BRIDGE BANKS.

SEC. 503. BRIDGE BANKS. (a) Establishment of Bridge Banks.— Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is amended— (1) in subsection (h) by striking out “(h) As soon as” and inserting in lieu thereof “(h) New Banks.—(1) As soon as”; (2) by redesignating subsections (i), (j), (k), and (1) as paragraphs (2), (3), (4), and (5) of subsection (h), respectively; and (3) by inserting after subsection (h)(5) (as redesignated by paragraph (2)) the following new subsection: “(i) Bridge Banks.— “(1) Establishment.— When an insured bank is closed, the Corporation, in the Corporation’s discretion and subject to the conditions established in paragraph (2), may establish a bridge bank to— “(A) assume the deposits of the closed bank; “(B) assume such other liabilities of the closed bank as the Corporation, in the Corporation’s discretion, may determine to be appropriate; “(C) purchase such assets of the closed bank as the Corporation, in the Corporation’s discretion, may determine to appropriate; and “(D) perform any other temporary function which the Corporation may prescribe in accordance with this Act. “(2) Conditions.— A bridge bank may be established under paragraph (1) only if the Board of Directors determines that— “(A) the amount which is reasonably necessary to organize and operate such bridge bank will not exceed the amount which is reasonably necessary to save the cost of liquidating, including paying the insured accounts of, the closed bank or banks; “(B) the continued operation of such insured bank is essential to provide adequate banking services in the community where such bank is located; or “(C) that the continued operation of such insured bank is in the best interest of the depositors of the closed bank and the public. “(3) Transfer of assets and liabilities.— “(A) In general.— Upon the organization of a bridge bank pursuant to this subsection, the Corporation, as re-101 STAT. 630ceiver, or any other receiver appointed with respect to the closed insured bank may, subject to the approval of any such transfer by a court of competent jurisdiction, transfer any assets and liabilities of the closed insured bank to the bridge bank. “(B) Intent of congress relating to continuing operations.— It is the intent of the Congress that, in order to prevent unnecessary hardship or losses to the customers of the closed bank with respect to which a bridge bank is established, especially creditworthy farmers, small businesses, and households, the Corporation should— “(i) continue to honor commitments made by the closed bank 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) Organization.— “(A) Articles of association.— The articles of association and the organization certificate of a bridge bank shall be executed by representatives designated by the Corporation. “(B) Insured national bank.— Each bridge bank shall be a national bank and shall be insured from the time of the organization of the bridge bank. “(C) Management.— Each bridge bank shall be under the management of a board of directors consisting of 5 members appointed by the Board of Directors of the Corporation. “(5) Powers of bridge banks.— Each bridge bank established 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 directors of any bridge bank; “(ii) fix the compensation of members of the board of directors of any bridge bank; and “(iii) waive any requirement established under section 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 (4)(B); “(B) the Corporation may indemnify the directors of a bridge bank on such terms as the Corporation determines to be appropriate; “(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 any bridge bank; “(D) the Comptroller of the Currency may establish a limitation on the extent to which any person may become indebted to any bridge bank without regard to the amount of the bank’s capital or surplus; “(E) the board of directors of the bridge bank shall elect a chairperson who shall also serve in the position of chief executive officer; 101 STAT. 631 “(F) no bridge bank shall be required to purchase stock of any Federal Reserve bank; and “(G) the Comptroller of the Currency may waive any requirement for a fidelity bond. “(6) Capital.— “(A) No capital required.— The Corporation shall not be required to— “(i) issue capital stock on behalf of any bridge bank established under this subsection; or “(ii) purchase any capital stock of any bridge bank. “(B) Operating funds in lieu of capital.— Upon the organization of a bridge bank, and thereafter as the Board of Directors may in its discretion deem necessary or advisable, the Corporation shall promptly make available to the bridge bank, upon such terms and conditions and in such form and amounts as the Board of Directors may prescribe, sufficient funds for the bridge bank to operate. “(C) Authority to issue capital stock.— Whenever in the judgment of the Board of Directors it is desirable to do so, the Corporation shall cause capital stock of any bridge bank to be issued and offered for sale on such terms and conditions as the Corporation determines to be appropriate and in an amount sufficient (in the discretion of the Corporation) to make possible the conduct of the business of the bridge bank on a sound basis. “(7) No federal status.— “(A) Agency status.— A bridge bank is not an agency, establishment, or instrumentality of the United States. “(B) Employee status.— Directors, officers, employees, or agents of the bridge bank are not officers or employees of the United States for purposes of title 5, United States Code, or any other provision of law. “(8) Assistance authorized.— The Corporation may, in its discretion, provide assistance under section 13(c) to facilitate the sale or merger of the bridge bank with another insured depository institution in the same manner and to the same extent as such assistance may be provided under such section with respect to a closed insured bank. “(9) Acquisition by out-of-state bank holding company.— Any depository institution, including an out-of-State bank, or any out-of-State holding company may acquire and retain the shares or assets of, or otherwise acquire and retain a bridge bank which has assumed the insured deposits of one or more closed banks which had total assets aggregating $500,000,000 or more (determined in the manner provided in section 13(f)(11) at the time such insured bank was closed) in the same manner and to the same extent as such depository institution or such out-of-State holding company may acquire a closed insured bank under section 13(f)(2). “(10) Termination of bridge bank.— “(A) In general.— A bridge bank shall terminate upon the occurrence of the earliest of the following: “(i) The bridge bank merges or consolidates with another bank that is not a bridge bank. “(ii) The bridge bank sells all or substantially all of the stock of the bridge bank other than to the Corporation or to another bridge bank. 101 STAT. 632 “(iii) A holding company or another bank that is not a bridge bank assumes all, or substantially all of the deposits or other liabilities of a bridge bank. “(iv) A period of 2 years following the date the bridge bank was organized expires without any other disposition of the assets and liabilities of the bank having occurred. “(B) Extension allowed for 1 year.— If the Board of Directors finds, after consultation with the Comptroller of the Currency, that an extension of time for winding up the affairs of the bank is in the best interest of the depositors of the closed bank and the public, the Corporation may extend the time period specified in subparagraph (A)(iv) for not to exceed one year. “(11) 2 or more banks.— The Corporation, in the Corporation’s discretion, may establish a bridge bank under this subsection to assume the deposits of, assume any other liabilities of, and purchase any assets of 2 or more closed banks.”. (b) Definitions.— Section 3(i) of the Federal Deposit Insurance Act (12 U.S.C. 1813(i)) is amended to read as follows: “(i) New Bank and Bridge Bank Defined.— “(1) New bank.— The term ‘new bank’ means a new national bank, other than a bridge bank, organized by the Corporation in accordance with section 11(h). “(2) Bridge bank.— The term ‘bridge bank’ means a new national bank organized by the Corporation in accordance with section 11(i).”.