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FDIC Law, Regulations, Related Acts

[Main Tabs]     [Table of Contents - 8000]     [Index]     [Previous Page]     [Next Page]     [Search] 8000 - Miscellaneous Statutes and Regulations SEC. 5. FEDERAL SAVINGS ASSOCIATIONS.   (a)  IN GENERAL.--In order to provide thrift institutions for the deposit of funds and for the extension of credit for homes and other goods and services, the Director is authorized, under such regulations as the Director may prescribe--     (1)  to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings associations (including Federal savings banks), and     (2)  to issue charters therefor, giving primary consideration of the best practices of thrift institutions in the United States. The lending and investment powers conferred by this section are intended to encourage such institutions to provide credit for housing safely and soundly.   (b)  DEPOSITS AND RELATED POWERS.--     (1)  DEPOSIT ACCOUNTS.--       (A)  Subject to the terms of its charter and regulations of the Director, a Federal savings association may--         (i)  raise funds through such deposit, share, or other accounts, including demand deposit accounts (hereafter in this section referred to as "accounts"); and         (ii)  issue passbooks, certificates, or other evidence of accounts.       (B)  A Federal savings association may not--         (i)  pay interest on a demand account; or {{4-30-97 p.8700}}         (ii)  permit any overdraft (including an intraday overdraft) on behalf of an affiliate, or incur any such overdraft in such savings association's account at a Federal reserve bank or Federal home loan bank on behalf of an affiliate. All savings accounts and demand accounts shall have the same priority upon liquidation. Holders of accounts and obligors of a Federal savings association shall, to such extent as may be provided by its charter or by regulations of the Director, be members of the savings association, and shall have such voting rights and such other rights as are thereby provided.       (C)  A Federal savings association may require not less than 14 days notice prior to payment of savings accounts if the charter of the savings association or the regulations of the Director so provide.       (D)  If a Federal savings association does not pay all withdrawals in full (subject to the right of the association, where applicable, to require notice), the payment of withdrawals from accounts shall be subject to such rules and procedures as may be prescribed by the savings association's charter or by regulation of the Director. Except as authorized in writing by the Director, any Federal savings association that fails to make full payment of any withdrawal when due shall be deemed to be in an unsafe or unsound condition.       (E)  Accounts may be subject to check or to withdrawal or transfer on negotiable or transferable or other order or authorization to the Federal savings association, as the Director may by regulation provide.       (F)  A Federal savings association may establish remote service units for the purpose of crediting savings or demand accounts, debiting such accounts, crediting payments on loans, and the disposition of related financial transactions, as provided in regulations prescribed by the Director.     (2)  OTHER LIABILITIES.--To such extent as the Director may authorize in writing, a Federal savings association may borrow, may give security, may be surety as defined by the Director and may issue such notes, bonds, debentures, or other obligations, or other securities, including capital stock.     (3)  LOANS FROM STATE HOUSING FINANCE AGENCIES.--       (A)  IN GENERAL.--Subject to regulation by the Director but without regard to any other provision of this subsection, any Federal savings association that is in compliance with the capital standards in effect under subsection (t) may borrow funds from a State mortgage finance agency of the State in which the head office of such savings association is situated to the same extent as State law authorizes a savings association organized under the laws of such State to borrow from the State mortgage finance agency.       (B)  INTEREST RATE.--A Federal savings association may not make any loan of funds borrowed under subparagraph (A) at an interest rate which exceeds by more than 1 3/4 percent per annum the interest rate paid to the State mortgage finance agency on the obligations issued to obtain the funds so borrowed.     (4)  MUTUAL CAPITAL CERTIFICATES.--In accordance with regulations issued by the Director, mutual capital certificates may be issued and sold directly to subscribers or through underwriters. Such certificates may be included in calculating capital for the purpose of subsection (t) to the extent permitted by the Director. The issuance of certificates under this paragraph does not constitute a change of control or ownership under this Act or any other law unless there is in fact a change in control or reorganization. Regulations relating to the issuance and sale of mutual capital certificates shall provide that such certificates--       (A)  are subordinate to all savings accounts, savings certificates, and debt obligations;       (B)  constitute a claim in liquidation on the general reserves, surplus, and undivided profits of the Federal savings association remaining after the payment in full of all savings accounts, savings certificates, and debt obligations;       (C)  are entitled to the payment of dividends; and       (D)  may have a fixed or variable dividend rate. {{4-30-01 p.8701}}   (c)  LOANS AND INVESTMENTS.--To the extent specified in regulations of the Director, a Federal savings association may invest in, sell, or otherwise deal in the following loans and other investments:     (1)  Loans or investments without percentage of assets limitation.--Without limitation as a percentage of assets, the following are permitted:       (A)  ACCOUNT LOANS.--Loans on the security of its savings accounts and loans specifically related to transaction accounts.       (B)  RESIDENTIAL REAL PROPERTY LOANS.--Loans on the security of liens upon residential real property.       (C)  UNITED STATES GOVERNMENT SECURITIES.--Investments in obligations of, or fully guaranteed as to principal and interest by, the United States.       (D)  Federal home loan bank and federal national mortgage association securities.--Investments in the stock or bonds of a Federal home loan bank or in the stock of the Federal National Mortgage Association.       (E)  Federal home loan mortgage corporation instruments.--Investments in mortgages, obligations, or other securities which are or have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 305 or 306 of the Federal Home Loan Mortgage Corporation Act.       (F)  OTHER GOVERNMENT SECURITIES.--Investments in obligations, participations, securities, or other instruments issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association, or any agency of the United States. A savings association may issue and sell securities which are guaranteed pursuant to section 306(g) of the National Housing Act.       (G)  DEPOSITS.--Investments in accounts of any insured depository institution, as defined in section 3 of the Federal Deposit Insurance Act.       (H)  STATE SECURITIES.--Investments in obligations issued by any State or political subdivision thereof (including any agency, corporation, or instrumentality of a State or political subdivision). A Federal savings association may not invest more than 10 percent of its capital in obligations of any one issuer, exclusive of investments in general obligations of any issuer.       (I)  PURCHASE OF INSURED LOANS.--Purchase of loans secured by liens on improved real estate which are insured or guaranteed under the National Housing Act, the Servicemen's Readjustment Act of 1944, or chapter 37 of title 38, United States Code.       (J)  HOME IMPROVEMENT AND MANUFACTURED HOME LOANS.--Loans made to repair, equip, alter, or improve any residential real property, and loans made for manufactured home financing.       (K)  Insured loans to finance the purchase of fee simple.--Loans insured under section 240 of the National Housing Act.       (L)  Loans to financial institutions, brokers, and dealers.--Loans to--         (i)  financial institutions with respect to which the United States or an agency or instrumentality thereof has any function of examination or supervision, or         (ii)  any broker or dealer registered with the Securities and Exchange Commission, which are secured by loans, obligations, or investments in which the Federal savings association has the statutory authority to invest directly.       (M)  LIQUIDITY INVESTMENTS.--Investments (other than equity investments), identified by the Director, for liquidity purposes, including cash, funds on deposit at a Federal reserve bank or a Federal home loan bank, or bankers' acceptances.       (N)  Investment in the national housing partnership corporation, partnerships, and joint ventures.--Investments in shares of stock issued by a corporation authorized to be created pursuant to title IX of the Housing and Urban Development Act of 1968, and investments in any partnership, limited partnership, or joint venture formed pursuant to section 907(a) or 907(c) of such Act. {{4-30-01 p.8702}}       (O)  Certain hud insured or guaranteed investments.--Loans that are secured by mortgages--         (i)  insured under title X of the National Housing Act, or         (ii)  guaranteed under title IV of the Housing and Urban Development Act of 1968, under part B of the National Urban Policy and New Community Development Act of 1970, or under section 802 of the Housing and Community Development Act of 1974.       (P)  STATE HOUSING CORPORATION INVESTMENTS.--Obligations of and loans to any State housing corporation, if--         (i)  such obligations or loans are secured directly, or indirectly through an agent or fiduciary, by a first lien on improved real estate which is insured under the provisions of the National Housing Act, and         (ii)  in the event of default, the holder of the obligations or loans has the right directly, or indirectly through an agent or fiduciary, to cause to be subject to the satisfaction of such obligations or loans the real estate described in the first lien or the insurance proceeds under the National Housing Act.       (Q)  INVESTMENT COMPANIES.--A Federal savings association may invest in, redeem, or hold shares or certificates issued by any open-end management investment company which--         (i)  is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, and         (ii)  the portfolio of which is restricted by such management company's investment policy (changeable only if authorized by shareholder vote) solely to investments that a Federal savings association by law or regulation may, without limitation as to percentage of assets, invest in, sell, redeem, hold, or otherwise deal in.       (R)  MORTGAGE-BACKED SECURITIES.--Investments in securities that--         (i)  are offered and sold pursuant to section 4(5) of the Securities Act of 1933; or         (ii)  are mortgage related securities (as defined in section 3(a)(41) of the Securities Exchange Act of 1934), subject to such regulations as the Director may prescribe, including regulations prescribing minimum size of the issue (at the time of initial distribution) or minimum aggregate sales price, or both.       (S)  SMALL BUSINESS RELATED SECURITIES.--Investments in small business related securities (as defined in section 3(a)(53) of the Securities Exchange Act of 1934), subject to such regulations as the Director may prescribe, including regulations concerning the minimum size of the issue (at the time of the initial distribution), the minimum aggregate sales price, or both.       (T)  CREDIT CARD LOANS.--Loans made through credit cards or credit card accounts.       (U)  EDUCATIONAL LOANS.--Loans made for the payment of educational expenses.     (2)  Loans or investments limited to a percentage of assets or capital.--The following loans or investments are permitted, but only to the extent specified:       (A)  COMMERCIAL AND OTHER LOANS.--Secured or unsecured loans for commercial, corporate, business, or agricultural purposes. The aggregate amount of loans made under this subparagraph may not exceed 20 percent of the total assets of the Federal savings association, and amounts in excess of 10 percent of such total assets may be used under this subparagraph only for small business loans, as that term is defined by the Director.       (B)  NONRESIDENTIAL REAL PROPERTY LOANS.--         (i)  IN GENERAL.--Loans on the security of liens upon nonresidential real property. Except as provided in clause (ii), the aggregate amount of such loans shall not exceed 400 percent of the Federal savings association's capital, as determined under subsection (t).         (ii)  EXCEPTION.--The Director may permit a savings association to exceed the limitation set forth in clause (i) if the Director determines that the increased authority-- {{4-28-06 p.8703}}           (I)  poses no significant risk to the safe and sound operation of the association, and           (II)  is consistent with prudent operating practices.         (iii)  MONITORING.