONS APPLICABLE TO PURCHASER REMAINING IN 
POSSESSION.—If any purchaser of real property under any 
contract described in subparagraph (A) remains in posses-
sion of such property pursuant to clause (ii) of such 
subpar£igraph— 
"(i) the purchaser— 
"(I) shall continue to make all payments due 
under the contract after the date of the repudi-
ation of the contract; and 
"(II) may offset against any such payments any 
damages which accrue after such date due to the 
nonperformance (after such date) of any obligation 
of the credit union under the contract; and 
"(ii) the conservator or liquidating agent shall— 
103 STAT. 540 
PUBLIC LAW 101-73—AUG. 9, 1989 
\ 
"(I) not be liable to the purchaser for any dam-
ages arising after such date as a result of the 
repudiation other than the amount of any offset 
allowed under clause (iXII); 
"(11) deliver title to the purchaser in accordance 
with the provisions of the contract; and 
"(III) have no obligation under the contract other 
than the performance required under subclause 
(II). 
"(C) ASSIGNMENT AND SALE ALLOWED.— 
"(i) IN GENERAL.—No provision of this paragraph 
shall be construed as limiting the right of the conserva-
tor or liquidating agent to assign the contract described 
in subparagraph (A) and sell the property subject to the 
contract and the provisions of this paragraph. 
"(ii) N o LIABILITY AFTER ASSIGNMENT AND SALE.—If an 
assignment and sale described in clause (i) is con-
summated, the conservator or liquidating agent shall 
have no further liability under the contract described 
in subparagraph (A) or with respect to the real prop-
erty which was the subject of such contract. 
"(7) PROVISIONS APPUCABLE TO SERVICE CONTRACTS.— 
"(A) SERVICES PERFORMED BEFORE APPOINTMENT.—In the 
case of any contract for services between any person and 
any insured credit union for which the Board has been 
appointed conservator or liquidating agent, any claim of 
such person for services performed before the appointment 
of the conservator or the liquidating agent shall be— 
"(i) a claim to be paid in accordance with subsection 
(b); and 
"(ii) deemed to have arisen as of the date the con-
servator or liquidating agent was appointed. 
"(B) SERVICES PERFORMED AFTER APPOINTMENT AND PRIOR 
TO REPUDIATION.—If, in the case of any contract for services 
described in subparagraph (A), the conservator or liquidat-
ing agent accepts performance by the other person before 
the conservator or liquidating agent makes any determina-
tion to exercise the right of repudiation of such contract 
under this section— 
"(i) the other party shall be paid under the terms of 
the contract for the services performed; and 
"(ii) the amount of such pajonent shall be treated as 
an administrative expense of the conservatorship or 
liquidation. 
"(C) ACCEPTANCE OF PERFORMANCE NO BAR TO SUBSEQUENT 
REPUDIATION.—The acceptance by any conservator or liq-
uidating agent of services referred to in subparagraph (B) in 
connection with a contract described in such subparagraph 
shall not affect the right of the conservator or liquidating 
agent to repudiate such contract under this section at any 
time after such performance. 
"(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS.— 
"(A) RIGHTS OF PARTIES TO CONTRACTS.—Subject to para-
graph (12) of this subsection and notwithstanding any other 
provision of this Act (other than subsection (bX9) of this 
section and section 208(aX3)), any other Federal law, or the 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 541 
law of any State, no person shall be stayed or prohibited 
from exercising— 
"(i) any right to cause the termination or liquidation 
of any qualified financial contract with an insured 
credit union which arises upon the appointment of the 
Board as liquidating agent for such credit union at any 
time after such appointment; 
"(ii) any right under any security arrangement relat-
ing to any contract or agreement described in clause (i); 
or 
"(iii) any right to offset or net out any termination 
value, payment amount, or other transfer obligation 
arising under or in connection with 1 or more contracts 
and agreements described in clause (i), including any 
master agreement for such contracts or agreements. 
"(B) 
APPUCABILTTY OF OTHER PROVISIONS.—Subsection 
Ot))(12) shall apply in the case of any judicial action or 
proceeding brought against any liquidating £igent referred 
to in subparagraph (A), or the credit union for which such 
liquidating agent was appointed, by any party to a contract 
or agreement described in subparagraph (A)(i) with such 
credit union. 
"(C) CERTAIN TRANSFERS NOT AVOIDABLE.— 
"(i) IN GENERAL.—Notwithstanding paragraph (11), 
the Board, whether acting as such or as conservator or 
liquidating agent of an insured credit union, may not 
avoid any transfer of money or other property in 
connection with any qualified financial contract with 
an insured credit union. 
"(ii) EXCEPTION FOR CERTAIN TRANSFERS.—Clause (i) 
shall not apply to gmy transfer of money or other 
property in connection with any qualified 
financial 
contract with an insured credit union if the Board 
determines that the transferee had actual intent to 
hinder, delay, or defraud such credit union, the credi-
tors of such credit union, or any conservator or liq-
uidating agent appointed for such credit union. 
