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96 STAT. 1479

operating an insured depository institution subsidiary in the State in which the closed bank or the bank in danger of closing is chartered.". ASSESSMENTS

SEC. 117. The third sentence of section 7(d)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1817(d)(1)) is amended— (1) by striking out "and" before "(3) the insurance losses"; and (2) by inserting before the period at the end thereof the following: "; and (4) any lending costs for the calendar year, which costs shall be equal to the amount by which the amount of interest earned, if any, from each loan made by the Corporation under section 13 of this Act after January 1, 1982, is less 12 USC 1823. than the amount which the Corporation would have earned in interest for the calendar year if interest had been paid on such loan during such calendar year at a rate equal to the average current value of funds to the United States Treasury for such calendar year". WAIVER OF NOTICE REQUIREMENTS

SEC. 118. (a) Section 4(c)(8) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)(8)) is amended by striking out the semicolon at the end thereof and inserting in lieu thereof the following: ". Notwithstanding any other provision of this Act, if the Board finds that an emergency exists which requires the Board to act immediately on any application under this subsection involving a thrift institution, and the primary Federal regulator of such institution concurs in such finding, the Board may dispense with the notice and hearing requirement of this subsection and the Board may approve or deny any such application without notice or hearing;". (b) Section 2(i) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(i)) is amended by— (1) striking out "or" before "(3)"; and (2) by inserting before the period at the end thereof the following: "or (4) a Federal savings bank". (c) The first sentence of section 3(d) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)) is amended by inserting after "no application" the following: "(except an application filed as a result of a transaction authorized under section 13(f) of the Federal Deposit Insurance Act)". Ante, p. 1476. PART B—FEDERAL HOME LOAN BANK BOARD AMENDMENTS FEDERAL STOCK SAVINGS INSTITUTIONS

SEC. 121. Section 5 of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464), as amended by section 112, is amended by adding at the end thereof the following: "(p)(l) Notwithstanding any other provision of Federal law or the laws or constitution of any State, and consistent with the purposes of this Act, the Board may authorize (or in the case of a Federal association, require) the conversion of a mutual savings and loan association or Federal mutual savings bank that is insured by the Federal Savings and Loan Insurance Corporation into a Federal stock savings and loan association or Federal stock savings bank, or

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Page:United States Statutes at Large Volume 96 Part 2.djvu/118

 96 STAT. 1480

PUBLIC LAW 97-320—OCT. 15, 1982

charter a Federal stock savings and loan association or Federal stock savings bank to acquire the assets of, or merge with such a mutual institution under the rules and regulations of the Board. "(2) Authorizations under this subsection may be made only to assist an institution in receivership, or if the Board has determined that severe financial conditions exist which threaten the stability of an institution and that such authorization is likely to improve the financial condition of the institution, or when the Federal Savings and Loan Insurance Corporation has contracted to provide assistance to such institution under section 406 of the National Housing 12 USC 1729.

Act.

"(3) A Federal savings bank chartered under this subsection shall have the same authority with respect to investments, operations and activities, and shall be subject to the same restrictions, including those applicable to branching and discrimination, as would apply to it if it were chartered as a Federal savings bank under any other provisions of this Act, and may engage in any investment, activity, or operation that the institution it acquired was engaged in if that institution was a Federal savings bank, or would have been authorized to engage in had that institution converted to a Federal charter.". ASSISTANCE TO THRIFT INSTITUTIONS

SEC. 122. (a) Section 406(f) of the National Housing Act (12 U.S.C. 1729(f)) is amended to read as follows: "(f)(1) The Corporation is authorized, in its sole discretion and upon such terms and conditions as the Corporation may prescribe, to make loans to, to make deposits in, to purchase the assets or securities of, to assume the liabilities of, or to make contributions to, any insured institution— "(A) if such action is taken to prevent the default of such insured institution; "(B) if, with respect to an insured institution in default, such action is taken to restore such insured institution in default to normal operation; or "(C) if, when severe financial conditions exist which threaten the stability of a significant number of insured institutions or of insured institutions possessing significant resources, such action is taken in order to lessen the risk to the Corporation posed by such insured institution under such threat of instability. "(2)(A) In order to facilitate a merger or consolidation of an insured institution described in subparagraph (B) with another insured institution or the sale of assets of such insured institution and the assumption of such insured institution's liabilities by another insured institution, the Corporation is authorized, in its sole discretion and upon such terms and conditions as the (Ilorporation may prescribe— "(i) to purchase any such assets or assume any such liabilities; "(ii) to make loans or contributions to, or deposits in, or purchase the securities of, such other insured institution (which, for the purposes of this subparagraph, shall include a Federal savings bank insured by the Federal Deposit Insurance Corporation); "(iii) to guarantee such other insured institution (which, for the purposes of this subparagraph, shall include a Federal savings bank insured by the Federal Deposit Insurance Corporation) against loss by reason of such other insured institution's

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Page:United States Statutes at Large Volume 96 Part 2.djvu/119

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96 STAT. 1481

merging or consolidating with or assuming the liabilities and purchasing the assets of such insured institution; or "(iv) to take any combination of the actions referred to in clauses (i) through (iii). "(B) An insured institution described in this subparagraph— "(i) is an insured institution which is in default; "(ii) is an insured institution which, in the judgment of the Corporation is in danger of default; or "(iii) is an insured institution which, when severe financial conditions exist which threaten the stability of a significant number of insured institutions, or of insured institutions possessing significant financial resources, is determined by the Corporation, in its sole discretion, to require assistance under subparagraph (A) in order to lessen the risk to the Corporation posed by such insured institution under such threat of instability. "(3) The Corporation may provide any person acquiring control of, merging with, consolidating with or acquiring the assets of an insured institution under section 408(m) of this Act with such Post, p. 1483. financial assistance as it could provide an insured institution under this subsection. "(4)(A) No assistance shall be provided under paragraph (1), (2), or (3) of this subsection in an amount in excess of that amount which the Corporation determines to be reasonably necessary to save the cost of liquidating (including paying the insured accounts of) such insured institution, except that such restriction shall not apply in any case in which the Corporation determines that the continued operation of such insured institution is essential to provide adequate savings or home financing services in its community. "(B) The Corporation may not use its authority under this subsection to purchase the voting or common stock of an insured institution. Nothing in the preceding sentence shall be construed to limit the ability of the Corporation to enter into and enforce covenants and agreements that it determines to be necessary to protect its (b) Section 406(b) of the National Housing Act (12 U.S.C. 1729(b)) is amended to read as follows: "Ob)(l) In the event that a Federal association is in default, the Corporation shall be appointed as conservator or receiver and as such— "(A) is authorized— "(i) to take over the assets of and operate such association; "(ii) to take such action as may be necessary to put it in a sound solvent condition; "(iii) to merge it with another insured institution; "(iv) to organize a new Federal association to take over its assets; "(v) to proceed to liquidate its assets in an orderly manner; or "(vi) to make such other disposition of the matter as it deems appropriate; whichever it deems to be in the best interest of the association, its savers, and the Corporation; and "(B) shall pay all valid credit obligations of the association.

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Page:United States Statutes at Large Volume 96 Part 2.djvu/120

 96 STAT. 1482

"Federal association."

