FDIC Law, Regulations, Related Acts
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1000 - Federal Deposit Insurance Act
SEC. 24. ACTIVITIES OF INSURED STATE BANKS.
(a) Permissible activities--
(1) IN GENERAL.--After the end of the 1-year period
beginning on [December 19, 1991], the date of the enactment of the
Federal Deposit Insurance Corporation Improvement Act of 1991, an
insured State bank may not engage as principal in any type of activity
that is not permissible for a national bank unless--
(A) the Corporation has determined that the activity would pose
no significant risk to the Deposit Insurance Fund; and
(B) the State bank is, and continues to be, in compliance with
applicable capital standards prescribed by the appropriate Federal
banking agency.
(2) PROCESSING PERIOD.--
(A) IN GENERAL.--The Corporation shall make a
determination under paragraph (1)(A) not later than 60 days after
receipt of a completed application that may be required under this
subsection.
(B) EXTENSION OF TIME PERIOD.--The Corporation may
extend the 60-day period referred to in subparagraph (A) for not more
than 30 additional days, and shall notify the applicant of any such
extension.
[Codified to 12 U.S.C. 1831a(a)]
[Source: Section 2[24(a)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19, 1991; as amended
by section 2217(1) of title II of the Act of September 30, 1996 (Pub.
L. No. 104--208; 110 Stat. 3009--414), effective September 30, 1996;
section 8(a)(31)(A) of the Act of February 15, 2006 (Pub. L. No.
109--173; 119 Stat. 3615), effective date shall take effect on the day
of the merger of the Bank Insurance Fund and the Savings Association
Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of
2005]
(b) Insurance Underwriting.--
(1) IN GENERAL.--Notwithstanding subsection (a), an
insured State bank may not engage in insurance underwriting except to
the extent that activity is permissible for national banks.
(2) EXCEPTION FOR CERTAIN FEDERALLY REINSURED CROP
INSURANCE.--Notwithstanding any other provision of law, an
insured State bank or any of its subsidiaries that provided insurance
on or before September 30, 1991, which was reinsured in whole or in
part by the Federal Crop Insurance Corporation may continue to provide
such insurance.
[Codified to 12 U.S.C. 1831a(b)]
[Source: Section 2[24(b)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19,
1991]
(c) Equity Investments by Insured State Banks.--
(1) IN GENERAL.--An insured State bank may not, directly
or indirectly, acquire or retain any equity investment of a type that
is not permissible for a national bank.
(2) EXCEPTION FOR CERTAIN SUBSIDIARIES.--Paragraph (1)
shall not prohibit an insured State bank from acquiring or retaining an
equity investment in a subsidiary of which the insured State bank is a
majority owner.
(3) EXCEPTION FOR QUALIFIED HOUSING PROJECTS.--
(A) EXCEPTION.--Notwithstanding any other provision of
this subsection, an insured State bank may invest as a limited partner
in a partnership, the sole purpose of which is direct or indirect
investment in the acquisition, rehabilitation, or new construction of a
qualified housing project.
(B) LIMITATION.--The aggregate of the investments of any
insured State bank pursuant to this paragraph shall not exceed 2
percent of the total assets of the bank.
(C) QUALIFIED HOUSING PROJECT DEFINED.--As used in this
paragraph--
(i) QUALIFIED HOUSING PROJECT.--The term "qualified
housing project" means residential real estate that is intended to
primarily benefit lower income people throughout the period of the
investment.
(ii) LOWER INCOME.--The term "lower income" means
income that is less than or equal to the median income based on
statistics from State or Federal sources.
(4) TRANSITION RULE.--
(A) IN GENERAL.--The Corporation shall require any
insured State bank to divest any equity investment the retention of
which is not permissible under this subsection as quickly as can be
prudently done, and in any event before the end of the 5-year period
beginning on [December 19, 1991], the date of the enactment of the
Federal Deposit Insurance Corporation Improvement Act of 1991.
