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2000 - Rules and Regulations


Subpart F—Rules and Procedures Applicable to Proceedings for Involuntary Termination of Insured Status

§ 308.119  Scope.

(a)  Involuntary termination of insurance pursuant to section 8(a) of the FDIA.  The rules and procedures in this subpart, subpart B of the Local Rules and the Uniform Rules shall apply to proceedings in connection with the involuntary termination of the insured status of an insured bank depository institution or an insured branch of a foreign bank pursuant to section 8(a) of the FDIA (12 U.S.C. 1818(a)), except that the Uniform Rules and subpart B of the Local Rules shall not apply to the temporary suspension of insurance pursuant to section 8(a)(8) of the FDIA (12 U.S.C. 1818(a)(8)).

(b)  Involuntary termination of insurance pursuant to section 8(p) of the Act.  The rules and procedures in § 308.124 of this subpart F shall apply to proceeding in connection with the involuntary termination of the insured status of an insured depository institution or an insured branch of a foreign bank pursuant to section 8(p) of the FDIA (12 U.S.C. 1818(p)). The Uniform Rules shall not apply to proceedings under section 8(p) of the FDIA.

[Codified to 12 C.F.R. § 308.119]

§ 308.120  Grounds for termination of insurance.

(a)  General rule.  The following are grounds for involuntary termination of insurance pursuant to section 8(a) of the FDIA:

(1)  An insured depository institution or its directors or trustees have engaged or are engaging in unsafe or unsound practices in conducting the business of such depository institution;

(2)  An insured depository institution is in an unsafe or unsound condition such that it should not continue operations as an insured depository institution; or

(3)  An insured depository institution or its directors or trustees have violated an applicable law, rule, regulation, order, or condition imposed in writing by the FDIC in connection with the granting of any application or other request by the insured depository institution or have violated any written agreement entered into between the insured depository institution and the FDIC.

(b)  Extraterritorial acts of foreign banks.  An act or practice committed outside the United States by a foreign bank or its directors or trustees which would otherwise be a ground for termination of insured status under this section shall be a ground for termination if the Board of Directors finds:

(1)  The act or practice has been, is, or is likely to be a cause of, or carried on in connection with or in furtherance of, an act or practice committed within any state, territory, or possession of the United States or the District of Columbia that, in and of itself, would be an appropriate basis for action by the FDIC; or

(2)  The act or practice committed outside the United States, if proven, would adversely affect the insurance risk of the FDIC.

(c)  Failure of foreign bank to secure removal of personnel.  The failure of a foreign bank to comply with any order of removal or prohibition issued by the Board of Directors or the failure of any person associated with a foreign bank to appear promptly as a party to a proceeding pursuant to section 8(e) of the FDIA (12 U.S.C. 1818(e)), shall be a ground for termination of insurance of deposits in any branch of the bank.

[Codified to 12 C.F.R. § 308.120]

§ 308.121  Notification to primary regulator.

(a)  Service of notification.  (1)  Upon a determination by the Board of Directors or its designee pursuant to § 308.120 of an unsafe or unsound practice or condition or of a violation, a notification shall be served upon the appropriate federal banking agency of the insured depository institution, or the state banking supervisor if the FDIC is the appropriate federal banking agency.

The notification shall be served not less than 30 days before the Notice of Intent to Terminate Insured Status required by section 8(a)(2)(B) of the FDIA (12 U.S.C. 1818(a)(2)(B)), and § 308.122, except that this period for notification may be reduced or eliminated with the agreement of the appropriate federal banking agency.

(2)  Appropriate Federal banking agency shall have the meaning given that term in section 3(q) of the FDIA (12 U.S.C. 1813 (q)), and shall be the OCC in the case of a national bank, a District bank or an insured federal branch of a foreign bank; the FDIC in the case of an insured nonmember bank, including an insured state branch of a foreign bank; the Board of Governors in the case of a state member bank; or the OTS in the case of an insured federal or state savings association.

(3)  In the case of a state nonmember bank, insured federal branch of a foreign bank, or state member bank, in addition to service of the notification upon the appropriate federal banking agency, a copy of the notification shall be sent to the appropriate state banking supervisor.