12 USC 1464.

PUBLIC LAW 97-320—OCT. 15, 1982

"(2) The corporation shall pay insurance as provided in section 405. The surrender and transfer to the Corporation of an insured account in any such association which is in default shall subrogate the Corporation with respect to such insured account, but shall not affect any right which the insured member may have in the uninsured portion of his account or any right which he may have to participate in the distribution of the net proceeds remaining from the disposition of the assets of such association. "(3) As used in this section, the term 'Federal association' means a Federal savings and loan association or a Federal savings bank.". (c) Section 406(c) of the National Housing Act (12 U.S.C. 1729(c)) is amended by striking out "savings and loan" wherever it appears. (d) Section 406(c)(1) of the National Housing Act (12 U.S.C. 1729(c)(1)) is amended by inserting "(A)" after "(c)(1)" and by adding at the end thereof the following: "(B)(i)(I) Notwithstanding any provision of the constitution or laws of any State, or of this section, in the event the Federal Home Loan Bank Board determines that any of the grounds specified in section 5(d)(6)(A)(i), (ii), or (iii) of the Home Owners' Loan Act of 1933 exist with respect to an insured institution, other than a Federal association, the Board shall have exclusive power and jurisdiction to appoint the Corporation as sole conservator or receiver of such institution. "(II) In such cases the corporation shall have the same powers and duties with respect to insured institutions as are conferred upon it under subsection (b) of this section with respect to Federal associations. "(ii)(I) The authority conferred by this subparagraph shall not be exercised without the written approval of the State official having jurisdiction over the State-chartered insured institution that the grounds specified for such exercise exist. "(II) If such approval has not been received by the Board within 90 days of receipt of notice by the State that the Board has determined such grounds exist, and the Board has responded in writing to the State's written reasons, if any, for withholding approval, then the Board may proceed without State approval only by a unanimous vote of the Board. The corporation may also proceed without State approval if the Corporation has been appointed conservator, receiver, or other legal custodian pursuant to State law under subparagraph (A).". (e) The first sentence of section 406(c)(2) of the National Housing Act (12 U.S.C. 1729(c)(2)) is amended by inserting "conservator or after "sole". (f) Section 406(c)(3) of the National Housing Act (12 U.S.C. 1729(c)(3)) is amended— (1) by inserting "conservator or" before "receiver" wherever it appears therein; (2) by striking out "paragraph (2)" and inserting in lieu thereof "paragraphs (1) or (2)'; and (3) by striking out the second sentence. (g) Section 406(d) of the National Housing Act (12 U.S.C. 1729(d)) is amended to read as follows: "(d) In connection with the liquidation of insured institutions, the Corporation shall have power to carry on the business of and to collect all obligations to the insured institutions, to settle, compromise, or release claims in favor of or against the insured institutions, and to do all other things that may be necessary in connection

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96 STAT. 1483

therewith, subject only to the regulation of the Federal Home Loan Bank Board, or, in cases where the Corporation has been appointed conservator, receiver, or legal custodian solely by a public authority having jurisdiction over the matter other than said Board, subject only to the regulation of such public authority.". EMERGENCY THRIFT ACQUISITIONS

SEC. 123. (a) Section 408 of the National Housing Act (12 U.S.C. 1730a) is amended by adding at the end thereof the following: "(m)(l)(A)(i) Notwithstanding any provision of the laws or constitution of any State or any provision of Federal law, except as provided in subsections (e)(2) and (1) of this section, and in clause (iii) of this subparagraph, the Corporation, upon its determination that severe financial conditions exist which threaten the stability of a significant number of insured institutions, or of insured institutions possessing significant financial resources, may authorize, in its discretion and where it determines such authorization would lessen the risk to the Corporation, an insured institution that is eligible for assistance pursuant to section 406(f) of this Act to merge or consoli- Post, p. 1489. date with, or to transfer its assets and liabilities to, any other insured institution or any insured bank (as such term 'insured bank' is defined in section 3(h) of the Federal Deposit Insurance Act), may 12 USC 1813. authorize any other insured institution to acquire control of said insured institution, or may authorize any company to acquire control of said insured institution or to acquire the assets or assume the liabilities thereof. "(ii) Mergers, consolidations, transfers, and acquisitions under this subsection shall be on such terms as the Corporation shall provide. "(iii) Where otherwise required by law, transactions under this subsection must be approved by the primary Federal supervisor of the party thereto that is not an insured institution. "(B)(i) Before making a determination to take any action under subparagraph (A), the Corporation shall consult the State official having jurisdiction of the acquired institution. "(ii) The State official shall be given a reasonable opportunity, and in no event less than forty-eight hours, to object to the use of the provisions of this paragraph. Such notice may be provided by the Corporation prior to its appointment as receiver, but in anticipation of an impending appointment. "(iii) If the State official objects during such period, the Corporation may use the authority of this paragraph only by a unanimous vote of the Board of Directors. The Board of Directors shall provide to the State official, as soon as practicable, a written certification of its determination. "(2) In considering authorizations under this subsection, the Corporation may solicit such offers or proposals as are practicable from any prospective purchasers or merger partners it determines, in its sole discretion, are both qualified and capable of acquiring the assets and liabilities of the insured institution. "(3)(A) If, after receiving offers, the offer presenting the lowest expense to the Corporation, that is in a form and with conditions acceptable to the Corporation (hereinafter referred to as the 'lowest acceptable offer'), is from an institution that is not an existing inState insured institution or an in-State savings and loan holding company, the Corporation shall permit each offeror who made an offer the estimated cost of which to the Corporation was within 15

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Page:United States Statutes at Large Volume 96 Part 2.djvu/122

 96 STAT. 1484

Definitions.

26 USC 7701.

PUBLIC LAW 97-320—OCT. 15, 1982

per centum or $15,000,000, whichever is less, of the initial lowest acceptable offer to submit a new offer. "(B) In considering authorizations under this subsection, the Corporation shall give consideration to the need to minimize the cost of financial assistance and to the maintenance of specialized depository institutions. The Corporation shall authorize transactions under this subsection considering the following priorities: "(i) First, between depository institutions of the same type within the same State; "(ii) Second, between depository institutions of the same type in different States; "(iii) Third, between depository institutions of different types in the same State; and "(iv) Fourth, between depository institutions of different types in different States. "(C) In the case of a minority-controlled institution, the Corporation shall seek an offer from other minority-controlled institutions before proceeding with the sequence set forth in the preceding subparagraph. "(D) In considering offers from different States, the Corporation shall give a priority to offers from adjoining States. "(E) In determining the cost of offers and reoffers under this subsection, the Corporation's calculations and estimations shall be determinative. The Corporation may set reasonable time limits on offers and reoffers. "(4) For purposes of this subsection— "(A) the term 'insured depository institution* means an insured institution or a bank insured by the Federal Deposit Insurance Corporation; and "(B) the term 'in-State depository institution or in-State depository institution holding company' means an existing insured depository institution currently operating in the State in which the closed institution is chartered or a company that is operating an insured depository institution subsidiary in the State in which the closed institution is chartered. "(5)(A) Where a merger, consolidation, transfer, or acquisition under this subsection involves an insured institution eligible for assistance and a bank or bank holding company, an insured institution may retain and operate any existing branch or branches or any other existing facilities but otherwise shall be subject to the conditions upon which a national bank may establish and operate branches in the State in which such insured institution is located. "(B) No such insured institution shall move its principal office or any branch office after it is acquired which it would be prohibited from moving if it were a national bank. "(C)(i) Notwithstanding the foregoing, if such an insured institution does not have its home office in the State of the bank holding company bank subsidiary, and if such institution does not qualify as a domestic building and loan association under section 7701(a)(19) of the Internal Revenue Code of 1954, or does not meet the asset composition test imposed by subparagraph (C) of that section on institutions seeking so to qualify, then such insured institution shall be subject to the conditions upon which a bank may retain, operate, and establish branches in the State in which the insured institution is located.

