Bank Capitalization 

U.S. Code > Title 12 > Chapter 46 > Subchapter II > § 4615 - Supervisory actions applicable to undercapitalized regulated entities

    (a) Mandatory supervisory actions
      (1) Capital restoration plan
        A regulated entity that is classified as significantly
      undercapitalized shall, within the time period under section
      4622(b) and (d) of this title, submit to the Director a capital
      restoration plan that complies with section 4622 of this title
      and carry out the plan after approval.
      (2) Restrictions on capital distributions
        (A) Prior approval
          A regulated entity that is classified as significantly
        undercapitalized may not make any capital distribution that
        would result in the regulated entity being reclassified as
        critically undercapitalized. A regulated entity that is
        classified as significantly undercapitalized may not make any
        other capital distribution unless the Director approves the
        distribution.
        (B) Standard for approval
          The Director may approve a capital distribution by a
        regulated entity classified as significantly undercapitalized
        only if the Director determines that the distribution (i) will
        enhance the ability of the regulated entity to meet the risk-
        based capital level and the minimum capital level for the
        regulated entity promptly, (ii) will contribute to the long-
        term financial safety and soundness of the regulated entity,
        or (iii) is otherwise in the public interest.
    (b) Specific actions
      In addition to any other actions taken by the Director (including
    actions under subsection (a) of this section), the Director shall
    carry out this section by taking, at any time, 1 or more of the
    following actions with respect to a regulated entity that is
    classified as significantly undercapitalized:
      (1) Limitation on increase in obligations
        Limit any increase in, or order the reduction of, any
      obligations of the regulated entity, including off-balance sheet
      obligations.
      (2) Limitation on growth
        Limit or prohibit the growth of the assets of the regulated
      entity or require contraction of the assets of the regulated
      entity.
      (3) Acquisition of new capital
        Require the regulated entity to acquire new capital in a form
      and amount determined by the Director.
      (4) Restriction of activities
        Require the regulated entity to terminate, reduce, or modify
      any activity that the Director determines creates excessive risk
      to the regulated entity.
      (5) Improvement of management
        Take 1 or more of the following actions:
        (A) New election of board
          Order a new election for the board of directors of the
        regulated entity.
        (B) Dismissal of directors or executive officers
          Require the regulated entity to dismiss from office any
        director or executive officer who had held office for more than
        180 days immediately before the date on which the regulated
        entity became undercapitalized. Dismissal under this
        subparagraph shall not be construed to be a removal pursuant to
        the enforcement powers of the Director under section 4636a of
        this title.
        (C) Employ qualified executive officers
          Require the regulated entity to employ qualified executive
        officers (who, if the Director so specifies, shall be subject
        to approval by the Director).
      (6) Reclassification from significantly to critically
        undercapitalized
        The Director may reclassify as critically undercapitalized a
      regulated entity that is classified as significantly
      undercapitalized (and the regulated entity shall be subject to
      the provisions of section 4617 of this title) if - 
          (A) the regulated entity does not submit a capital
        restoration plan that is substantially in compliance with
        section 4622 of this title within the applicable period or the
        Director does not approve the capital restoration plan
        submitted by the regulated entity; or
          (B) the Director determines that the regulated entity has
        failed to make, in good faith, reasonable efforts necessary to
        comply with the capital restoration plan and fulfill the
        schedule for the plan approved by the Director.
      (7) Other action
        Require the regulated entity to take any other action that the
      Director determines will better carry out the purpose of this
      section than any of the other actions specified in this
      subsection.
    (c) Restriction on compensation of executive officers
      A regulated entity that is classified as significantly
    undercapitalized in accordance with section 4614 of this title may
    not, without prior written approval by the Director - 
        (1) pay any bonus to any executive officer; or
        (2) provide compensation to any executive officer at a rate
      exceeding the average rate of compensation of that officer
      (excluding bonuses, stock options, and profit sharing) during the
      12 calendar months preceding the calendar month in which the
      regulated entity became significantly undercapitalized.

Legislative History

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U.S. Code Provisions: Bank Capitalization

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