--If the Director permits any increased authority pursuant to clause (ii), the Director shall closely monitor the Federal savings association's condition and lending activities to ensure that the savings association carries out all authority under this paragraph in a safe and sound manner and complies with this subparagraph and all relevant laws and regulations provided however, that no amount in excess of 30 percent of the assets may be invested in loans made directly by the association to the original obligor, and the association does not pay finder, referral, or other fees, directly or indirectly, to a third party.       (C)  INVESTMENTS IN PERSONAL PROPERTY.--Investments in tangible personal property, including vehicles, manufactured homes, machinery, equipment, or furniture, for rental or sale. Investments under this subparagraph may not exceed 10 percent of the assets of the Federal savings association.       (D)  CONSUMER LOANS AND CERTAIN SECURITIES.--A Federal savings association may make loans for personal, family, or household purposes, including loans reasonably incident to providing such credit, and may invest in, sell, or hold commercial paper and corporate debt securities, as defined and approved by the Director. Loans and other investments under this subparagraph may not exceed 35 percent of the assets of the Federal savings association, except that amounts in excess of 30 percent of the assets may be invested only in loans which are made by the association directly to the original obligor and with respect to which the association does not pay any finder, referral, or other fee, directly or indirectly, to any third party.     (3)  Loans or investments limited to 5 percent of assets.--The following loans or investments are permitted, but not to exceed 5 percent of assets of a Federal savings association for each subparagraph:       (A)  COMMUNITY DEVELOPMENT INVESTMENTS.--Investments in real property and obligations secured by liens on real property located within a geographic area or neighborhood receiving concentrated development assistance by a local government under title I of the Housing and Community Development Act of 1974. No investment under this subparagraph in such real property may exceed an aggregate of 2 percent of the assets of the Federal savings association.       (B)  NONCONFORMING LOANS.--Loans upon the security of or respecting real property or interests therein used for primarily residential or farm purposes that do not comply with the limitations of this subsection.       (C)  CONSTRUCTION LOANS WITHOUT SECURITY.--Loans--         (i)  the principal purpose of which is to provide financing with respect to what is or is expected to become primarily residential real estate; and         (ii)  with respect to which the association--           (I)  relies substantially on the borrower's general credit standing and projected future income for repayment, without other security; or           (II)  relies on other assurances for repayment, including a guarantee or similar obligation of a third party. The aggregate amount of such investments shall not exceed the greater of the Federal savings association's capital or 5 percent of its assets.     (4)  OTHER LOANS AND INVESTMENTS.--The following additional loans and other investments to the extent authorized below:       (A)  BUSINESS DEVELOPMENT CREDIT CORPORATIONS.--A Federal savings association that is in compliance with the capital standards prescribed under subsection (t) may invest in, lend to, or to commit itself to lend to, any business development credit corporation incorporated in the State in which the home office of the association is located in the same manner and to the same extent as savings associations chartered by such State are authorized. The aggregate amount of such investments, loans, and commitments of any {{4-28-06 p.8704}}such Federal savings association shall not exceed one-half of 1 percent of the association's total outstanding loans or $250,000, whichever is less.       (B)  SERVICE CORPORATIONS.--Investments in the capital stock, obligations, or other securities of any corporation organized under the laws of the State in which the Federal savings association's home office is located, if such corporation's entire capital stock is available for purchase only by savings associations of such State and by Federal associations having their home offices in such State. No Federal savings association may make any investment under this subparagraph if the association's aggregate outstanding investment under this subparagraph would exceed 3 percent of the association's assets. Not less than one-half of the investment permitted under this subparagraph which exceeds 1 percent of the association's assets shall be used primarily for community, inner-city, and community development purposes.       (C)  FOREIGN ASSISTANCE INVESTMENTS.--Investments in housing project loans having the benefit of any guaranty under section 221 of the Foreign Assistance Act of 1961 or loans having the benefit of any guarantee under section 224 of such Act, or any commitment or agreement with respect to such loans made pursuant to either of such sections and in the share capital and capital reserve of the Inter-American Savings and Loan Bank. This authority extends to the acquisition, holding, and disposition of loans guaranteed under section 221 or 222 of such Act. Investments under this subparagraph shall not exceed 1 percent of the Federal savings association's assets.       (D)  SMALL BUSINESS INVESTMENT COMPANIES.--A Federal savings association may invest in stock, obligations, or other securities of any small business investment company formed pursuant to section 301(d) of the Small Business Investment Act of 1958 for the purpose of aiding members of a Federal home loan bank. A Federal savings association may not make any investment under this subparagraph if its aggregate outstanding investment under this subparagraph would exceed 1 percent of the assets of such savings association.       (E)  BANKERS' BANKS.--A Federal savings association may purchase for its own account shares of stock of a bankers' bank, described in Paragraph Seventh of section 5136 of the Revised Statutes or in section 5169(b) of the Revised Statutes, on the same terms and conditions as a national bank may purchase such shares.     (5)  Transition rule for savings associations acquiring banks.--       (A)  IN GENERAL.--If, under section 5(d)(3) of the Federal Deposit Insurance Act, a savings association acquires all or substantially all of the assets of a bank, the Director may permit the savings association to retain any such asset during the 2-year period beginning on the date of the acquisition.       (B)  EXTENSION.--The Director may extend the 2-year period described in subparagraph (A) for not more than 1 year at a time and not more than 2 years in the aggregate, if the Director determines that the extension is consistent with the purposes of this Act.     (6)  DEFINITIONS.--For purposes of this subsection, the following definitions shall apply--       (A)  RESIDENTIAL PROPERTY.--The terms "residential real property" or "residential real estate" mean leaseholds, homes (including condominiums and cooperatives, except that in connection with loans on individual cooperative units, such loans shall be adequately secured as defined by the Director) and, combinations of homes or dwelling units and business property, involving only minor or incidental business use, or property to be improved by construction of such structures.       (B)  LOANS.--The term "loans" includes obligations and extensions or advances of credit; and any reference to a loan or investment includes an interest in such a loan or investment.   (d)  REGULATORY AUTHORITY.—     (1)  IN GENERAL.--       (A)  ENFORCEMENT.--The Director shall have power to enforce this section, section 8 of the Federal Deposit Insurance Act, and regulations prescribed hereunder. In enforcing any provision of this section, regulations prescribed under this section, or any {{4-30-97 p.8704.01}}other law or regulation, or in any other action, suit, or proceeding to which the Director is a party or in which the Director is interested, and in the administration of conservatorships and receiverships, the Director may act in the Director's own name and through the Director's own attorneys. Except as otherwise provided, the Director shall be subject to suit (other than suits on claims for money damages) by any Federal savings association or director or officer thereof with respect to any matter under this section or any other applicable law, or regulation thereunder, in the United States district court for the judicial district in which the savings association's home office is located, or in the United States District Court for the District of Columbia, and the Director may be served with process in the manner prescribed by the Federal Rules of Civil Procedure.       (B)  ANCILLARY PROVISIONS.--(i) In making examinations of savings associations, examiners appointed by the Director shall have power to make such examinations of the affairs of all affiliates of such savings associations as shall be necessary to disclose fully the relations between such savings associations and their affiliates and the effect of such relations upon such savings associations. For purposes of this subsection, the term {{2-28-92 p.8705}}"affiliate" has the same meaning as in section 2(b) of the Banking Act of 1933, except that the term "member bank" in section 2(b) shall be deemed to refer to a savings association.         (ii)  In the course of any examination of any savings association, upon request by the Director, prompt and complete access shall be given to all savings association officers, directors, employees, and agents, and to all relevant books, records, or documents of any type.         (iii)  Upon request made in the course of supervision or oversight of any savings association, for the purpose of acting on any application or determining the condition of any savings association, including whether operations are being conducted safely, soundly, or in compliance with charters, laws, regulations, directives, written agreements, or conditions imposed in writing in connection with the granting of an application or other request, the Director shall be given prompt and complete access to all savings association officers, directors, employees, and agents, and to all relevant books, records, or documents of any type.         (iv)  If prompt and complete access upon request is not given as required in this subsection, the Director may apply to the United States district court for the judicial district (or the United States court in any territory) in which the principal office of the institution is located, or in which the person denying such access resides or carries on business, for an order requiring that such information be promptly provided.         (v)  In connection with examinations of savings associations and affiliates thereof, the Director may--           (I)  administer oaths and affirmations and examine and to take and preserve testimony under oath as to any matter in respect of the affairs or ownership of any such savings association or affiliate, and           (II)  issue subpenas and, for the enforcement thereof, apply to the United States district court for the judicial district (or the United States court in any territory) in which the principal office of the savings association or affiliate is located, or in which the witness resides or carries on business.   Such courts shall have jurisdiction and power to order and require compliance with any such subpena.         (vi)  In any proceeding under this section, the Director may administer oaths and affirmations, take depositions, and issue subpenas. The Director may prescribe regulations with respect to any such proceedings. The attendance of witnesses and the production of documents provided for in this subsection may be required from any place in any State or in any territory at any designated place where such proceeding is being conducted.         (vii)  Any party to a proceeding under this section may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district (or the United States court in any territory) in which such proceeding is being conducted, or where the witness resides or carries on business, for enforcement of any subpena issued pursuant to this subsection or section 10(c) of the Federal Deposit Insurance Act, and such courts shall have jurisdiction and power to order and require compliance therewith. Witnesses subpenaed under this section shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States. All expenses of the Director in connection with this section shall be considered as nonadministrative expenses. Any court having jurisdiction of any proceeding instituted under this section by a savings association, or a director or officer thereof, may allow to any such party reasonable expenses and attorneys' fees. Such expenses and fees shall be paid by the savings association.     (2)  CONSERVATORSHIPS AND RECEIVERSHIPS.--       (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. {{2-28-92 p.8706}}       (B)  POWER OF APPOINTMENT; JUDICIAL REVIEW.