"(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED.—For 
purposes of this subsection— 
"(i) 
QUALIFIED 
FINANCIAL 
CONTRACT.—The 
term 
'qualified financial contract' means any securities con-
tract, forward contract, repurchase agreement, and any 
similar agreement that the Board determines by regu-
lation to be a qualified financial contract for purposes 
of this paragraph. 
"(ii) SECURITIES CONTRACT.—The term 'securities con-
tract'— 
"(I) has the meaning given to such term in sec-
tion 741(7) of title 11, United States Code, except 
that the term 'security' (as used in such section) 
shall be deemed to include any mortgage loan, any 
mortgage-related security (£is defined in section 
3(aX41) of the Securities Exchange Act of 1934), 
and any interest in any mortgage loan or mort-
gage-related security; and 
"(II) does not include any participation in a 
commercial mortgage loan unless the Board deter-
103 STAT. 542 
PUBLIC LAW 101-73—AUG. 9, 1989 
mines by regulation, resolution, or order to include 
any such participation within the meaning of such 
term, 
"(iii) FORWARD CONTRACT.—The term 'forward con-
• 
tract' has the meaning given to such term in section 
101(24) of title 11, United States Code. 
"(iv) 
REPURCHASE 
AGREEMENT.—The 
term 
*re-
^ 
purchase agreement'— 
"(I) h£is the meaning given to such term in sec-
tion 101(41) of title 11, the United States Code, 
except that the items (as described in such section) 
which may be subject to any such agreement shall 
be deemed to include mortgage-related securities 
(as such term is defined in section 3(a)(41) of the 
Securities Exchange Act of 1934, any mortgage 
loan, and any interest in any mortgage loan; and 
• 
"(11) does not include any participation in a 
commercial mortgage loan unless the Board deter-
mines by regulation, resolution, or order to include 
any such participation within the meaning of such 
term. 
"(v) TRANSFER.—The term 'transfer' has the meaning 
given to such term in section 101(50) of title 11, United 
States Code. 
"(E) CERTAIN PROTECTIONS IN EVENT OF APPOINTMENT OF 
CONSERVATOR.—Notwithstanding any other provision of this 
Act (other than paragraph (12) of this subsection, subsection 
(b)(9) of this section, and section 208(a)(3) of this Act), any 
other Federal law, or the law of any State, no person shall 
be stayed or prohibited from exercising— 
"(i) any right such person has to cause the termi-
nation, liquidation, or acceleration of any qualified 
financial 
contract 
with 
a 
credit 
union 
in 
a 
conservatorship based upon a default under such finan-
cial contract which is enforceable under applicable 
noninsolvency law; 
"(ii) any right under any security arrangement relat-
ing to such qualified financial contracts; or 
"(iii) any right to offset or net out any termination 
values, payment amounts, or other trgmsfer obligations 
arising under or in connection with such qualified 
financial contracts. 
"(9) 
TRANSFER 
OF 
QUALIFIED FINANCIAL 
CONTRACTS.—In 
making any transfer of assets or liabilities of a credit union in 
default which includes any qualified financial contract, the 
conservator or liquidating agent for such credit union shall 
either— 
"(A) transfer to 1 credit union (other than a credit union 
in default)— 
"(i) all qualified financial contracts between— 
"(I) any person or any affiliate of such person; 
and 
"(II) the credit union in default; 
"(ii) all claims of such person or any affiliate of such 
person against such credit union under any such con-
tract (other than any claim which, under the terms of 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 543 
any such contract, is subordinated to the claims of 
general unsecured creditors of such credit union); 
"(iii) all claims of such credit union against such 
person or any affiliate of such person under any such 
contract; and 
"(iv) all property securing any claim described in 
clause (ii) or (iii) under any such contract; or 
"(B) trEinsfer none of the financial contracts, claims, or 
property referred to in subparagraph (A) (with respect to 
such person and any affiliate of such person). 
"(10) NOTIFICATION OP TRANSFER.— 
"(A) IN GENERAL.—If^ 
"(i) the conservator or liquidating agent for an in-
sured credit union in default makes any transfer of the 
assets and liabilities of such credit union; and 
"(ii) the transfer includes any qualified financial con-
tract, 
the conservator or liquidating agent shall use such con-
servator's or liquidating agent's best efforts to notify any 
person who is a party to any such contract of such transfer 
by 12:00, noon (local time), on the business day following 
such transfer. 
"(B) BUSINESS DAY DEFINED.—For purposes of this para-
graph, the term 'business day' means any day other than 
any Saturday, Sunday, or any day on which either the New 
York Stock Exchange or the Federal Reserve Bank of New 
York is closed. 