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"(ii) The Corporation, for good cause shown, may allow insured institutions up to two years to comply with the requirements of (b) Section 408(e)(2) of the National Housing Act (12 U.S.C. 1730a(e)(2)) is amended— (1) in the first sentence, by inserting after "subsection" the following: ", or any transaction under subsection (m) of this section,'; and (2) in the third sentence, by inserting after "acquisition," the following: "except a transaction under subsection (m) of this section,'. ASSISTANCE TO FEDERAL HOME LOAN BANKS MEMBERS

SEC. 124. Section 16 of the Federal Home Loan Bank Act (12 U.S.C. 1436) is amended by inserting "(a)" after "SEC. 16." and by adding at the end thereof the following: "(b) Notwithstanding subsection (a) or any other provision of this Act, if the Board determines that severe financial conditions exist threatening the stability of member institutions, the Board may suspend temporarily the requirements of subsection (a) that a portion of net earnings be set aside semiannually by each Federal Home Loan Bank to a reserve account and permit each Federal Home Loan Bank to declare and pay dividends out of undivided profits.". BORROWING AUTHORITY

SEC. 125. (a) The first sentence of section 402(d) of the National Housing Act (12 U.S.C. 1725(d)) is amended by inserting before the period at the end thereof the following: ", except that interest on loans from the Federal Home Loan Banks shall be not less than their current marginal cost of funds, taking into account the maturities involved, and loans from the Federal Home Loan Banks shall be adequately secured, as determined by the Board". (b) The first sentence of section 402(i) of the National Housing Act (12 U.S.C. 1725(i)) is amended— (1) by striking out "any other source" and inserting in lieu thereof "any source other than the Federal Home Loan Banks"; and (2) by inserting "from the Treasury" after "Provided, That Prich SllCil lo3.Tl

(c) Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended by adding at the end thereof the following: "(k) The Federal Home Loan Banks are hereby authorized, as directed by the Board, to make loans to the Federal Savings and Loan Insurance Corporation. All such loans shall be made in accordance with the provisions of section 402(d) of the National Housing Act". INSURANCE FUND RESERVES

SEC. 126. Section 404 of the National Housing Act (12 U.S.C. 1727) is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following: "(h) Notwithstanding any other provision of this section, the Corporation, upon its determination that extraordinary financial

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Page:The works of Xenophon Vol III Part II.djvu/78

 since a horse which cannot endure fatigue will clearly be unable to overhaul the foeman or effect escape; and in the second place, you will have to See to it the animals are tractable, since, clearly again, a horse that will not obey is only fighting for the enemy and not his friends. So, again, an animal that kicks when mounted must be cast; since brutes of that sort may often do more mischief than the foe himself. Lastly, you must pay attention to the horses' feet, and see that they will stand being ridden over rough ground. A horse, one knows, is practically useless where he cannot be galloped without suffering.

And now, supposing that your horses are all that they ought to be, like pains must be applied to train the men themselves. The trooper, in the first place, must be able to spring on horseback easily — a feat to which many a man has owed his life ere now. And next, he must be able to ride with freedom over every sort of ground, since any description of country may become the seat of war. When, presently, your men have got firm seats, your aim should be to make as many members of the corps as possible not only skilled to hurl the javelin from horseback with precision, but to perform all other feats expected of the expert horseman. Next comes the need to arm both horse and man in such a manner as to minimise the risk of wounds, and yet to increase the force of every blow delivered. This attended to, you must contrive to make your men amenable to discipline, without which neither good horses, nor a firm seat, nor splendour of equipment will be of any use at all.

The general of cavalry, as patron of the whole department, is naturally responsible for its efficient working. In view, however, of the task imposed upon that officer had he to carry out these various details single-handed, the state has chosen to associate with him certain coadjutors in the persons of the


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 96 STAT. 1486

PUBLIC LAW 97-320—OCT. 15, 1982

conditions exist increasing the risk to the Corporation, may terminate distribution of shares of the secondary reserve and utilize said reserve on the same basis as the primary reserve. If otherwise authorized, the Corporation may resume such distribution upon its determination that said conditions no longer exist.". FEDERAL HOME LOAN BANK ACT

SEC. 127. Section 17(a) of the Federal Home Loan Bank Act (12 U.S.C. 1437(a)) is amended by inserting after the first sentence the following: "Notwithstanding any other provision of law, the Board may from time to time make such provision as it deems appropriate authorizing the performance by any officer, employee, agent, or administrative unit thereof of any function of the Board (including any function of the Federal Savings and Loan Insurance Corporation), except with regard to promulgation of rules and regulations in accordance with the Administrative Procedure Act, and adjudications subject to such Act.". CONTINUATION OF INSURANCE

SEC. 128. Section 405(a) of the National Housing Act (12 U.S.C. 1728(a)) is amended by adding after the first sentence the following: "Whenever the liabilities of an insured institution for accounts shall have been assumed by another insured institution or institutions, whether by way of merger, consolidation, or other statutory assumption, or pursuant to contract, all accounts so assumed shall have separate insurance which shall terminate at the end of six months from the date such assumption takes effect or, in the case of any certificate account, the earliest maturity date after the six-month period.". PART C—CREDIT UNIONS CREDIT U N I O N MERGERS

SEC. 131. Section 205 of the Federal Credit Union Act (12 U.S.C. 1785) is amended by adding at the end thereof the following: "(h) Notwithstanding any other provision of law, the Board may authorize a merger or consolidation of an insured credit union which is insolvent or is in danger of insolvency with any other insured credit union or may authorize an insured credit union to > purchase any of the assets of, or assume any of the liabilities of, any other insured credit union which is insolvent or in danger of insolvency if the Board is satisfied that— "(1) an emergency requiring expeditious action exists with respect to such other insured credit union; "(2) other alternatives are not reasonably available; and "(3) the public interest would best be served by approval of such merger, consolidation, purchase, or assumption. "(i)(l) Notwithstanding any other provision of this Act or of State law, the Board may authorize an institution whose deposits or accounts are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation to purchase any of the assets of or assume any of the liabilities of an insured credit union which is insolvent or in danger of insolvency, except that prior to exercising this authority the Board must attempt to

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96 STAT. 1487

effect the merger or consolidation of an insured credit union which is insolvent or in danger of insolvency with another insured credit union, as provided in subsection (h). "(2) For purposes of the authority contained in paragraph (1), insured accounts of the credit union may upon consummation of the purchase and assumption be converted to insured deposits or other comparable accounts in the acquiring institution, and the Board and the National Credit Union Share Insurance Fund shall be absolved of any liability to the credit union's members with respect to those accounts.". BOARD'S AUTHORITY AS CONSERVATOR