(B) TREATMENT OF NONCOMPLIANCE DURING DIVESTMENT.--With
respect to any equity investment held by any insured State bank on
[December 19, 1991], the date of enactment of the Federal Deposit
Insurance Corporation Improvement Act of 1991 which was lawfully
acquired before December 19, 1991, the bank shall be deemed not to be
in violation of the prohibition in this subsection on retaining such
investment so long as the bank complies with the applicable
requirements established by the Corporation for divesting such
investments.
[Codified to 12 U.S.C. 1831a(c)]
[Source: Section 2[24(c)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19,
1991]
(d) Subsidiaries of Insured State Banks.--
(1) IN GENERAL.--After the end of the 1-year period
beginning on [December 19, 1991], the date of the enactment of the
Federal Deposit Insurance Corporation Improvement Act of 1991, a
subsidiary of an insured State bank may not engage as principal in any
type of activity that is not permissible for a subsidiary of a national
bank unless--
(A) the Corporation has determined that the activity poses no
significant risk to the Deposit Insurance Fund; and
(B) the bank is, and continues to be, in compliance with
applicable capital standards prescribed by the appropriate Federal
banking agency.
(2) INSURANCE UNDERWRITING PROHIBITED.--
(A) PROHIBITION.--Notwithstanding paragraph (1), no
subsidiary of an insured State bank may engage in insurance
underwriting except to the extent such activities are permissible for
national banks.
(B) CONTINUATION OF EXISTING
ACTIVITIES.--Notwithstanding subparagraph (A), a well-capitalized
insured State bank or any of its subsidiaries that was lawfully
providing insurance as principal in a State on November 21, 1991, may
continue to provide, as principal, insurance of the same type to
residents of the State (including companies or partnerships
incorporated in, organized under the laws of, licensed to do business
in, or having an office in the State, but only on behalf of their
employees resident in or property located in the State), individuals
employed in the State, and any other person to whom the bank or
subsidiary has provided insurance as principal, without interruption,
since such person resided in or was employed in such State.
(C) EXCEPTION.--Subparagraph (A) does not apply to a
subsidiary of an insured State bank if--
(i) the insured State bank was required, before June 1, 1991, to
provide title insurance as a condition of the bank's initial chartering
under State law; and
(ii) control of the insured State bank has not changed since that
date.
(3) PROCESSING PERIOD.--
(A) IN GENERAL.--The Corporation shall make a
determination under paragraph (1)(A) not later than 60 days after
receipt of a completed application that may be required under this
subsection.
(B) EXTENSION OF TIME PERIOD.--The Corporation may
extend the 60-day period referred to in subparagraph (A) for not more
than 30 additional days, and shall notify the applicant of any such
extension.
[Codified to 12 U.S.C. 1831a(d)]
[Source: Section 2[24(d)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19, 1991; as amended
by section 2217(2) of title II of the Act of September 30, 1996 (Pub.
L. No. 104--208; 110 Stat. 3009--414), effective September 30, 1996;
section 8(a)(31)(A) of the Act of February 15, 2006 (Pub. L. No.
109--173; 119 Stat. 3615), effective date shall take effect on the day
of the merger of the Bank Insurance Fund and the Savings Association
Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of
2005]
(e) Savings Bank Life Insurance.--
(1) IN GENERAL.--No provision of this Act shall be
construed as prohibiting or impairing the sale or underwriting of
savings bank life insurance, or the ownership of stock in a savings
bank life insurance company, by any insured bank which--
(A) is located in the Commonwealth of Massachusetts or the State
of New York or Connecticut; and
(B) meets applicable consumer disclosure requirements with
respect to such insurance.
(2) FDIC FINDING AND ACTION REGARDING RISK.--
(A) FINDING.--Before the end of the 1-year period
beginning on [December 19, 1991], the date of the enactment of the
Federal Deposit Insurance Corporation Improvement Act of 1991, the
Corporation shall make a finding whether savings bank life insurance
activities of insured banks pose or may pose any significant risk to
the Deposit Insurance Fund.