"(11) CERTAIN SECURITY INTERESTS NOT AVOIDABLE.—No provi-
sion of this subsection shall be construed as permitting the 
avoidance of any legally enforceable or perfected security in-
terest in any of the assete of any credit union except where such 
an interest is taken in contemplation of the credit union's 
insolvency or with the intent to hinder, delay, or defraud the 
credit union or the creditors of such credit union. 
"(12) AUTHORITY TO ENFORCE CONTRACTS.— 
"(A) IN GENERAL.—The conservator or liquidating agent 
mav enforce any contract, other than a director's or offi-
cer s liability insurance contract or a credit union bond, 
entered into by the credit union notwithstanding any provi-
sion of the contract providing for termination, default, 
acceleration, or exercise of rights upon, or solely by reason 
of, insolvency or the appointment of a conservator or liq-
uidating agent. 
"(B) CERTAIN RIGHTS NOT AFFECTED.—No provision of this 
paragraph may be construed as impairing or affecting any 
right of the conservator or liquidating gigent to enforce or 
recover under a directors or officers liability insurance 
contract or credit union bond under other applicable law. 
"(13) 
EXCEPTION FOR FEDERAL RESERVE AND FEDERAL HOME 
LOAN BANKS.—No provision of this subsection shall apply with 
respect to— 
"(A) any extension of credit from any Federal home loan 
bank or Federal Reserve bank to any insured depository 
institution; or 
"(B) any security interest in the assets of the institution 
securing any such extension of credit. 
'(d) PAYMENT OF INSURED DEPOSITS.— 
103 STAT. 544 
PUBLIC LAW 101-73—AUG. 9, 1989 
Courts, U.S. 
District of 
Columbia. 
"(1) IN GENERAL.—In case of the liquidation of any insured 
credit union, pajrment of the insured deposits in such credit 
> union shall be made by the Board as soon as possible, subject to 
the provisions of subsection (e) of this section, either by cash or 
by making available to each accountholder a transferred deposit 
in a new credit union in the same community or in another 
insured credit union in an amount equal to the insured deposit 
of such accountholder. 
"(2) PROOF OF CLAIMS.—The Board, in its discretion, may 
require proof of claims to be filed and may approve or reject 
such claims for insured deposits. 
"(3) RESOLUTION OF DISPUTES.— 
"(A) 
RESOLUTIONS IN ACCORDANCE TO BOARD REGULA-
TIONS.—In the case of any disputed claim relating to any 
insured deposit or any determination of insurance coverage 
with respect to any deposit, the Board may resolve such 
disputed claim in accordance with regulations prescribed by 
the Board establishing procedures for resolving such claims. 
"(B) ADJUDICATION OF CLAIMS.—If the Board has not pre-
scribed regulations establishing procedures for resolving 
disputed claims, the Board may require the final deter-
mination of a court of competent jurisdiction before paying 
any such claim. 
"(4) REVIEW OF BOARD'S DETERMINATION.—Final determination 
made by the Board shall be reviewable in accordance with 
chapter 7 of title 5, United States Code, by the United States 
Court of Appeals for the District of Columbia or the court of 
appeals for the Federal judicial circuit where the principal place 
of business of the credit union is located. 
"(5) STATUTE OF UMITATIONS.—Any request for review of a 
finail determination by the Board shall be filed with the appro-
priate circuit court of appeals not later than 60 days after such 
determination is ordered. 
"(e) SUBROGATION OF BOARD.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
Federal law, the law of any State, or the constitution of any 
State, the Eioard, upon the payment to any accountholder as 
provided in subsection (d) in connection with any insured credit 
union described in such subsection or the assumption of any 
deposit in such credit union by another insured credit union 
pursuant to this section, shall be subrogated to all rights of the 
accountholder against such credit union to the extent of such 
payment or assumption. 
(2) DIVIDENDS ON SUBROGATED AMOUNTS.—The subrogation of 
the Board under paragraph (1) with respect to any insured 
credit union shall include the right on the part of the Board to 
receive the same dividends from the proceeds of the assets of 
such credit union as would have been payable to the 
accountholder on a claim for the insured deposit, but such 
accountholder shall retain such claim for any uninsured or 
unassumed portion of the deposit. 
"(f) VALUATION OF CLAIMS IN DEFAULT.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
Federal law or the law of any State, this subsection shall govern 
the rights of the creditors (other than insured accountholders) of 
such credit union. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 545 
"(2) MAXIMUM UABIUTY.—The maximum liability of the 
Board, acting as liquidating agent or in any other capacity, to 
any person having a claim against the liquidating agent or the 
insured credit union for which such liquidating agent is ap-
pointed shall equal the amount such claimant would have 
received if the Board had liquidated the assets and liabilities of 
such credit union without exercising the Board's authority 
under subsection (n) of this section. 
