CONSERVATORSHIP AND RECEIVERSHIP AMENDMENTS TO FACILITATE PROMPT REGULATORY ACTION.

SEC. 133. CONSERVATORSHIP AND RECEIVERSHIP AMENDMENTS TO FACILITATE PROMPT REGULATORY ACTION. (a) Additional Grounds for Appointing Conservator or Receiver; Consistent Standards for National, State Member, and State Nonmember Banks.— Section 11(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1821(c)(5)) is amended to read as follows: “(5) Grounds for appointing conservator or receiver.— The grounds for appointing a conservator or receiver (which may be the Corporation) for any insured depository institution are as follows: “(A) Assets insufficient for obligations.— The institution’s assets are less than the institution’s obligations to its creditors and others, including members of the institution. “(B) Substantial dissipation.— Substantial dissipation of assets or earnings due to— “(i) any violation of any statute or regulation; or “(ii) any unsafe or unsound practice. “(C) Unsafe or unsound condition.— An unsafe or unsound condition to transact business. “(D) Cease and desist orders.— Any willful violation of a cease-and-desist order which has become final. “(E) Concealment.— Any concealment of the institution’s books, papers, records, or assets, or any refusal to submit the institution’s books, papers, records, or affairs for inspection to any examiner or to any lawful agent of the appropriate Federal banking agency or State bank or savings association supervisor. “(F) Inability to meet obligations.— The institution is likely to be unable to pay its obligations or meet its depositors’ demands in the normal course of business. “(G) Losses.— The institution has incurred or is likely to incur losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the institu-105 STAT. 2271tion to become adequately capitalized (as defined in section 38(b)) without Federal assistance. “(H) Violations of law.— Any violation of any law or regulation, or any unsafe or unsound practice or condition that is likely to— “(i) cause insolvency or substantial dissipation of assets or earnings; “(ii) weaken the institution’s condition; or “(iii) otherwise seriously prejudice the interests of the institution’s depositors or the deposit insurance fund. “(I) Consent.— The institution, by resolution of its board of directors or its shareholders or members, consents to the appointment. “(J) Cessation of insured status.— The institution ceases to be an insured institution. “(K) Undercapitalization.— The institution is undercapitalized (as defined in section 38(b)), and— “(i) has no reasonable prospect of becoming adequately capitalized (as defined in that section); “(ii) fails to become adequately capitalized when required to do so under section 38(f)(2)(A); “(iii) fails to submit a capital restoration plan acceptable to that agency within the time prescribed under section 38(e)(2)(D); or “(iv) materially fails to implement a capital restoration plan submitted and accepted under section 38(e)(2). “(L) The institution— “(i) is critically undercapitalized, as defined in section 38(b); or “(ii) otherwise has substantially insufficient capital.”. (b) Conforming Amendment to Authority To Appoint Receiver for National Bank.— Section 1 of the Act of June 30, 1876 (12 U.S.C. 191) is amended to read as follows: “Section 1. The Comptroller of the Currency may, without prior notice or hearings, appoint the Federal Deposit Insurance Corporation as receiver for any national banking association if the Comptroller determines, in the Comptroller’s discretion, that— “(1) 1 or more of the grounds specified in section 11(c)(5) of the Federal Deposit Insurance Act exist; or “(2) the association’s board of directors consists of fewer than 5 members.”. (c) Conforming Amendment to the Bank Conservation Act.— Section 203(a) of the Bank Conservation Act (12 U.S.C. 203(a)) is amended to read as follows: “(a) Appointment.— The Comptroller of the Currency may, without prior notice or hearings, appoint a conservator (which may be the Federal Deposit Insurance Corporation) to the possession and control of a bank whenever the Comptroller of the Currency determines that 1 or more of the grounds specified in section 11(c)(5) of the Federal Deposit Insurance Act exist.”. (d) Conforming Amendments to the Home Owners’ Loan Act.— Section 5(d)(2) of the Home Owners’ Loan Act (12 U.S.C. 1464(d)(2)) is amended— (1) by striking subparagraphs (A) through (D) and inserting the following: 105 STAT. 2272 “(A) Grounds for appointing conservator or receiver for insured savings association.