(B) ACTIONS.--
(i) IN GENERAL.--The Corporation shall, pursuant to any
finding made under subparagraph (A), take appropriate actions to
address any risk that exists or may subsequently develop with respect
to insured banks described in paragraph (1)(A).
(ii) AUTHORIZED ACTIONS.--Actions the Corporation may
take under this subparagraph include requiring the modification,
suspension, or termination of insurance activities conducted by any
insured bank if the Corporation finds that the activities pose a
significant risk to any insured bank described in paragraph (1)(A) or
to the Deposit Insurance Fund.
[Codified to 12 U.S.C. 1831a(e)]
[Source: Section 2[24(e)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19, 1991; as amended
by section 1605(a)(8) of title XVI of the Act of October 28, 1992 (Pub.
L. No. 102--550; 106 Stat. 4086), effective December 19, 1991; section
8(a)(31)(B) and (C) of the Act of February 15, 2006 (Pub. L. No.
109--173; 119 Stat. 3615), effective date shall take effect on the day
of the merger of the Bank Insurance Fund and the Savings Association
Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of
2005]
(f) Common and Preferred Stock Investment.--
(1) IN GENERAL.--An insured State bank shall not acquire
or retain, directly or indirectly, any equity investment of a type or
in an amount that is not permissible for a national bank or is not
otherwise permitted under this section.
(2) EXCEPTION FOR BANKS IN CERTAIN
STATES.--Notwithstanding paragraph (1), an insured State bank may,
to the extent permitted by the Corporation, acquire and retain
ownership of securities described in paragraph (1) to the extent the
aggregate amount of such investment does not exceed an amount equal to
100 percent of the bank's capital if such bank--
(A) is located in a State that permitted, as of September 30,
1991, investment in common or preferred stock listed on a national
securities exchange or shares of an investment company registered under
the Investment Company Act of 1940 [15 U.S.C.A. § 80a.1 et seq.];
and
(B) made or maintained an investment in such securities during
the period beginning on September 30, 1990, and ending on November 26,
1991.
(3) EXCEPTION FOR CERTAIN TYPES OF
INSTITUTIONS.--Notwithstanding paragraph (1), an insured State bank
may--
(A) acquire not more than 10 percent of a corporation that only--
(i) provides directors', trustees', and officers' liability
insurance coverage or bankers' blanket bond group insurance coverage
for insured depository institutions; or
(ii) reinsures such policies; and
(B) acquire or retain shares of a depository institution if--
(i) the institution engages only in activities permissible for
national banks;
(ii) the institution is subject to examination and regulation by
a State bank supervisor;
(iii) 20 or more depository institutions own shares of the
institution and none of those institutions owns more than 15 percent of
the institution's shares; and
(iv) the institution's shares (other than directors' qualifying
shares or shares held under or initially acquired through a plan
established for the benefit of the institution's officers and
employees) are owned only by the institution.
(4) TRANSITION PERIOD FOR COMMON AND PREFERRED STOCK
INVESTMENTS.--
(A) IN GENERAL.--During each year in the 3-year period
beginning on [December 19, 1991], the date of the enactment of the
Federal Deposit Insurance Corporation Improvement Act of 1991, each
insured State bank shall reduce by not less than 1/3 of its
shares (as of December 19, 1991), the bank's ownership of securities in
excess of the amount equal to 100 percent of the capital of such bank.
(B) COMPLIANCE AT END OF PERIOD.--By the end of
the 3-year period referred to in subparagraph (A), each insured State
bank and each subsidiary of a State bank shall be in compliance with
the maximum amount limitations on investments referred to in paragraph
(1).
(5) LOSS OF EXCEPTION UPON ACQUISITION.--Any exception
applicable under paragraph (2) with respect to any insured State bank
shall cease to apply with respect to such bank upon any change in
control of such bank or any conversion of the charter of such bank.