"(3) ADDITIONAL PAYMENTS AUTHORIZED.— 
"(A) IN GENERAL.—The Board may, in its discretion and 
in the interests of minimizing its losses, use its own re-
sources to make additional payments or credit additional 
amounts to or with respect to or for the account of any 
claimant or category of claimants. The Board shall not be 
obligated, as a result of having made any such payment or 
credited any such amount to or with respect to or for the 
account of any clcdmant or category of claimants, to make 
payments to any other claimant or category or claimants. 
"(B) MANNER OF PAYMENT.—The Board may make the 
payments or credit the amounts specified in subparagraph 
(A) directly to the claimants or may make such pa3rments or 
credit such gunounts to an open insured credit union to 
induce the open insured credit union to accept liability for 
such claims. 
"(g) LIMITATION ON COURT ACTION.—Except as provided in this 
section, no court may take any action, except at the request of the 
Board of Directors by regulation or order, to restrain or affect the 
exercise of powers or functions of the Board as a conservator or a 
liquidating agent. 
"(h) LIABILITY OF DIRECTORS AND OFFICERS.—A director or officer of 
an insured credit union may be held personally liable for monetary 
damages in any civil action by, on behalf of, or at the request or 
direction of the Board, which action is prosecuted wholly or partially 
for the benefit of the Board— 
"(1) acting as conservator or liquidating agent of such insured 
credit union, 
"(2) acting based upon a suit, claim, or cause of action pur-
chased from, assigned by, or otherwise conveyed by such liq-
• 
uidating agent or conservator, or 
"(3) acting based upon a suit, clgiim, or cause of action pur-
chased from, assigned by, or otherwise conveyed in whole or in 
part by an insured credit union or its affiliate in connection 
with assistance provided under section 208, 
for gross negligence, including any similar conduct or conduct that 
demonstrates a greater disregard of a duty of care (than gross 
negligence) including intentional tortious conduct, as such terms are 
defined and determined under applicable State law. Nothing in this 
paragraph shall impair or affect any right, if any, of the Board 
under other applicable law. 
"(i) DAMAGES.—In any proceeding related to any claim against an 
insured credit union's director, officer, employee, agent, attorney, 
accountant, appraiser, or any other party employed by or providing 
services to an insured credit union, recoverable damages determined 
to result from the improvident or otherwise improper use or invest-
ment of any insured credit union's sissets shall include principal 
losses and appropriate interest."; and 
103 STAT. 546 
PUBLIC LAW 101-73—AUG. 9, 1989 
(5) in subsection (k) (as so redesignated by paragraph (3) of 
this subsection) by striking out the 1st and 5th sentences, 
(b) LIMITATION ON COURT ACTION.—Section 206(hX3) of the Federal 
Credit Union Act (12 U.S.C. 1786(h)(3)) is amended by adding at the 
end thereof the following sentence: "Except as provided in this 
paragraph, no court may take any action, except at the request of 
the Board by regulation or order, to restrain or affect the exercise of 
powers or functions of the Board as conservator.". 
SEC. 1218. RISK MANAGEMENT TRAINING. 
The Federal Financial Institutions Examination Council Act (12 
U.S.C. 3301 et seq.) is amended by adding at the end the following 
new section: 
12 u s e 3309. 
"SEC. 1009A. RISK MANAGEMENT TRAINING. 
"(a) SEMINARS.—The Council shall develop and administer train-
ing seminars in risk management for its employees and the employ-
ees of insured financial institutions. 
"(b) STUDY OF RISK MANAGEMENT TRAINING PROGRAM.—Not later 
than end of the 1-year period beginning on the date of the enact-
ment of the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989, the Council shall— 
"(1) conduct a study on the feasibility and appropriateness of 
establishing a formalized risk management training program 
designed to lead to the certification of Risk Management An-
alysts; and 
Reports. 
"(2) report to the Congress the results of such study.". 
SEC. 1219. CROSS-MARKETING RESTRICTIONS. 
Section 4(f)(3)(B) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1843(f)(3)(B)) is amended by striking clause (ii) and inserting 
the following: 
"(ii) offer or market products or services of an affili-
ate that are not permissible for bank holding compa-
nies to provide under subsection (c)(8), or permit its 
products or services to be offered or marketed in 
connection with products and services of an affiliate, 
unless— 
"(I) the Board, by regulation, has determined 
such products and services are permissible for 
bank holding companies to provide under subsec-
tion (c)(8); 
"(II) such products and services are described in 
section 20 of the Banking Act of 1933 and the 
Board, by regulation, has permitted bank holding 
companies to offer or market such products or 
services, but has prohibited bank holding compa-
nies and their affiliates from principally engaging 
in the offering or marketing of such products or 
services; or 
"(III) such products or services were being so 
offered or marketed as of March 5, 1987, and then 
only in the same manner in which they were being 
offered or marketed as of that date;". 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 547 
SEC. 1220. REPORT ON LOAN DISCRIMINATION. 