(4)  In instances in which a Temporary Order Suspending Insurance is issued pursuant to section 8(a)(8) of the FDIA (12 U.S.C. 1818(a)(8)), the notification may be served concurrently with such order.

(b)  Contents of notification.  The notification shall contain the FDIC's determination, and the facts and circumstances upon which such determination is based, for the purpose of securing correction of such practice, condition, or violation.

[Codified to 12 C.F.R. § 308.121]

§ 308.122  Notice of intent to terminate.

(a)  If, after serving the notification under § 308.121, the Board of Directors determines that any unsafe or unsound practices, condition, or violation, specified in the notification, requires the termination of the insured status of the insured depository institution, the Board of Directors or its designee, if it determines to proceed further, shall cause to be served upon the insured depository institution a notice of its intention to terminate insured status not less than 30 days after service of the notification, unless a shorter time period has been agreed upon by the appropriate federal banking agency.

(b)  The Board of Directors or its designee shall cause a copy of the notice to be sent to the appropriate federal banking agency and to the appropriate state banking supervisor, if any.

[Codified to 12 C.F.R. § 308.122]

§ 308.123  Notice to depositors.

If the Board of Directors enters an order terminating the insured status of an insured depository institution or branch, the insured depository institution shall, on the day that order becomes final, or on such other day as that order prescribes, mail a notification of termination of insured status to each depositor at the depositor's last address of record on the books of the insured depository institution or branch. The insured depository institution shall also publish the notification in two issues of a local newspaper of general circulation and shall furnish the FDIC with proof of such publications. The notification to depositors shall include information provided in substantially the following form:

Notice

(Date) _______

1.  The status of the _______ as an (insured depository institution) (insured branch) under the provisions of the Federal Deposit Insurance Act, will terminate as of the close of business on the _______ day of _______ , 19 ____________________________________________ .

2.  Any deposits made by you after that date, either new deposits or additions to existing deposits, will not be insured by the Federal Deposit Insurance Corporation.

3.  Insured deposits in the (depository institution) (branch) on the _______ day of _______ , 19 ____________________________________________ , will continue to be insured, as provided by Federal Deposit Insurance Act, for 2 years after the close of business on the _______ day of _______ , 19 ____________________________________________ .

Provided, however, that any withdrawals after the close of business on the _______ day of _______ , 19 ____________________________________________ , will reduce the insurance coverage by the amount of such withdrawals.


________________________________________________________
(Name of (depository institution or branch)


________________________________________________________
(Address)

The notification may include any additional information on the depository institution deems advisable, provided that the information required by this section shall be set forth in a conspicuous manner on the first page of the notification.

[Codified to 12 C.F.R. § 308.123]

§ 308.124  Involuntary termination of insured status for failure to receive deposits.

(a)  Notice to show cause.  When the Board of Directors or its designee has evidence that an insured depository institution is not engaged in the business of receiving deposits, other than trust funds, the Board of Directors or its designee shall give written notice of this evidence to the depository institution and shall direct the depository institution to show cause why its insured status should not be terminated under the provisions of section 8(p) of the FDIA (12 U.S.C. 1818(p)). The insured depository institution shall have 30 days after receipt of the notice, or such longer period as is prescribed in the notice, to submit affidavits, other written proof, and any legal arguments that it is engaged in the business of receiving deposits other than trust funds.

(b)  Notice of termination date.  If, upon consideration of the affidavits, other written proof, and legal arguments, the Board of Directors determines that the depository institution is not engaged in the business of receiving deposits, other than trust funds, the finding shall be conclusive and the Board of Directors shall notify the depository institution that its insured status will terminate at the expiration of the first full semiannual assessment period following issuance of that notification.

(c)  Notification to depositors of termination of insured status.  Within the time specified by the Board of Directors and prior to the date of termination of its insured status, the depository institution shall mail a notification of termination of insured status to each depositor at the depositor's last address of record on the books of the depository institution. The depository institution shall also publish the notification in two issues of a local newspaper of general circulation and shall furnish the FDIC with proof of such publications. The notification to depositors shall include information provided in substantially the following form:

Notice

(Date) _______

The status of the _______ , as an (insured depository institution) (insured branch) under the Federal Deposit Insurance Act, will terminate on the _______ day of _______ , 19 ____________________________________________ , and its deposits will thereupon cease to be insured.