SEC. 132. (a) Section 206 of the Federal Credit Union Act (12 U.S.C. 1786) is amended— (1) by redesignating subsections (h) through (o) as subsections (i) through (p), respectively; and (2) by inserting after subsection (g) the following new subsection: "(h)(1) The Board may, ex parte without notice, appoint itself as conservator and immediately take possession and control of the business and assets of any insured credit union in any case in which— "(A) the Board determines that such action is necessary to conserve the assets of any insured credit union or to protect the Fund or the interests of the members of such insured credit union; or "(B) an insured credit union, by a resolution of its board of directors, consents to such an action by the Board. "(2)(A) In the case of a State-chartered insured credit union, the authority conferred by paragraph (1) shall not be exercised without the written approval of the State official having jurisdiction over the State-chartered credit union that the grounds specified for such exercise exist. "(B) If such approval has not been received by the Board within ninety days of receipt of notice by the State that the Board has determined such grounds exist, and the Board has responded in writing to the State's written reasons, if any, for withholding approval, then the Board may proceed without State approval only by a unanimous vote of the Board. "(3) Not later than ten days after the date on which the Board takes possession and control of the business and assets of an insured credit union pursuant to paragraph (1), such insured credit union may apply to the United States district court for the judicial district in which the principal office of such insured credit union is located or the United States District Court for the District of Columbia, for an order requiring the Board to show cause why it should not be enjoined from continuing such possession and control. '(4) Except as provided in paragraph (3), in the case of a Federal credit union, the Board may maintain possession and control of the business and assets of such credit union and may operate such credit union until such time— "(A) as the Board shall permit such credit union to continue business subject to such terms and conditions as may be imposed by the Board; or "(B) as such credit union is liquidated in accordance with the provisions of section 207. 12 USC 1787.

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 96 STAT. 1488

12 USC 1787.

PUBLIC LAW 97-320—OCT. 15, 1982

"(5) Except as provided in paragraph (3), in the case of an insured State-chartered credit union, the Board may maintain possession and control of the business and assets of such credit union and may operate such credit union until such time— "(A) as the Board shall permit such credit union to continue business, subject to such terms and conditions as may be imposed by the Board; "(B) as the Board shall permit the transfer of possession and control of such credit union to any commission, board, or authority which has supervisory authority over such credit union and which is authorized by State law to operate such credit union; or "(C) as such credit union is liquidated in accordance with the provisions of section 207. "(6) The Board may appoint such agents as it considers necessary in order to assist the Board in carrying out its duties as a conservator under this subsection. "(7) All expenses incurred by the Board in exercising its authority under this subsection with respect to any credit union shall be paid out of the assets of such credit union. "(8) The authority granted by this subsection is in addition to all other authority granted to the Board under this Act.". (b) Section 206(b)(2) of the Federal Credit Union Act (12 U.S.C. 1786(b)(2)) is amended by striking out "subsection (i)" and inserting in lieu thereof "subsection (j)". (c) Section 206g)(l) of such Act (12 U.S.C. 1786(j)(l)), as so redesignated by subsection (a), is amended— (1) in the first sentence, by striking out "subsection (h)(3)" and inserting in lieu thereof "subsection (i)(3)"; and (2) in the fourth sentence, by striking out "subsection (i)" and inserting in lieu thereof "subsection (j)". (d) The first sentence of section 206(j)(2) of such Act (12 U.S.C. 1786(j)(2)), as redesignated by subsection (a), is amended by striking out "subsection (h)(1)" and inserting in lieu thereof "subsection (i)(l)". (e) The first sentence of section 206(1) of such Act (12 U.S.C. 1786(1)), as redesignated by subsection (a), is amended by striking out "(h)" and inserting in lieu thereof "(i)". (f) Section 206(m) of such Act (12 U.S.C. 1786(m)), as redesignated by subsection (a), is amended— (1) by striking out "subsection (i)" and inserting in lieu thereof "subsection (j)"; and (2) by striking out "subsection (h)" and inserting in lieu thereof "subsection (i)". (g) The section heading for section 206 of the Federal Credit Union Act (12 U.S.C. 1786) is amended by inserting "; TAKING POSSESSION OF

BUSINESS AND ASSETs" after "COMMITTEE MEMBERS". PART D—SUNSET PROVISION SUNSET OF CERTAIN PROVISIONS

12 USC 1464 "°Ante, p. 1469.

SEC. 141. (a) Effective upon the expiration of three years after the date of enactment of this Act— (1) section 13(c)(5) of the Federal Deposit Insurance Act, as added by section 111 of this Act, shall be repealed;

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 PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1489

(2) subparagraphs (F) and (G) of section 5(o)(2) of the Home Owners* Loan Act of 1933, as added by section 112 of this Act, shall be repealed; (3) the provision of law amended by section 116 of this Act shall be amended to read as it would without such amendment; (4) the provisions of law amended by subsections (a) and (c) of section 118 shall be amended to read as they would without such amendments; (5) the provision of law amended by section 121 of this Act shall be amended to read as it would without such amendment; (6) the provisions of law amended by subsections (d) through (g) of section 122 of this Act shall be amended to read as they would without such amendments; (7) the provisions of law amended by section 123 of this Act shall be amended to read as they would without such amendments; and (8) the provisions of law amended by sections 131 and 132 shall be amended to read as they would without such amendments. (b) The repeal or termination by subsection (a) of any amendment made by this Act shall have no effect on any action taken or authorized while such amendment was in effect. TITLE II—NET WORTH CERTIFICATES

Ante, p. 1471. 12 USC 1823.

12 USC 1843, 1842. 12 USC 1464.

12 USC 1729. 12 USC 1730a.

12 USC 1785, 1786. 12 USC 1464 note.

Net Worth eertificate Act.

SHORT TITLE

SEC. 201. This title may be cited as the "Net Worth Certificate 12 USC I8II Act". "''^^• INSURED INSTITUTIONS

SEC. 202. (a) Section 406(f) of the National Housing Act (12 U.S.C. 1729(f)), as amended by section 122 of this Act, is amended by adding at the end thereof the following: "(5)(A)(i) Notwithstanding any other provision of State or Federal law, and without limitation on any authority provided elsewhere in this Act or the Home Owners' Loan Act of 1933, the Corporation, in 12 USC 1461. its sole discretion and on such terms and conditions as it may prescribe, is authorized to increase or maintain the capital of a qualified institution by making periodic purchases of capital instruments to be known as net worth certificates, as defined by the Corporation, for such form of consideration as the Corporation may determine, from such qualified institution, and may authorize such institution to issue such net worth certificates, pursuant to this paragraph. "(ii) Dividends on any certificate so purchased shall be at a rate equivalent to the rate of interest paid on any promissory note used to purchase the certificate. "(iii) In making a determination under this paragraph, the State supervisor of the State in which a State chartered institution which is the subject of the eligibility determination is located shall be consulted. "(iv) With respect to certificates held by it, the claim of the Corporation shall have a priority over any claim arising out of an equity interest in the insitution in the event of a liquidation or reorganization, subject to the prior payment of all accounts, certificates of deposit, and debt obligations other than debt obligations

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"Qualified institution."