— The Director of the Office of Thrift Supervision may appoint a conservator or receiver for any insured savings association if the Director determines, in the Director’s discretion, that 1 or more of the grounds specified in section 11(c)(5) of the Federal Deposit Insurance Act exists”; and (2) by redesignating subparagraphs (E) through (I) as subparagraphs (B) through (F), respectively. (e) Additional Provisions Relating to Appointment of Conservator or Receiver.— Section 11(c)(9) of the Federal Deposit Insurance Act (12 U.S.C. 1821(c)(9)) is amended to read as follows: “(9) Appropriate federal banking agency may appoint corporation as conservator or receiver for insured state depository institution to carry out section 38.— “(A) In general.— The appropriate Federal banking agency may appoint the Corporation as sole receiver (or, subject to paragraph (11), sole conservator) of any insured State depository institution, after consultation with the appropriate State supervisor, if the appropriate Federal banking agency determines that— “(i) 1 or more of the grounds specified in subparagraphs (K) and (L) of paragraph (5) exist with respect to that institution; and “(ii) the appointment is necessary to carry out the purpose of section 38. “(B) Nondelegation.— The appropriate Federal banking agency shall not delegate any action under subparagraph (A). “(10) Corporation may appoint itself as conservator or receiver for insured depository institution to prevent loss to deposit insurance fund.— The Board of Directors may appoint the Corporation as sole conservator or receiver of an insured depository institution, after consultation with the appropriate Federal banking agency and the appropriate State supervisor (if any), if the Board of Directors determines that— “(A) 1 or more of the grounds specified in any subparagraph of paragraph (5) exist with respect to the institution; and “(B) the appointment is necessary to reduce— “(i) the risk that the deposit insurance fund would incur a loss with respect to the insured depository institution, or “(ii) any loss that the deposit insurance fund is expected to incur with respect to that institution. “(11) Appropriate federal banking agency shall not appoint conservator under certain provisions without giving corporation opportunity to appoint receiver.— The appropriate Federal banking agency shall not appoint a conservator for an insured depository institution under subparagraph (K) or (L) of paragraph (5) without the Corporation’s consent unless the agency has given the Corporation 48 hours notice of the agency’s intention to appoint the conservator and the grounds for the appointment. “(12) Directors not liable for acquiescing in appointment of conservator or receiver.— The members of the board of directors of an insured depository institution shall not be liable 105 STAT. 2273to the institution’s shareholders or creditors for acquiescing in or consenting in good faith to— “(A) the appointment of the Corporation or the Resolution Trust Corporation as conservator or receiver for that institution; or “(B) an acquisition or combination under section 38(f)(2)(A)(iii). “(13) Additional powers.— In any case in which the Corporation is appointed conservator or receiver under paragraph (4), (6), (9), or (10) for any insured State depository institution— “(A) subject to subparagraph (B), this section shall apply to the Corporation as conservator or receiver in the same manner and to the same extent as if that institution were a Federal depository institution for which the Corporation had been appointed conservator or receiver; “(B) the Corporation shall apply the law of the State in which the institution is chartered insofar as that law gives the claims of depositors priority over those of other creditors or claimants; and “(C) the Corporation as receiver of the institution may— “(i) liquidate the institution in an orderly manner; and “(ii) make any other disposition of any matter concerning the institution, as the Corporation determines is in the best interests of the institution, the depositors of the institution, and the Corporation.”. (f) Conforming Amendment to the Federal Reserve Act.— Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by adding at the end the following new subsection: “(p) Authority To Appoint Conservator or Receiver.— The Board may appoint the Federal Deposit Insurance Corporation as conservator or receiver for a State member bank under section U(c)(9) of the Federal Deposit Insurance Act.”. (g) Effective Date.— The amendments made by this section shall become effective 1 year after the date of enactment of this Act.