(6) NOTICE AND APPROVAL.--An insured State bank may only
engage in any investment pursuant to paragraph (2) if--
(A) the bank has filed a 1-time notice of the bank's intention to
acquire and retain investments described in paragraph (1); and
(B) the Corporation has determined, within 60 days of receiving
such notice, that acquiring or retaining such investments does not pose
a significant risk to the Deposit Insurance Fund.
(7) DIVESTITURE.--
(A) IN GENERAL.--The Corporation may require divestiture
by an insured State bank of any investment permitted under this
subsection if the Corporation determines that such investment will have
an adverse effect on the safety and soundness of the bank.
(B) REASONABLE STANDARD.--The Corporation shall not
require divestiture by any bank pursuant to subparagraph (A) without
reason to believe that such investment will have an adverse effect on
the safety and soundness of the bank.
[Codified to 12 U.S.C. 1831a(f)]
[Source: Section 2[24(f)] of the Act of September 21,
1950 (Pub. L. No. 797; 64 Stat. 882), effective September 21, 1950, as
added by section 303(a) of title III of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2349), effective December 19, 1991;
section 8(a)(31)(C) of the Act of February 15, 2006 (Pub. L. No.
109--173; 119 Stat. 3615), effective date shall take effect on the day
of the merger of the Bank Insurance Fund and Savings Association
Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of
2005]
(g) Determinations.--The Corporation shall make
determinations under this section by regulation or order.
[Codified to 12 U.S.C. 1831a(g)]
[Source: Section 2[24(g)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19,
1991]
(h) Activity Defined.--For purposes of this section, the
term "activity" includes acquiring or retaining any investment.
[Codified to 12 U.S.C. 1831a(h)]
[Source: Section 2[24(h)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19,
1991]
(i) Other Authority not Affected.--This section shall not
be construed as limiting the authority of any appropriate Federal
banking agency or any State supervisory authority to impose more
stringent restrictions.
[Codified to 12 U.S.C. 1831a(i)]
[Source: Section 2[24(i)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 303(a) of title III of the Act of December 19, 1991 (Pub. L.
No. 102--242; 105 Stat. 2349), effective December 19,
1991]
(j) Activities of Branches of Out-of-State Banks.--
(1) APPLICATION OF HOST STATE LAW.--The laws of a host
State, including laws regarding community reinvestment, consumer
protection, fair lending, and establishment of intrastate branches,
shall apply to any branch in the host State of an out-of-State State
bank to the same extent as such State laws apply to a branch in the
host State of an out-of-State national bank. To the extent host State
law is inapplicable to a branch of an out-of-State State bank in such
host State pursuant to the preceding sentence, home State law shall
apply to such branch.
(2) ACTIVITIES OF BRANCHES.--An insured State bank that
establishes a branch in a host State may conduct any activity at such
branch that is permissible under the laws of the home State of such
bank, to the extent such activity is permissible either for a bank
chartered by the host State (subject to the restrictions in this
section) or for a branch in the host State of an out-of-State national
bank.
(3) SAVINGS PROVISION.--No provision of this subsection
shall be construed as affecting the applicability of--
(A) any State law of any home State under subsection (b), (c), or
(d) of
section 44; or
(B) Federal law to State banks and State bank branches in the
home State or the host State.
(4) DEFINITIONS.--The terms "host State", "home
State", and "out-of-State bank" have the same meanings as in
section 44(f).
[Codified to 12 U.S.C. 1831a(j)]
[Source: Section 2[24(j)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 102(b)(4) of title I of the Act of September 29, 1994 (Pub. L.
No. 103--328; 108 Stat. 2351), effective September 29, 1994; as amended
by section 2(a) of the Act of July 3, 1997 (Pub. L. No. 105--24; 111
Stat. 238), effective July 3, 1997]
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