PUBLIC LAW 97-320—OCT. 15, 1982

subordinated to the claims of general creditors which were outstanding when any certificates were purchased, and over any right of equity holders to participate in future earnings. "(B) For the purposes of this paragraph, the term 'qualified institution' means an institution the deposits of which are insured under this title or insured or guaranteed under State law which, as determined by the Corporation— "(i) has net worth equal to or less than 3 per centum of its assets; "(ii) has incurred losses during the two previous quarters; "(iii) has not incurred such losses as a result of transactions involving speculation in futures or forward contracts, of management action designed solely for the purpose of qualifying for assistance, or of excessive operating expenses; "(iv) agrees to comply with all the terms and conditions established by the Corporation for receiving assistance pursuant to this paragraph, including those relating to reporting, compliance with laws, rules and regulations, execution and implementation of resolutions and agreements to merge or reorganize, submission and adoption of plans of operation, restrictions on operations, repayment of assistance received, and consent to supervisory action; "(v) will have a net worth of not less than one-half of one per centum of assets after any purchase of its net worth certificates by the Corporation, as determined by the Corporation in accordance with the methods for calculating net worth pursuant to this paragraph; and "(vi) has investments in residential mortgages or securities backed by such mortgages aggregating at least 20 per centum of its loans. "(C)(i) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's board to allow such institution to be merged with or acquired by another company if the Corporation finds that such institution will have positive net worth for a period of at least six months after such certificates are purchased. "(ii) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's board to make specified management personnel changes if the Corporation finds that if such institution will have positive net worth for a period of at least nine months after such certificates are purchased. "(D) In any case where the staff of the Corporation finds for the purpose of subparagraph (C) that the length of time during which the institution will have positive net worth after a purchase of certificates is less than six months or nine months, as the case may be, the institution may submit to the staff its plans and projections. If the staff does not change its position after considering such plans and projections, the institution may submit such plans and projections to the Board and the institution shall be entitled to an appeal to, and a review of the staffs findings by, the Board. "(E) The Corporation may initially purchase net worth certificates as follows: "(i) With respect to a qualified institution having net worth greater than 2 per centum and less than or equal to 3 per centum, the Corporation may purchase net worth certificates in any period from such institution in an amount equal to 50 per

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96 STAT. 1491

centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation. "(ii) With respect to a qualified institution having net worth greater than 1 per centum and less than or equal to 2 per centum, the Corporation may purchase net worth certificates in any period from such institution in an amount equal to 60 per centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation. "(iii) With respect to a qualified institution having net worth less than or equal to 1 per centum, the Corporation may purchase net worth certificates in any period from such institution in an amount equal to 70 per centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation. "(F) In the exercise of its authority under this paragraph, the Corporation may at any time, in its sole discretion, establish criteria which, with respect to ranges of net worth, calculation of losses, and percentage of losses to be met by purchases of net worth certificates, differ from those set forth in subparagraph (E), except that the Corporation shall in no period purchase net worth certificates from a qualified institution in an amount equal to more than 100 per centum of such institution's operating losses incurred for the immediately preceding period. "(G) No assistance may be provided to a qualified institution pursuant to this paragraph if the Corporation determines that providing such assistance would be costlier than liquidating (including paying the insured accounts of) such institution or dealing with it in accordance with paragraph (1) or (2) of this subsection. "(H) The provisions of the constitution or the laws, civil or criminal, of any State, express or implied, limiting the authority of a qualified institution (i) to take part in programs under this paragraph, (ii) to issue and otherwise deal in net worth certificates issued pursuant to this paragraph, or (iii) to continue operations, including the receipt of deposits and the payment or crediting of interest or dividends to depositors, because of the level of such institution's net worth, surplus fund, or guaranty fund, shall not apply to any qualified institution which the Corporation has approved for the purpose of taking part in programs under this paragraph, continuing operations, or paying interest or dividends. "(I) During any period when a qualified institution has outstanding net worth certificates issued in accordance with this paragraph, such institution shall not be liable for any State or local tax which is determined on the basis of the deposits held by such institution or the interest paid on such deposits. "(J) Notwithstanding any other Federal or State law, net worth certificates purchased by the Corporation under this paragraph shall be deemed to be net worth for statutory and regulatory purposes. "(K) The Corporation may not use its authority under this paragraph to purchase the voting or common stock of a qualified institution. Nothing in this subparagraph shall be construed to limit the ability of the Corporation to enter into and enforce covenants and agreements that it determines to be necessary to protect its financial interests.

97-200 O-84-pt. 2

5: QL3

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Ante, p. 1480.

PUBLIC LAW 97-320—OCT. 15, 1982

"(L) The Corporation may provide assistance to a qualified institution which is not an insured institution only if the State fund which insures or guarantees the deposits of such qualified institution enters into an agreement with the Corporation which provides that— "(i) the State fund will indemnify the Corporation for any losses which the Corporation may incur as a result of providing assistance under this paragraph to such qualified institution; and "(ii) during any period when such qualified institution has outstanding capital instruments issued in accordance with this paragraph, the State insurance fund maintains a level of assessments on its members which results in costs to its members which are at least equivalent to the premium assessments paid to the Corporation by insured institutions during such period. "(M) During any period in which a qualified institution which has a stock form of ownership has outstanding certificates under this paragraph, such qualified insured institution may not pay dividends to its sn3.rpriol(iGrs (b) Section 5(b)(5) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(b)(5)) is amended— (1) by striking out subparagraph (B) and inserting in lieu thereof the following: "(B) Net worth certificates issued by an association pursuant to section 406(f) of the National Housing Act shall constitute part of the general reserves and net worth of the association, in accordance with the rules and regulations of the Board."; and (2) by adding at the end thereof a new subparagraph (C) as follows: "(C) The Board shall provide in its rules and regulations for charging losses to mutual capital certificates, net worth certificates issued pursuant to section 406(f) of the National Housing Act, reserves, and other net worth accounts.". (c) Section 403(b) of the National Housing Act (12 U.S.C. 1726(b)) is amended— (1) in the fourth-to-last sentence by inserting after "items," the following: "including net worth certificates issued pursuant to section 406(f) of this Act,"; and (2) in the second-to-last sentence by striking out "the mutual capital certificate" and inserting in lieu thereof "mutual capital certificates, net worth certificates issued pursuant to section 406(f) of this Act,". (d) Section 403(b) of the National Housing Act (12 U.S.C. 1726(b)) is amended by striking out "will provide adequate reserves satisfactory to the Corporation" and all that follows through the end of the sentence immediately preceding the fourth sentence from the end of such subsection, and inserting in lieu thereof the following: "and will provide adequate reserves in a form satisfactory to the Corporation, to be established in accordance with regulations made by the Corporation.". INSURED BANKS

SEC. 203. Section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823), as amended by section 113 of this Act is amended by adding at the end thereof the following: "(i)(l)(A) Notwithstanding any other provision of State or Federal law, and without limitation on any authority provided elsewhere in

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this Act, the Corporation, in its sole discretion and on such terms and conditions as it may prescribe, is authorized to increase or maintain the capital of a qualified institution by making periodic purchases of capital instruments to be known as net worth certificates, as defined by the Corporation, for such form of consideration as the Corporation may determine, from such institution, and may authorize such institution to issue net worth certificates, pursuant to this subsection. "(B) Dividends on any certificate so purchased shall be at a rate equivalent to the rate of interest paid on any promissory note used to purchase the certificate. "(C) In making a determination under this subsection, the corporation shall consult the State supervisor of the State in which a State chartered bank which is the subject of the eligibility determination is located, and in the case of a State member bank or a national bank, the Corporation shall consult the Board of Governors of the Federal Reserve System or the Comptroller of the Currency, respectively. "(D) With respect to certificates held by it, the claim of the Corporation shall have a priority over any claim arising out of an equity interest in the institution in the event of a liquidation or reorganization, subject to the prior payment of all accounts, certificates of deposit, and debt obligations other than debt obligations subordinated to the claims of general creditors which were outstanding when any certificates were purchased, and over any right of equity holders to participate in future earnings. "(2) For the purposes of this subsection, the term 'qualified institu- "Qualified tion' means an institution the deposits of which are insured under institution." this title or insured or guaranteed under State law which, as determined by the Corporation— "(A) has net worth equal to or less than 3 per centum of its assets; "(B) has incurred losses during the two previous quarters; "(C) has not incurred such losses as a result of transactions involving speculation in futures or forward contracts, of management action designed solely for the purpose of qualifying for assistance, or of excessive operating expenses; "(D) agrees to comply with all the terms and conditions established by the Corporation for receiving assistance pursuant to this paragraph, including those relating to reporting, compliance with laws, rules and regulations, execution and implementation of resolutions and agreements to merge or reorganize, submission and adoption of plans of operation, restrictions on operations, repayment of assistance received, and consent to supervisory action; "(E) will have a net worth of not less than one-half of one per centum of assets after any purchase of its net worth certificates by the Corporation, as determined by the Corporation in accordance with the methods for calculating net worth pursuant to this paragraph; and "(F) has investments in residential mortgages or securities backed by such mortgages aggregating at least 20 per centum of its loans. "(3)(A) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's board to allow such institution to be merged with or acquired by another company if the Corporation finds that such institution will

