AMENDMENTS TO CEASE AND DESIST AUTHORITY WITH RESPECT TO RESTITUTION, RESTRICTIONS ON SPECIFIC ACTIVITIES, GROUNDS FOR ISSUANCE OF A TEMPORARY ORDER, AND INCOMPLETE OR INACCURATE RECORDS.

SEC. 902. AMENDMENTS TO CEASE AND DESIST AUTHORITY WITH RESPECT TO RESTITUTION, RESTRICTIONS ON SPECIFIC ACTIVITIES, 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) through if) 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 (f) 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 paragraphs: “(6) Affirmative action to correct conditions resulting from violations or 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, indemnification, or guarantee against loss if— “(i) such depository institution 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 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 determines 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 affiliates 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 103 STAT. 451corporation, 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 amended— (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 requirement authorized under subsection (b)(6)(B)”; and (B) by adding at the end thereof the following new paragraph: “(3) Incomplete or inaccurate records.— “(A) Temporary order.—If a notice of charges served under subsection (b)(1) specifies, on the basis of particular facts and circumstances, that an insured depository institution’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 temporary order requiring— “(i) the cessation of any activity or practice which gave rise, whether in whole or in part, to the incomplete 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 (b)(1). “(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 Federal 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 or practices.—The authority to issue an order under this subsection and subsection (D 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. 452includes the authority to require such insured credit union or such party to— “(A) make restitution or provide reimbursement, indemnification, 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(D) 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 requirement authorized under subsection (e)(3)(B).”; 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 (e)(1) 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 normal supervisory process, to determine the financial condition of that insured credit union or the details or purpose of any transaction or transactions 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 incomplete 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 (e)(i). “(B) Effective period.—Any temporary order issued under subparagraph (A)— “(i) shall become effective upon service; and 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 “(II) the date the Board determines, by examination or otherwise, that the insured credit union’s books and records are accurate and reflect the financial condition of the credit union.”.