(a) IN GENERAL.—Not later than 60 days after the date of enact-
ment of this Act, the Secretary of Housing and Urban Development, 
the Comptroller of the Currency, the Board of Governors of the 
Federal Reserve System, the Federal Deposit Insurance Corporation, 
the National Credit Union Administration Board, and the Director 
of the Office of Thrift Supervision, shall each transmit to the 
Congress a report containing— 
(1) findings, based on a review of currently available loan 
acceptance and rejection statistics, on the extent of discrimina-
tory lending practices by mortgage lenders subject to regulation 
or supervision by such agency; and 
(2) recommendations for appropriate measures to assure non-
discriminatory lending practices. 
(h) SCOPE OF HUD REPORT.—The Secretary of Housing and Urban 
Development may exclude from the report under subsection (a) any 
data pertaining to mortgage lenders which are approved mortgagees 
under title II of the National Housing Act if data pertaining to such 
lenders is or will be included in the other reports under such 
subsection. 
SEC. 1221. SEPARABILITY OF PROVISIONS. 
12 USC 1811 
If any provision of this Act or the application thereof to any 
person or circumstance is held invalid, the remainder of the Act and 
the application of the provision to other persons not similarly 
situated or to other circumstances shall not be affected thereby. 
TITLE XIII—PARTICIPATION BY STATE 
HOUSING FINANCE AUTHORITIES AND 
NONPROFIT ENTITIES 
SEC. 1301. DEFINITIONS. 
12 USC 1441a-l. 
For purposes of this title: 
(1) STATE HOUSING FINANCE AUTHORITY.—The term "State 
housing finance authority" means any public agency, authority, 
or corporation which— 
(A) serves as an instrumentality of any State or any 
political subdivision of any State; and 
(B) functions as a source of residential mortgage loan 
financing in that State. 
(2) NONPROFIT ENTITY.—The term "nonprofit entity" means 
any not-for-profit corporation chartered under State law that is 
exempt from Federal taxation under section 501(c) of the In-
ternal Revenue Code of 1986 and no part of the net earnings of 
which inures to the benefit of any member, founder, contribu-
tor, or individual (including any nonprofit entity established by 
the corporation established under title IX of the Housing and 
Urban Development Act of 1968). 
(3) MORTGAGE-RELATED ASSETS.—The term "mortgage-related 
assets" means— 
(A) residential mortgage loans secured by 1- to 4-family or 
multifamily dwellings; and 
(B) real property improved with 1- to 4-family or multi-
family residential dwellings. 
103 STAT. 548 
PUBLIC LAW 101-73—AUG. 9, 1989 
which are located within the jurisdiction of the applicable State 
housing finance authority or within the geographical area 
served by the nonprofit entity. 
(4) NET INCOME.—The term "net income" means income after 
deduction of all associated expenses calculated in accordance 
with generally accepted accounting principles. 
12 u s e 1441a-2. 
SEC. 1302. AUTHORIZATION FOR STATE HOUSING FINANCE AGENCIES AND 
NONPROFIT ENTITIES TO PURCHASE MORTGAGE-RELATED 
ASSETS. 
(a) AUTHORIZATION.—Notwithstanding any other provision of Fed-
eral or State law, a State housing finance authority or nonprofit 
entity may purchase mortgage-related assets from the Resolution 
Trust Corporation or from financial institutions with respect to 
which the Federal Deposit Insurance Corporation is acting as a 
conservator or receiver (including assets associated with any trust 
business), and any contract for such purchase shall be effective in 
accordance with its terms without any further approval, assign-
ment, or consent with respect to that contract. 
Disadvantaged 
(b) INVESTMENT REQUIREMENT.—Any State housing 
finance 
persons. 
authority or nonprofit entity which purchases mortgage-related 
assets pursuant to subsection (a) shall invest any net income attrib-
utable to the ownership of those assets in financing, refinancing, or 
rehabilitating low- and moderate-income housing within the juris-
diction of the State housing finance authority or within the geo-
graphical area served by the nonprofit entity. 
TITLE XIV—TAX PROVISIONS 
SEC. 1401. EARLY TERMINATION OF SPECIAL REORGANIZATION RULES 
FOR FINANCIAL INSTITUTIONS. 
(a) GENERAL RULE.— 
(1) REORGANIZATIONS.—Subparagraph (D) of section 368(a)(3) 
of the Internal Revenue Code of 1986 (as amended by section 
26 use 368. 
4012 of the Technical and Miscellaneous Revenue Act of 1988) is 
amended to read as follows: 
"(D) AGENCY RECEIVERSHIP PROCEEDINGS WHICH INVOLVE 
FINANCIAL INSTITUTIONS.—For purposes of subparagraphs 
(A) and (B), in the case of a receivership, foreclosure, or 
similar proceeding before a Federal or State agency involv-
ing a financial institution referred to in section 581 or 591, 
the agency shall be treated as a court." 