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PUBLIC LAW 97-320—OCT. 15, 1982

have positive net worth for a period of at least six months after such certificates are purchased. "(B) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's board to make specified management personnel changes if the Corporation finds that such institution will have positive net worth for a period of at least nine months after such certificates are purchased. "(4) In any case where the staff of the Corporation finds for the purpose of paragraph (3) that the length of time during which the institution will have positive net worth after a purchase of certificates is less than six months or nine months, as the case may be, the institution may submit to the staff its plans and projections. If the staff does not change its position after considering such plans and projections, the institution may submit such plans and projections to the Board and the institution shall be entitled to an appeal to, and a review of the staffs findings by, the Board. "(5) The Corporation may initially purchase net worth certificates as follows: "(A) With respect to a qualified institution having net worth greater than 2 per centum and less than or equal to 3 per centum, the Corporation may purchase net worth certificates in any period from such institution in an amount equal to 50 per centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation. "(B) With respect to a qualified institution having net worth greater than 1 per centum and less than or equal to 2 per centum, the Corporation may purchase net worth certificates in any period from such institution in an amount equal to 60 per centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation. "(C) With respect to a qualified institution having net worth greater than zero and less than or equal to 1 per centum, the Corporation may purchase net worth certificates in any period from such institution in an amount equal to 70 per centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation. "(6) In the exercise of its authority under this subsection, the Corporation may at any time, in its sole discretion, establish criteria which, with respect to ranges of net worth, calculation of losses, and percentage of losses to be met by purchases of net worth certificates, differ from those set forth in paragraph (5), except that the Corporation shall in no period purchase net worth certificates from a qualified institution in an amount equal to more than 100 per centum of such institution's operating losses incurred for the immediately preceding period. "(7) No assistance may be provided to a qualified institution pursuant to this subsection if the Corporation determines that providing such assistance would be costlier than liquidating (including paying the insured accounts of) such institution or dealing with it in accordance with subsection (c) or (d) of this subsection. "(8) The provisions of the constitution or the laws, civil or criminal, of any State, express or implied, limiting the authority of a qualified institution (A) to take part in programs under this subsec-

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tion, (B) to issue and otherwise deal in net worth certificates issued pursuant to this paragraph, or (C) to continue operations, including the receipt of deposits and the payment or crediting of interest or dividends to depositors, because of the level of such institution's net worth, surplus fund, or guaranty fund, shall not apply to any qualified institution which the Corporation has approved for the purpose of taking part in programs under this subsection, continuing operations, or paying interest or dividends. "(9) During any period when a qualified institution has outstanding net worth certificates issued in accordance with this subsection, such institution shall not be liable for any State or local tax which is determined on the basis of the deposits held by such institution or the interest paid on such deposits. "(10) Notwithstanding any other Federal or State law, net worth certificates purchased by the Corporation under this subsection shall be deemed to be net worth for statutory and regulatory purposes. "(11) The Corporation may not use its authority under this subsection to purchase the voting or common stock of a qualified institution. Nothing in this paragraph shall be construed to limit the ability of the Corporation to enter into and enforce covenants and agreements that it determines to be necessary to protect its financial interests. "(12) The Corporation may provide assistance to a qualified institution which is not an insured institution only if the State fund which insures or guarantees tho deposits of such qualified institution enters into an agreement with the Corporation which provides that— "(A) the State fund will indemnify the Corporation for any losses which the Corporation may incur as a result of providing assistance under this subsection to such qualified institution; and "(B) during any period when such qualified institution has outstanding capital instruments issued in accordance with this subsection, the State insurance fund maintains a level of assessments on its members which results in costs to its members which are at least equivalent to the premium assessments paid to the Corporation by insured institutions during such period. "(13) During any period in which a qualified institution which has a stock form of ownership has outstanding certificates under this subsection, such qualified insured institution may not pay dividends to its shareholders.". REPORTS TO CONGRESS

SEC. 204. The Federal Home Loan Bank Board and the Board of 12 USC 1823 Directors of the Federal Deposit Insurance Corporation shall each "ote. transmit an annual report to each House of the Congress specifying the types and amounts of net worth certificates purchased from each depository institution and the conditions imposed on each such depository institution. GENERAL ACCOUNTING OFFICE AUDIT

SEC. 205. The Comptroller General of the United States shall 12 USC 1823 conduct on a semiannual basis an audit of the net worth certificate "°^^' programs of the Federal Deposit Insurance Corporation and the

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PUBLIC LAW 97-320—OCT. 15, 1982

Federal Home Loan Bank Board. A report on each such audit shall be transmitted to each House of the Congress. REPEAL

Ante, p. 1489. 12 USC 1729, 1823. Ante, p. 1492. Thrift Institutions Restructuring Act. 12 USC 1461 note.

SEC. 206. Upon the expiration of three years after the date of enactment of this Act, section 406(f)(5) of the National Housing Act and section 13(i) of the Federal Deposit Insurance Act are repealed. TITLE III—THRIFT INSTITUTIONS RESTRUCTURING SHORT TITLE

SEC. 301. This title may be cited as the "Thrift Institutions Restructuring Act". PART A—FORM OF CHARTER; DEMAND ACCOUNTS CHARTERING AND PURPOSE

SEC. 311. Section 5(a) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(a)) is amended to read as follows: "SEC. 5. (a) In order to provide thrift institutions for the deposit or investment of funds and for the extension of credit for homes and other goods and services, the Board is authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings and loan associations, or Federal savings banks, and to issue charters therefor, giving primary consideration to the best practices of thrift institutions in the United States. The lending and investment authorities are conferred by this section to provide such institutions the flexibility necessary to maintain their role of providing credit for housing,". DEMAND ACCOUNTS AND CAPITAL STOCK

SEC. 312. Paragraphs (1) and (2) of section 5(b) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(b)) are amended to read as follows: "(1)(A) An association may raise capital in the form of such savings deposits, shares, or other accounts, for fixed, minimum, or indefinite periods of time (all of which are referred to in this section as savings accounts), or in the form of such demand accounts of those persons or organizations that have a business, corporate, commercial, or agricultural loan relationship with the association as are authorized by its charter or by regulations of the Board, and may issue such passbooks, time certificates of deposit, or other evidence of accounts as are so authorized. "(B) An association may also accept demand accounts from a commercial, corporate, business, or agricultural entity for the sole purpose of effectuating payments thereto by a nonbusiness customer. An association may not pay interest on a demand account. All savings accounts and demand accounts shall have the same priority upon liquidation. Holders of accounts and obligors of an association shall, to such extent as may be provided by its charter or by regulations of the Board, be members of the association, and shall