--The Director shall have exclusive power and jurisdiction to appoint a conservator or receiver for a Federal savings association. If, in the opinion of the Director, a ground for the appointment of a conservator or receiver for a savings association exists, the Director is authorized to appoint ex parte and without notice a conservator or receiver for the savings association. In the event of such appointment, the association may, within 30 days thereafter, bring an action in the United States district court for the judicial district in which the home office of such association is located, or in the United States District Court for the District of Columbia, for an order requiring the Director to remove such conservator or receiver, and the court shall upon the merits dismiss such action or direct the Director to remove such conservator or receiver. Upon the commencement of such an action, the court having jurisdiction of any other action or proceeding authorized under this subsection to which the association is a party shall stay such action or proceeding during the pendency of the action for removal of the conservator or receiver.       (C)  REPLACEMENT.--The Director may, without any prior notice, hearing, or other action, replace a conservator with another conservator or with a receiver, but such replacement shall not affect any right which the association may have to obtain judicial review of the original appointment, except that any removal under this subparagraph shall be removal of the conservator or receiver in office at the time of such removal.       (D)  COURT ACTION.--Except as otherwise provided in this subsection, no court may take any action for or toward the removal of any conservator or receiver or, except at the request of the Director, to restrain or affect the exercise of powers or functions of a conservator or receiver.       (E)  POWERS.--         (i)  IN GENERAL.--A conservator shall have all the powers of the members, the stockholders, the directors, and the officers of the association and shall be authorized to operate the association in its own name or to conserve its assets in the manner and to the extent authorized by the Director.         (ii)  FDIC OR RTC AS CONSERVATOR OR RECEIVER.--Except as provided in section 21A of the Federal Home Loan Bank Act, the Director, at the Director's discretion, may appoint the Federal Deposit Insurance Corporation or the Resolution Trust Corporation, as appropriate, as conservator for a savings association. The Director shall appoint only the Federal Deposit Insurance Corporation or the Resolution Trust Corporation, as appropriate, as receiver for a savings association for the purpose of liquidation or winding up the affairs of such savings association. The conservator or receiver so appointed shall, as such, have power to buy at its own sale. The Federal Deposit Insurance Corporation, as such conservator or receiver, shall have all the powers of a conservator or receiver, as appropriate, granted under the Federal Deposit Insurance Act, and (when not inconsistent therewith) any other rights, powers, and privileges possessed by conservators or receivers, as appropriate, of savings associations under this Act and any other provisions of law.       (F)  Disclosure requirement for those acting on behalf of conservator.--A conservator shall require that any independent contractor, consultant, or counsel employed by the conservator in connection with the conservatorship of a savings association pursuant to this section shall fully disclose to all parties with which such contractor, consultant, or counsel is negotiating, any limitation on the authority of such contractor, consultant, or counsel to make legally binding representations on behalf of the conservator.     (3)  REGULATIONS.--       (A)  IN GENERAL.--The Director may prescribe regulations for the reorganization, consolidation, liquidation, and dissolution of savings associations, for the merger of insured savings associations with insured savings associations, for savings associations in conservatorship and receivership, and for the conduct of conservatorships and receiverships. The Director may, by regulation or otherwise, provide for the exercise of functions {{12-30-99 p.8707}}by members, stockholders, directors, or officers of a savings association during conservatorship and receivership.       (B)  FDIC OR RTC AS CONSERVATOR OR RECEIVER.--In any case where the Federal Deposit Insurance Corporation or the Resolution Trust Corporation is the conservator or receiver, any regulations prescribed by the Director shall be consistent with any regulations prescribed by the Federal Deposit Insurance Corporation pursuant to the Federal Deposit Insurance Act.     (4)  REFUSAL TO COMPLY WITH DEMAND.--Whenever a conservator or receiver appointed by the Director demands possession of the property, business, and assets of any savings association, or of any part thereof, the refusal by any director, officer, employee, or agent of such association to comply with the demand shall be punishable by a fine of not more than $5,000 or imprisonment for not more than one year, or both.     (5)  DEFINITIONS.--As used in this subsection, the term "savings association" includes any savings association or former savings association that retains deposits insured by the Corporation, notwithstanding termination of its status as an institution insured by the Corporation.     (6)  Compliance with monetary transaction recordkeeping and report requirements.—       (A)  COMPLIANCE PROCEDURES REQUIRED.--The Director shall prescribe regulations requiring savings associations to establish and maintain procedures reasonably designed to assure and monitor the compliance of such associations with the requirements of subchapter II of chapter 53 of title 31, United States Code.       (B)  Examinations of savings associations to include review of compliance procedures.—         (i)  IN GENERAL.--Each examination of a savings association by the Director shall include a review of the procedures required to be established and maintained under subparagraph (A).         (ii)  EXAM REPORT REQUIREMENT.--The report of examination shall describe any problem with the procedures maintained by the association.       (C)  ORDER TO COMPLY WITH REQUIREMENTS.--If the Director determines that a savings association--         (i)  has failed to establish and maintain the procedures described in subparagraph (A); or         (ii)  has failed to correct any problem with the procedures maintained by such association which was previously reported to the association by the Director, The Director shall issue an order under section 8 of the Federal Deposit Insurance Act requiring such association to cease and desist from its violation of this paragraph or regulations prescribed under this paragraph.     (7)  Regulation and examination of savings association service companies, subsidiaries, and service providers.--         (A)  GENERAL EXAMINATION AND REGULATORY AUTHORITY.--A service company or subsidiary that is owned in whole or in part by a savings association shall be subject to examination and regulation by the Director to the same extent as that savings association.         (B)  EXAMINATION BY OTHER BANKING AGENCIES.--The Director may authorize any other Federal banking agency that supervises any other owner of part of the service company or subsidiary to perform an examination described in subparagraph (A).         (C)  Applicability of section 8 of the Federal Deposit Insurance Act.--A service company or subsidiary that is owned in whole or in part by a saving association shall be subject to the provisions of section 8 of the Federal Deposit Insurance Act as if the service company or subsidiary were an insured depository institution. In any such case, the Director shall be deemed to be the appropriate Federal banking agency, pursuant to section 3(q) of the Federal Deposit Insurance Act.         (D)  Service performed by contract or other-wise.--Notwithstanding subparagraph (A), if a savings association, a subsidiary thereof, or any savings and loan affiliate or entity, as identified by section 8(b)(9) of the Federal Deposit Insurance Act, that {{12-30-99 p.8708}}is regularly examined or subject to examination by the Director, causes to be performed for itself, by contract or otherwise, any service authorized under this Act or, in the case of a State savings association, any applicable State law, whether on or off its premises--       (i)  such performance shall be subject to regulation and examination by the Director to the same extent as if such services were being performed by the savings association on its own premises; and       (ii)  the savings association shall notify the Director of the existence of the service relationship not later than 30 days after the earlier of--           (I)  the date on which the contract is entered into; or           (II)  the date on which the performance of the service is initiated.         (E)  ADMINISTRATION BY THE DIRECTOR.--The Director may issue such regulations and orders, including those issued pursuant to section 8 of the Federal Deposit Insurance Act, as may be necessary to enable the Director to administer and carry out this paragraph and to prevent evasion of this paragraph.     (8)  DEFINITIONS.--For purposes of this section--         (A)  the term "service company" means--       (i)  any corporation--           (I)  that is organized to perform services authorized by this Act or, in the case of a corporation owned in part by a State savings association, authorized by applicable State law; and           (II)  all of the capital stock of which is owned by 1 or more insured savings associations; and       (ii)  any limited liability company--           (I)  that is organized to perform services authorized by this Act or, in the case of a company, 1 of the members of which is a State savings association, authorized by applicable State law; and           (II)  all of the members of which are 1 or more insured savings associations;         (B)  the term "limited liability company" means any company, partnership, trust, or similar business entity organized under the law of a State (as defined in section 3 of the Federal Deposit Insurance Act) that provides that a member or manager of such company is not personally liable for a debt, obligation, or liability of the company solely by reason of being, or acting as, a member or manager of such company; and         (C)  the terms "State savings association" and "subsidiary" have the same meanings as in section 3 of the Federal Deposit Insurance Act.   (e)  CHARACTER AND RESPONSIBILITY.--A charter may be granted only--     (1)  to persons of good character and responsibility,     (2)  if in the judgment of the Director a necessity exists for such an institution in the community to be served,     (3)  if there is a reasonable probability of its usefulness and success, and     (4)  if the association can be established without undue injury to properly conducted existing local thrift and home financing institutions.   (f)  FEDERAL HOME LOAN BANK MEMBERSHIP.--After the end of the 6-month period beginning on the date of the enactment of the Federal Home Loan Bank System Modernization Act of 1999, a Federal savings association may become a member of the Federal Home Loan Bank System, and shall qualify for such membership in the manner provided by the Federal Home Loan Bank Act.   (g)  PREFERRED SHARES.--[Repealed.]   (h)  Discriminatory State and Local Taxation Prohibited.--No State, county, municipal, or local taxing authority may impose any tax on Federal savings associations or their franchise, capital, reserves, surplus, loans, or income greater than that imposed by such authority on other similar local mutual or cooperative thrift and home financing institutions.   (i)  CONVERSIONS.--     (1)  IN GENERAL.--Any savings association which is, or is eligible to become, a member of a Federal home loan bank may convert into a Federal savings association (and {{12-29-06 p.8709}}in so doing may change directly from the mutual form to the stock form, or from the stock form to the mutual form). Such conversion shall be subject to such regulations as the Director shall prescribe. Thereafter such Federal savings association shall be entitled to all the benefits of this section and shall be subject to examination and regulation to the same extent as other associations incorporated pursuant to this Act.     (2)  AUTHORITY OF DIRECTOR.--(A) No savings association may convert from the mutual to the stock form, or from the stock form to the mutual form, except in accordance with the regulations of the Director.       (B)  Any aggrieved person may obtain review of a final action of the Director which approves or disapproves a plan of conversion pursuant to this subsection only by complying with the provisions of section 10(j) of this Act within the time limit and in the manner therein prescribed, which provisions shall apply in all respects as if such final action were an order the review of which is therein provided for, except that such time limit shall commence upon publication of notice of such final action in the Federal Register or upon the giving of such general notice of such final action as is required by or approved under regulations of the Director, whichever is later.       (C)  Any Federal savings association may change its designation from a Federal savings association to a Federal savings bank, or the reverse.     (3)  CONVERSION TO STATE ASSOCIATION.