(2) NET OPERATING LOSS RULES,—The last sentence of section 
26 use 382. 
382(1X5)(F) of such Code (as so amended) is amended by striking 
"after December 31, 1989" and inserting "on or after May 10, 
1989". 
(3) FINANCIAL ASSISTANCE.— 
(A) Section 597 of such Code (as so amended) is amended 
to read as follows: 
26 u s e 597. 
"SEC. 597. TREATMENT OF TRANSACTIONS IN WHICH FEDERAL FINANCIAL 
ASSISTANCE PROVIDED. 
"(a) GENERAL RULE.—The treatment for purposes of this chapter 
of any transaction in which Federal financial assistance is provided 
with respect to a bank or domestic building and loan association 
shall be determined under regulations prescribed by the Secretary. 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 549 
"(b) PRINCIPLES USED IN PRESCRIBING REGULATIONS.— 
"(1) TREATMENT OF TAXABLE ASSET ACQUISITIONS.—In the case 
of any acquisition of assets to which section 381(a) does not 
apply, the regulations prescribed under subsection (a) shall— 
"(A) provide that Federal financial assistance shall be 
properly taken into account by the institution from which 
the assets were acquired, and 
"(B) provide the proper method of allocating basis among 
the assets so acquired (including rights to receive Federal 
financial assistance). 
"(2) OTHER TRANSACTIONS.—In the case of any transaction not 
described in paragraph (1), the regulations prescribed under 
subsection (a) shall provide for the proper treatment of Federal 
financial assistance and appropriate adjustments to basis or 
other tax attributes to reflect such treatment. 
"(3) DENIAL OF DOUBLE BENEFIT.—No regulations prescribed 
under this section shall permit the utilization of any deduction 
(or other tax benefit) if such amount was in effect reimbursed by 
nontaxable Federal financial assistance. 
"(c) FEDERAL FINANCIAL ASSISTANCE.—The purposes of this sec-
tion, the term 'Federal financial gissistance' means— 
"(1) any money or other property provided with respect to a 
domestic building and loan association by the Federal Savings 
and Loan Insurance Corporation or the Resolution Trust Cor-
poration pursuant to section 406(f) of the National Housing Act 
or section 21A of the Federal Home Loan Bank Act (or under 
any other similar provision of law), and 
"(2) any money or other property provided with respect to a 
bank or domestic building and loan association by the Federal 
Deposit Insurance Corporation pursuant to section 11(f) or 13(c) 
of the Federal Deposit Insurance Act (or under any other 
similar provision of law), 
regardless of whether any note or other instrument is issued in 
exchange therefor. 
"(d) DOMESTIC BUILDING AND LOAN ASSOCIATION.—For purposes of 
this section, the term 'domestic building and loan association' has 
the meaning given such term by section 7701(a)(19) without regard 
to subparagraph (C) thereof." 
(B) Subparagraph (B) of section 904(c)(2) of the Tax 
Reform Act of 1986 is hereby repealed. 
26 USC 597 note. 
(C) The table of sections for part II of subchapter H of 
chapter 1 of such Code is amended by striking the item 
relating to section 597 and inserting the following: 
"Sec. 597. Treatment of transactions in which Federal financial assistance provid-
ed." 
(b) TECHNICAL AMENDMENTS.— 
(1) Section 904 of the Tax Reform Act of 1986 (other than 
subsection (c)(2)(B) thereof) is hereby repealed and the Internal 
26 USC 597 note. 
Revenue Code of 1986 shall be applied as if the amendments 
made by such section had not been enacted. 
(2) The last sentence of paragraph (3) of section 4012(c) of the 
Technical and Miscellaneous Revenue Act of 1988 is amended to 
26 USC 597 note. 
read as follows: 
"In the c£ise of any bank or any institution treated as a domestic 
building and loan association for purposes of section 597 of the 
1986 Code by reason of the amendment made by subsection 
(b)(2)(B), the amendments made by this subsection shall also 
1 r\ 
oi 
r>—.* 1 
103 STAT. 550 
PUBLIC LAW 101-73—AUG. 9, 1989 
apply to any transfer before January 1, 1989, to which the 
amendments made by subsection (bX2) apply." 
26 use 593. 
(3) The last sentence of section 593(eXl) of such Code is 
amended to read as follows: "This paragraph shall not apply to 
any transaction to which section 381 applies, or to any distribu-
tion to the Federal Savings and Loan Insurance Corporation (or 
any successor thereof) or the Federal Deposit Insurance Cor-
poration in redemption of an interest in an association, if such 
interest was originally received by any such entity in exchange 
for assistance provided under a provision of law referred to in 
section 597(c).". 