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have such voting rights and such other rights as are thereby provided. "(C) Except as may be otherwise authorized by an association's charter or regulation of the Board in the case of savings accounts for fixed or minimum terms of not less than fourteen days, the payment of any savings account shall be subject to the right of the association to require such advance notice, not less than fourteen days, as shall be provided for by the charter of the association or the regulations of the Board. "(D) The payment of withdrawals from accounts in the event an association does not pay all withdrawals in full (subject to the right of the association, where applicable, to require notice) shall be subject to such rules and procedures as may be prescribed by the association's charter or by regulation of the Board, but any association which, except as authorized in writing by the Board, fails to make full payment of any withdrawal when due shall be deemed to be in an unsafe or unsound condition to transact business within the meaning of subsection (d) of this section. "(E) Accounts may be subject to check or to withdrawal or transfer on negotiable or transferable or other order or authorization to the association, as the Board may by regulation provide. "(F) Notwithstanding any limitation of this section, associations 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 Board. "(2) To such extent as the Board may authorize by regulation or advice in writing, an association may borrow, may give security, may be surety as defined by the Board and may issue such notes, bonds, debentures, or other obligations, or other securities, including capital stock, as the Board may so authorize.". CONVERSIONS TO FEDERAL CHARTERS

SEC. 313. Section 5(i) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(i)) is amended to read as follows: "(i)(1) Any institution which is, or is eligible to become, a member of a Federal home loan bank may convert itself into a Federal savings and loan association or Federal savings bank under this Act (and in so doing may change directly from the mutual form to the stock form, or from the stock form to the mutual form), but such conversion shall be subject to such rules and regulations as the Board shall prescribe, and thereafter the converted 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) Subject to the rules and regulations of the Board, any Federal association may convert itself from the mutual form to the stock form of organization, or from the stock form to the mutual form, and any Federal association may change its designation from a Federal savings and loan association to a Federal savings bank, or the reverse. "(3)(A) Any Federal association may convert itself into a savings and loan or savings bank type of institution organized pursuant to the laws of the State, district, commonwealth, or territory (hereinafter referred to in this section as the 'State') in which the principal office of such Federal association is located if—

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12 USC 1726.

12 USC 1730a.

PUBLIC LAW 97-320—OCT. 15, 1982

"(i) the State permits the conversion of any savings and loan or savings bank type of institution of such State into a Federal association; "(ii) such conversion of a Federal association into such a State institution is determined 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 association is located, as required by such law for a Statechartered institution to convert itself into a Federal association, but in no event upon a vote of less than 51 per centum of all the votes cast at such meeting, and 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 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 thirty and not more than sixty days prior to the date of the meeting, to each member or stockholder of record of the Federal association at his last address as shown on the books of the Federal association and to the General Counsel of the Federal Home Loan Bank Board, Washington, District of Columbia; "(iv) in the event of dissolution of a mutual association after conversion, the members or shareholders of the association will share on a mutual basis in the assets of the association in exact proportion to their relative share or account credits; "(v) in the event of dissolution of a stock association after conversion, the stockholders will share on a 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 association is located. "(B)(i) The act of conversion constitutes consent by the institution to be bound by all the requirements that the Federal Savings and Loan Insurance Corporation may legally impose under section 403 of the National Housing Act. "(ii) The association shall upon conversion and thereafter be authorized to issue securities in any form currently approved at the time of issue by the Federal Savings and Loan Insurance Corporation for issuance by similar insured institutions in such State, "(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) Any aggrieved person may obtain review of a final action of the Board or the Federal Savings and Loan Insurance Corporation which approves, with or without conditions, or disapproves a plan of conversion from the mutual to the stock form, only by complying with the provisions of subsection (k) of section 408 of the National Housing 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

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notice of such final action in the Federal Register or upon the giving of such general notice of final action as is required by or approved under regulations of the Corporation, whichever is later. "(5)(A) To the extent authorized by the Board— "(i) any Federal savings bank chartered as such prior to the enactment of this paragraph 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 such enactment; and "(ii) any Federal savings bank 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 association that acquires, by merger or consolidation, a Federal savings bank enjoying grandfathered rights hereunder.". CONVERSION FROM STATE MUTUAL TO STATE STOCK

SEC. 314. Section 402(j) of the National Housing Act (12 U.S.C. 1725(j)) is amended— (1) by amending paragraph (1) to read as follows: "(1) Except as provided in section 5 of the Home Owners' Loan Act of 1933, no insured institution may convert from the mutual to the stock form except in accordance with the rules and regulations of the Corporation."; and (2) by striking out paragraphs (2), (3), (5), and (6) and redesignating paragraph (4) as paragraph (2). PART B—INVESTMENTS OVERDRAFTS

SEC. 321. Section 5(c)(1)(A) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)(1)(A)) is amended to read as follows: "(A) ACCOUNT LOANS.—Loans on the security of its savings

accounts and accounts.".

loans

specifically

related

to

transaction

REAL ESTATE LOANS

SEC. 322. Section 5(c)(1)(B) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)(1)(B)) is amended to read as follows: "(B) REAL PROPERTY LOANS.—Loans on the security of liens upon residential or nonresidential real property, except that the loans and investments of an association on nonresidential real property may not exceed 40 per centum of its assets.". TIME DEPOSITS

SEC. 323. Section 5(c)(1)(G) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)(1)(G)) is amended to read as follows: "(G) DEPOSITS.—Investments in the time deposits, certificates, or accounts of any bank the deposits of which are insured by the Federal Deposit Insurance Corporation, or in the savings accounts, certificates, or other accounts of any institution the

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PUBLIC LAW 97-320—OCT. 15, 1982 accounts of which are insured by the Federal Savings and Loan Insurance Corporation.". GOVERNMENT SECURITIES

SEC. 324. Section 5(c)(1)(H) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)(l)(H)) is amended to read as follows: "(H) STATE SECURITIES.—Investments in obligations of, or

issued by, any State or political subdivision thereof (including any agency, corporation, or instrumentality of a State or political subdivision), except that an association may not invest more than 10 per centum of its capital and surplus in obligations of any one issuer, exclusive of investments in general obligations of any issuer.". COMMERCIAL AND OTHER LOANS

SEC. 325. Section 5(c)(1) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)(l)) is amended by adding at the end thereof the following: "(R) COMMERCIAL AND OTHER LOANS.—Secured or unsecured

loans for commercial, corporate, business, or agricultural purposes. No association may make loans to one borrower under the authority provided by this subparagraph in excess of the amount a national bank having an identical total capital and surplus could lend such borrower. The aggregate amount of loans under this paragraph shall not exceed 5 per centum of the assets of a savings and loan association (7 y% per centum of the assets of a savings bank) prior to January 1, 1984, or 10 per centum of the assets of a savings and loan association or savings bank thereafter.". EUMINATION OF DIFFERENTIAL

12 USC 461 12 USC 3503 note.

Post, p. 1501.