--(A) Any Federal savings association may convert itself into a savings association or savings bank organized pursuant to the laws of the State in which the principal office of such Federal savings association is located if--         (i)  the State permits the conversion of any savings association or savings bank of such State into a Federal savings association;         (ii)  such conversion of a Federal savings association into such a State savings association is determined--           (I)  upon the vote in favor of such conversion cast in person or by proxy at a special meeting of members or stockholders called to consider such action, specified by the law of the State in which the home office of the Federal savings association is located, as required by such law for a State-chartered institution to convert itself into a Federal savings association, but in no event upon a vote of less than 51 percent of all the votes cast at such meeting, and           (II)  upon compliance with other requirements reciprocally equivalent to the requirements of such State law for the conversion of a State-chartered institution into a Federal savings association;         (iii)  notice of the meeting to vote on conversion shall be given as herein provided and no other notice thereof shall be necessary; the notice shall expressly state that such meeting is called to vote thereon, as well as the time and place thereof; and such notice shall be mailed, postage prepaid, at least 30 and not more than 60 days prior to the date of the meeting, to the Director and to each member or stockholder of record of the Federal savings association at the member's or stockholder's last address as shown on the books of the Federal savings association;         (iv)  when a mutual savings association is dissolved after conversion, the members or shareholders of the savings association will share on a mutual basis in the assets of the association in exact proportion to their relative share or account credits;         (v)  when a stock savings association is dissolved after conversion, the stockholders will share on an equitable basis in the assets of the association; and         (vi)  such conversion shall be effective upon the date that all the provisions of this Act shall have been fully complied with and upon the issuance of a new charter by the State wherein the savings association is located.       (B)(i)  The act of conversion constitutes consent by the institution to be bound by all the requirements that the Director may impose under this Act.         (ii)  The savings association shall upon conversion and thereafter be authorized to issue securities in any form currently approved at the time of issue by the Director for issuance by similar savings associations in such State. {{12-29-06 p.8710}}         (iii)  If the insurance of accounts is terminated in connection with such conversion, the notice and other action shall be taken as provided by law and regulations for the termination of insurance of accounts.     (4)  SAVINGS BANK ACTIVITIES.--(A) To the extent authorized by the Director, but subject to section 18(m)(3) of the Federal Deposit Insurance Act--         (i)  any Federal savings bank chartered as such prior to October 15, 1982, may continue to make any investment or engage in any activity not otherwise authorized under this section, to the degree it was permitted to do so as a Federal savings bank prior to October 15, 1982; and         (ii)  any Federal savings bank in existence on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and formerly organized as a mutual savings bank under State law may continue to make any investment or engage in any activity not otherwise authorized under this section, to the degree it was authorized to do so as a mutual savings bank under State law.       (B)  The authority conferred by this paragraph may be utilized by any Federal savings association that acquires, by merger or consolidation, a Federal savings bank enjoying grandfather rights hereunder.     (5)  CONVERSION TO NATIONAL OR STATE BANK.--       (A)  IN GENERAL.--Any Federal savings association chartered and in operation before the date of enactment of the Gramm-Leach-Bliley Act, with branches in operation before such date of enactment in 1 or more States, may convert, at its option, with the approval of the Comptroller of the Currency for each national bank, and with the approval of the appropriate State bank supervisor and the appropriate Federal banking agency for each State bank, into 1 or more national or State banks, each of which may encompass 1 or more of the branches of the Federal savings association in operation before such date of enactment in 1 or more States subject to subparagraph (B).       (B)  CONDITIONS OF CONVERSION.--The authority in subparagraph (A) shall apply only if each resulting national or State bank--         (i)  will meet all financial, management, and capital requirements applicable to the resulting national or State bank; and         (ii)  if more than 1 national or State bank results from a conversion under this subparagraph, has received approval from the Federal Deposit Insurance Corporation under section 5(a) of the Federal Deposit Insurance Act.       (C)  NO MERGER APPLICATION UNDER FDIA REQUIRED.--No application under section 18(c) of the Federal Deposit Insurance Act shall be required for a conversion under this paragraph.       (D)  DEFINITIONS.--For purposes of this paragraph, the terms State bank' and State bank supervisor' have the same meanings as in section 3 of the Federal Deposit Insurance Act.   (j)  SUBSCRIPTION FOR SHARES.--[Repealed.]   (k)  DEPOSITORY OF PUBLIC MONEY.--When designated for that purpose by the Secretary of the Treasury, a savings association the deposits of which are insured by the Corporation shall be a depository of public money and may be employed as fiscal agents of the Government under such regulations as may be prescribed by the Secretary and shall perform all such reasonable duties as fiscal agent of the Government as may be required of it. A savings association the deposits of which are insured by the Corporation may act as agent for any other instrumentality of the United States when designated for that purpose by such instrumentality, including services in connection with the collection of taxes and other obligations owed the United States, and the Secretary of the Treasury may deposit public money in any such savings association, and shall prescribe such regulations as may be necessary to carry out the purposes of this subsection.   (l)  RETIREMENT ACCOUNTS.