(c) EFFECTIVE DATES.— 
26 use 368 note. 
(1) SUBSECTION (aXD.—The amendment made by subsection 
(aXl) shall apply to acquisitions on or after May 10, 1989. 
26 use 382 note. 
(2) SUBSECTION (aX2).—The amendment made by subsection 
(aX2) shall apply to transactions on or after May 10, 1989. 
26 u s e 597 note. 
(3) SUBSECTION (aX3).— 
(A) IN GENERAL.—The amendments made by subsection 
(aX3) shall apply to any amount received or accrued by the 
financial institution on or after May 10, 1989, except that 
such amendments shall not apply to transfers on or after 
such date pursuant to an acquisition to which the amend-
ment made by subsection (aXl) does not apply. 
(B) INTERIM RULE.—In the case of any payment pursuant 
to a transaction on or after May 10, 1989, and before the 
date on which the Secretary of the Treasury (or his dele-
gate) takes action in exercise of his regulatory authority 
under section 597 of the Internal Revenue Code of 1986 (as 
amended by subsection (a)(3)), the taxpayer may rely on the 
legislative history for the amendments made by subsection 
(aX3) in determining the proper treatment of such pajmient. 
26 use 597 note. 
(4) SUBSECTION (bXD-—The provisions of subsection (bXl) shall 
take effect on the date of the enactment of the Tax Reform Act 
of 1986. 
26 use 597 note. 
(5) SUBSECTION (bX2).—The amendment made by subsection 
(b)(2) shall take effect on the date of the enactment of the 
Technical and Miscellaneous Revenue Act of 1988. 
26 use 593 note. 
(6) SUBSECTION (b)(3).—The amendment made by subsection 
(b)(3) shall take effect on the date of the enactment of this Act. 
26 use 597 note. 
(7) CLARIFICATION OF PRIOR LAW.—Any reference to the Fed-
eral Savings and Loan Insurance Corporation in section 597 of 
the Internal Revenue Code of 1986 (as in effect on the day before 
the date of the enactment of this Act) shall be treated as 
including a reference to the Resolution Trust Corporation and 
the FSLIC Resolution Fund. 
SEC. 1402. TAX EXEMPTION FOR RESOLUTION TRUST CORPORATION AND 
RESOLUTION FUNDING CORPORATION. 
(a) GENERAL RULE.—Subsection (1) of section 501 of the Internal 
Revenue Code of 1986 (relating to government corporations exempt 
26 use 501. 
under subsection (c)(1)) is amended to read as follows: 
"(1) 
GOVERNMENT 
CORPORATIONS EXEMPT 
UNDER 
SUBSECTION 
(c)(1).—For purposes of subsection (cXD, the following organizations 
are described in this subsection: 
"(1) The Centred Liquidity Facility established under title III 
of the Federal Credit Union Act (12 U.S.C. 1795 et seq.). 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 551 
"(2) The Resolution Trust Corporation established under sec-
tion 21A of the Federal Home Loan Bank Act. 
"(3) The Resolution Funding Corporation established under 
section 21B of the Federal Home Loan Bank Act." 
0)) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 501 note. 
shall take effect on the date of the enactment of this Act. 
SEC. 1403. ANNUAL REPORTS ON TRANSACTIONS IN WHICH FEDERAL 
26 USC 597 note. 
FINANCIAL ASSISTANCE PROVIDED. 
(a) IN GENERAL.—The Secretary of the Treasury or his delegate 
shall submit to the Senate and to the Committee on Ways and 
Means of the House of Representatives annual reports on— 
(IXA) the transactions which occur during the year for which 
the report is made and with respect to which Federal financial 
assistance is provided; 
(B) the aggregate amount of Federal financial assistsmce pro-
vided with respect to such transactions; and 
(C) any tax benefits available by resison of such transactions; 
and 
(2) the aggregate amount of Federal financial assistance pro-
vided during such year, and the aggregate tax benefits utilized 
during such year, which Eire attributable to such transactions in 
prior years. 
(b) DEFINITION.—For purposes of this section, the term "Federal 
financial assistance" means any assistance to which section 597 of 
the Internal Revenue Code of 1986 applies. 
SEC. 1404. STUDIES OF RELATIONSHIP BETWEEN PUBLIC DEBT AND 12 USC 1811 
ACTIVITIES OF GOVERNMENT-SPONSORED ENTERPRISES. 
note. 
(a) IN GENERAL.—In order to better manage the bonded indebted-
ness of the United States, the Secretary shall conduct 2 annual 
studies to assess the financial safety and soundness of the activities 
of all Government-sponsored enterprises and the impact of their 
operations on Federal borrowing. 
(b) ACCESS TO RELEVANT INFORMATION.— 
Records. 
(1) INFORMATION FROM GSE'S.—Each Government-sponsored 
enterprise shall provide full and prompt access to the Secretary 
to its books and records, and shedl promptly provide any other 
information requested by the Secretary. 