________________________________________________________
(Name of depository institution or branch)


________________________________________________________
(Address)

The notification may include any additional information the depository institution deems advisable, provided that the information required by this section shall be set forth in a conspicuous manner on the first page of the notification.

[Codified to 12 C.F.R. § 308.124]

§ 308.125  Temporary suspension of deposit insurance.

(a)  If, while an action is pending under section 8(a)(2) of the FDIA (12 U.S.C. 1818(a)(2)), the Board of Directors, after consultation with the appropriate Federal banking agency, finds that an insured depository institution (other than a special supervisory association to which § 308.126 of this subpart applies) has no tangible capital under the capital guidelines or regulations of the appropriate Federal banking agency, the Board of Directors may issue a Temporary Order Suspending Deposit Insurance, pending completion of the proceedings under section 8(a)(2) of the FDIA (12 U.S.C. 1818(a)(2)).

(b)  The temporary order shall be served upon the insured institution and a copy sent to the appropriate Federal banking agency and to the appropriate state banking supervisor.

(c)  The temporary order shall become effective ten days from the date of service upon the insured depository institution. Unless set aside, limited, or suspended in proceedings under section 8(a)(8)(D) of the FDIA (12 U.S.C. 1818(a)(8)(D)), the temporary order shall remain effective and enforceable until an order terminating the insured status of the institution is entered by the Board of Directors and becomes final, or the Board of Directors dismisses the proceedings.

(d)  Notification to depositors of suspension of insured status. Within the time specified by the Board of Directors and prior to the suspension of insured status, the depository institution shall mail a notification of suspension of insured status to each depositor at the depositor's last address of record on the books of the depository institution. The depository institution shall also publish the notification in two issues of a local newspaper of general circulation and shall furnish the FDIC with proof of such publications. The notification to depositors shall include information provided in substantially the following form:

Notice

(Date) _______

1.  The status of the _______ , as an (insured depository institution) (insured branch) under the provisions of the Federal Deposit Insurance Act, will be suspended as of the close of business on the _______ day of _______ , 19 ____________________________________________ , pending the completion of administrative proceedings under section 8(a) of the Federal Deposit Insurance Act.

2.  Any deposits made by you after that date, either new deposits or additions to existing deposits, will not be insured by the Federal Deposit Insurance Corporation.

3.  Insured deposits in the (depository institution) (branch) on the _______ day of _______ , 19 ____________________________________________ , will continue to be insured for _______ after the close of business on the _______ day of _______ , 19 ____________________________________________ . Provided, however, that any withdrawals after the close of business on the _______ day of _______ , 19 ____________________________________________ , will reduce the insurance coverage by the amount of such withdrawals.


________________________________________________________
(Name of depository institution or branch)


________________________________________________________
(Address)

The notification may include any additional information the depository institution deems advisable, provided that the information required by this section shall be set forth in a conspicuous manner on the first page of the notification.

[Codified to 12 C.F.R. § 308.125]

§ 308.126  Special supervisory associations.

If the Board of Directors finds that a savings association is a special supervisory association under the provisions of section 8(a)(8)(B) of the FDIA (12 U.S.C. 1818(a)(8)(B)) for purposes of temporary suspension of insured status, the Board of Directors shall serve upon the association its findings with regard to the determination that the capital of the association, as computed using applicable accounting standards, has suffered a material decline; that such association or its directors or officers, is engaging in an unsafe or unsound practice in conducting the business of the association; that such association is in an unsafe or unsound condition to continue operating as an insured association; or that such association or its directors or officers, has violated any law, rule, regulation, order, condition imposed in writing by any federal banking agency, or any written agreement, or that the association failed to enter into a capital improvement plan acceptable to the Corporation prior to January 1990.

[Codified to 12 C.F.R. § 308.126]


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Last updated September 16, 2013 regs@fdic.gov