--A Federal savings association is authorized to act as trustee of any trust created or organized in the United States and forming part of a stock bonus, pension, or profit-sharing plan which qualifies or qualified for specific tax treatment under section 401(d) of the Internal Revenue Code of 1986 and to act as trustee or custodian of an individual retirement account within the meaning of section 408 of such {{12-29-06 p.8710.01}}Code if the funds of such trust or account are invested only in savings accounts or deposits in such Federal savings association or in obligations or securities issued by such Federal savings association. All funds held in such fiduciary capacity by any Federal savings association may be commingled for appropriate purposes of investment, but individual records shall be kept by the fiduciary for each participant and shall show in proper detail all transactions engaged in under this paragraph.   (m)  BRANCHING.--     (1)  IN GENERAL.--       (A)  No savings association incorporated under the laws of the District of Columbia or organized in the District or doing business in the District shall establish any branch or move its principal office or any branch without the Director's prior written approval.       (B)  No savings association shall establish any branch in the District of Columbia or move its principal office or any branch in the District without the Director's prior written approval.     (2)  DEFINITION.--For purposes of this subsection the term "branch" means any office, place of business, or facility, other than the principal office as defined by the Director, of a savings association at which accounts are opened or payments are received or withdrawals are made, or any other office, place of business, or facility of a savings association defined by the Director as a branch within the meaning of such sentence.   (n)  TRUSTS.--     (1)  PERMITS.--The Director may grant by special permit to a Federal savings association applying therefor the right to act as trustee, executor, administrator, guardian, or in any other fiduciary capacity in which State banks, trust companies, or other corporations which compete with Federal savings associations are permitted to act under the laws of the State in which the Federal savings association is located. Subject to the regulations of the Director, service corporations may invest in State or federally chartered corporations which are located in the State in which the home office of the Federal savings association is located and which are engaged in trust activities. {{4-28-06 p.8711}}     (2)  SEGREGATION OF ASSETS.--A Federal savings association exercising any or all of the powers enumerated in this section shall segregate all assets held in any fiduciary capacity from the general assets of the association and shall keep a separate set of books and records showing in proper detail all transactions engaged in under this subsection. The State banking authority involved may have access to reports of examination made by the Director insofar as such reports relate to the trust department of such association but nothing in this subsection shall be construed as authorizing such State banking authority to examine the books, records, and assets of such associations.     (3)  PROHIBITIONS.--No Federal savings association shall receive in its trust department deposits of current funds subject to check or the deposit of checks, drafts, bills of exchange, or other items for collection or exchange purposes. Funds deposited or held in trust by the association awaiting investment shall be carried in a separate account and shall not be used by the association in the conduct of its business unless it shall first set aside in the trust department Untied States bonds or other securities approved by the Director.     (4)  SEPARATE LIEN.--In the event of the failure of a Federal savings association, the owners of the funds held in trust for investment shall have a lien on the bonds or other securities so set apart in addition to their claim against the estate of the association.     (5)  DEPOSITS.--Whenever the laws of a State require corporations acting in a fiduciary capacity to deposit securities with the State authorities for the protection of private or court trusts, Federal savings associations so acting shall be required to make similar deposits. Securities so deposited shall be held for the protection of private or court trusts, as provided by the State law. Federal savings associations in such cases shall not be required to execute the bond usually required of individuals if State corporations under similar circumstances are exempt from this requirement. Federal savings associations shall have power to execute such bond when so required by the laws of the State involved.     (6)  OATHS AND AFFIDAVITS.--In any case in which the laws of a State require that a corporation acting as trustee, executor, administrator, or in any capacity specified in this section, shall take an oath or make an affidavit, the president, vice president, cashier, or trust officer of such association may take the necessary oath or execute the necessary affidavit.     (7)  CERTAIN LOANS PROHIBITED.--It shall be unlawful for any Federal savings association to lend any officer, director, or employee any funds held in trust under the powers conferred by this section. Any officer, director, or employee making such loan, or to whom such loan is made, may be fined not more than $50,000 or twice the amount of that person's gain from the loan, whichever is greater, or may be imprisoned not more than 5 years, or may be both fined and imprisoned, in the discretion of the court.     (8)  FACTORS TO BE CONSIDERED.--In reviewing applications for permission to exercise the powers enumerated in this section, the Director may consider--       (A)  the amount of capital of the applying Federal savings association,       (B)  whether or not such capital is sufficient under the circumstances of the case,       (C)  the needs of the community to be served, and       (D)  any other facts and circumstances that seem to it proper. The Director may grant or refuse the application accordingly, except that no permit shall be issued to any association having capital less than the capital required by State law of State banks, trust companies, and corporations exercising such powers.     (9)  SURRENDER OF CHARTER.--(A) Any Federal savings association may surrender its right to exercise the powers granted under this subsection, and have returned to it any securities which it may have deposited with the State authorities, by filing with the Director a certified copy of a resolution of its board of directors indicating its intention to surrender its right.       (B)  Upon receipt of such resolution, the Director, if satisfied that such Federal savings association has been relieved in accordance with State law of all duties as trustee, executor, administrator, guardian or other fiduciary, may in the Director's discretion, issue to such association a certificate that such association is no longer authorized to exercise the powers granted by this subsection. 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