(2) INFORMATION FROM SUPERVISORY AGENCIES.—In conducting 
the studies under this section, the Secretary may request 
information from, or the assistance of, any Federal department 
or agency authorized by law to supervise the activities of any 
Government-sponsored enterprise. 
(3) CONFIDENTIALITY OF INFORMATION.— 
(A) IN GENERAL.—The Secretary shall determine and 
maintain the confidentisility of any book, record, or 
information made available under this subsection in a 
manner genersdly consistent with the level of confidential-
ity established for the material by the Government-spon-
sored enterprise involved. 
(B) EXEMPTION FROM PUBUC DISCLOSURE REQUIREMENTS.— 
The Department of the Treasury shall be exempt from 
section 552 of title 5, United States Code, with respect to 
any book, record, or information made available under this 
subsection and determined by the Secretary to be confiden-
tial under subparagraph (A). 
103 STAT. 552 
PUBLIC LAW 101-73—AUG. 9, 1989 
(C) PENALTY FOR UNAUTHORIZED DISCLOSURE.—Any officer 
or employee of the Department of the Treasury shall be 
subject to the penalties set forth in section 1906 of title 18, 
United States Code, if— 
(i) by virtue of his employment or official position, he 
has possession of or access to any book, record, or 
information made available under this subsection and 
determined by the Secretary to be confidential under 
subparagraph (A); and 
(ii) he discloses the material in any manner other 
than— 
(I) to an officer or employee of the Department of 
the Treasury; or 
(II) pursuant to the exceptions set forth in such 
section 1906. 
(c) ASSESSMENT OF RISK.—In assessing the financial safety and 
soundness of the activities of Government-sponsored enterprises, 
and the impact of their activities on Federal borrowing, the Sec-
retary shall quantify the risks associated with each Government-
sponsored enterprise. In quantifying such risks, the Secretary shall 
determine the volume and tjrpe of securities outstanding which are 
issued or guaranteed by each Government-sponsored enterprise, the 
capitalization of each Government-sponsored enterprise, and the 
degree of risk involved in the operations of each Government-
sponsored enterprise due to factors such as credit risk, interest rate 
Reports. 
risk, Bianagement and operations risk, and business risk. The Sec-
retary shall also report on the quality and timeliness of information 
currently available to the public and the Federal Government 
concerning the extent and nature of the activities of Government-
sponsored enterprises and the financial risk associated with such 
activities. 
(d) REPORTS TO CONGRESS.—The Secretary shall submit to the 
Congress— 
(1) by May 15,1990, a report setting forth the results of the 1st 
annual study conducted under this section; and 
(2) by May 15, 1991, a report setting forth the results of the 
2nd annual study conducted under this section. 
(e) DEFINITIONS.—For purposes of this section: 
(1) GOVERNMENT-SPONSORED ENTERPRISE.—The term "Govern-
ment-sponsored enterprise" means— 
(A) the Federal National Mortgage Association, the Fed-
eral Home Loan Mortgage Corporation, the Federal Home 
Loan Bank System, the Farm Credit Banks, the Banks for 
Cooperatives, the Federal Agricultural Mortgage Corpora-
tion, the Student Loan Marketing Association, the College 
PUBLIC LAW 101-73—AUG. 9, 1989 
103 STAT. 553 
Construction Loan Insurance Association, and any of their 
affiliated or member institutions; and 
(B) any other Government-sponsored enterprise, as des-
ignated by the Secretary. 
(2) SECRETARY.—The term "Secretary" means the Secretary of 
the Treasury or his delegate. 
Approved August 9, 1989. 
LEGISLATIVE HISTORY—H.R. 1278 (S. 774): 
HOUSE REPORTS: No. 101-54, Pt. 1 (Ckimm. on Banking, Finance and Urban 
Affairs), Pt. 2 (Comm. on Ways and Means), Pt. 3 (Comm. on 
Banking, Finance and Urban Affairs), Pt. 4 (Comm. on Rules), 
Pt. 5 (Comm. on the Judiciary), Pt. 6 (Comm. on Government 
Operations), and Pt. 7 (Comm. on Banking, Finance and Urban 
Affairs); and Nos. 101-209 and 101-222 both from (Comm. of 
Conference). 
SENATE REPORTS: No. 101-19 accompanying S. 774 (Comm. on Banking, Housing, 
and Urban Affairs). 
CONGRESSIONAL RECORD, Vol. 135 (1989): 
Apr. 17-19, S. 774 considered and paased Senate. 
Jxme 14,15, H.R. 1278 considered and passed House. 
June 21, considered and passed Senate, amended. 
Aug. 3, House agreed to conference report. Senate ruled conference report out 
of order. 
Aug. 4, House and Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 25 (1989): 
Aug. 9, Presidential remarks.