SEC. 326. (a) Section 102 of Public Law 94-200 is repealed. ^\^) Interest rate differentials for all categories of deposits or accounts between (i) any bank (other than a savings bank) the deposits of which are insured by the Federal Deposit Insurance Corporation, and (ii) any savings and loan, building and loan, or homestead association (including cooperative banks) the deposits or accounts of which are insured by the Federal Savings and Loan Insurance Corporation or any mutual savings bank as defined in section 3(0 of the Federal Deposit Insurance Act (12 U.S.C. 1813(j)), shall be phased out on or before January 1, 1984. (2) Any differential which is being phased out pursuant to a schedule established by regulations prescribed by the Depository Institutions Deregulation Committee prior to the aate of enactment of this Act shall be phased out as soon as practicable, but in no event later than such schedule provides. (3) Notwithstanding any other provision of law, no differential for any category of deposits or accounts shall be established or maintained on or after January 1, 1984. (c) No interest rate differential may be established or maintained in the case of the deposit account authorized pursuant to section 204(c) of the Depository Institutions Deregulation Act of 1980. (d) In the case of the elimination or reduction of any interest rate differential under subsection (b) with respect to any category of

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96 STAT. 1501

deposits or accounts between (1) any bank (other than a savings bank) the deposits of which are insured by the Federal Deposit Insurance Corporation and (2) any savings and loan, building and loan, or homestead association (including cooperative banks) the deposits or accounts of which are insured by the Federal Savings and Loan Insurance Corporation or any mutual savings bank as defined in section 3(f) of the Federal Deposit Insurance Act, the 12 USC 1813. maximum rate of interest which shall be established for such category of deposits for banks (other than savings banks) the deposits of which are insured by the Federal Deposit Insurance Corporation shall be equal to the highest rate of interest which savings and loan associations the deposits or accounts of which are insured by the Federal Savings and Loan Insurance Corporation were permitted to pay on such category of deposits immediately prior to the elimination or reduction of such interest rate differential. MONEY MARKET DEPOSIT ACCOUNT

SEC. 327. Section 204 of the Depository Institutions Deregulation Act of 1980 (12 U.S.C. 3503) is amended by adding at the end thereof the following: "(c)(1) The Committee shall issue a regulation authorizing a new deposit account, effective not later than 60 days after the date of enactment of this subsection. Such account shall be directly equivalent to and competitive with money market mutual funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940. 15 USC 80a-5i. "(2) No limitation on the meiximum rate or rates of interest payable on deposit accounts shall apply to the account authorized by this subsection. "(3) For purposes of section 19(b) of the Federal Reserve Act, 12 USC 46i. accounts established pursuant to this subsection which are not 'transaction accounts' as defined by the reserve requirement regulations of the Board of Governors of the Federal Reserve System as those regulations existed on August 1, 1982, shall not be subject to transaction account reserves, even though no minimum maturity is required, and even though up to three preauthorized or automatic transfers and three transfers to third parties are permitted monthly.". HOUSING AND LAND DEVELOPMENT LOANS

SEC. 328. Section 5(c)(l)(0) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)(l)(0)) is amended to read as follows: "(O) HOUSING AND LAND AND URBAN DEVELOPMENT INSURED OR

GUARANTEED INVESTMENTS.—Loans (i) secured by mortgages as to which the association has the benefit of insurance under title X of the National Housing Act or of a commitment or agreement for such insurance, or (ii) as to which the association has the benefit of any guarantee under title IV of the Housing and Urban Development Act of 1968 or 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, or of a commitment or agreement therefor.".

12 USC I749aa. 42 USC 390i. 42 USC 4511. 42 USC 1440,12 u s e 371, 1464.

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PUBLIC LAW 97-320—OCT. 15, 1982 CONSUMER LOANS

SEC. 329. Section 5(c)(2)(B) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)(2)(B)) is amended— (1) by inserting ", including loans reasonably incident to the provision of such credit," after "household purposes"; and (2) by inserting before the period at the end thereof the following: ", except that loans of an association under this subparagraph may not exceed 30 per centum of the assets of the association". ADDITIONAL INVESTMENT AUTHORITIES

SEC. 330. Section 5(c) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)) is amended— (1) in paragraph (2), by striking out "20 per centum" and inserting in lieu thereof "the following percentages"; (2) by redesignating paragraph (6) as paragraph (5); (3) by striking out paragraph (2)(A) and inserting in lieu thereof the following: "(A) INVESTMENTS IN PERSONALTY.—Investments in tangi-

ble personal property, including, without limitation, vehicles, manufactured homes, machinery, equipment, or furniture, for rental or sale, but such investment may not exceed 10 per centum of the assets of the association."; (4) in paragraph (3)— (A) by striking out subparagraph (D); and (B) by amending subparagraph (A) to read as follows: "(A) EDUCATION LOANS.—Loans made for the payment of educational expenses."; and (5) in paragraph (4)— (A) by amending subparagraph (C) to read as follows: "(C) FOREIGN ASSISTANCE INVESTMENTS.—Investments in

22 USC 2181. 22 USC 2183 note.

22 USC 2181, ^^^^-

15 USC 681.

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 having the benefit of any guaranty under section 221 or 222 of such Act as hereafter amended or extended, or of any commitment or agreement for any such guaranty. Investments under this subparagraph shall not exceed, in the case of any association, 1 per centum of the assets of such association."; and (B) by amending subparagraph (D) to read as follows: "(D) SMALL BUSINESS INVESTMENT COMPANIES.—An 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 the Federal Home Loan Bank System, but no association may make any investment under this subparagraph if its aggregate outstanding investment under this subparagraph would exceed 1 per centum of the assets of such association.".

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96 STAT. 1503

TYING ARRANGEMENTS

SEC. 331. Section 5 of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464), as amended by sections 112 and 121, is amended by adding at the end thereof the following: "(q)(l) An association shall not in any manner extend credit, lease, or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition or requirement— "(A) that the customer shall obtain additional credit, property, or service from such association, or from any service corporation or affiliate of such association, other than a loan, discount, deposit, or trust service; "(B) that the customer provide additional credit, property, or service to such association, or to any service corporation or affiliate of such association, other than those related to and usually provided in connection with a similar loan, discount, deposit, or trust service; and "(C) that the customer shall not obtain some other credit, property, or service from a competitor of such association, or from a competitor of any service corporation or affiliate of such association, other than a condition or requirement that such association shall reasonably impose in connection with credit transactions to assure the soundness of credit. "(2)(A) Any person may sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by reason of a violation of paragraph (1), under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity and under the rules governing such proceedings. "(B) Upon the execution of proper bond against damages for an injunction improvidently granted and a showing that the danger of irreparable loss or damage is immediate, a preliminary injunction may issue. "(3) any person who is injured in his business or property by reason of anything forbidden in paragraph (1) may sue therefor in any district court of the United States in which the defendant resides or is found or has an agent, without regard to the amount in controversy, or may sue therefor in any other court of competent jurisdiction, and shall be entitled to recover three times the amount of the damages sustained by him, and the cost of suit, including a reasonable attorney's fee. Any such suit shall be brought within four years from the date of the occurrence of the violation. "(4) Nothing contained in this subsection shall be construed as affecting in any manner the right of the United States or any other party to bring an action under any other law of the United States or of any State, including any right which may exist in addition to specific statutory authority, challenging the legality of any act or practice which may be proscribed by this subsection. No regulation or order issued by the Board under this subsection shall in any manner constitute a defense to such action. "(5) For purposes of this subsection— "(A) the term 'affiliate' of an association means any individual or company (including any corporation, partnership, trust, joint-stock company, or similar organization) which controls, is

Ante, pp. 1471, 1479.

"Affiliate.

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"Loan."

PUBLIC LAW 97-320—OCT. 15, 1982 controlled by, or is under common control with such association; and "(B) the term 'loan' includes obligations and extensions or advances of credit.". LIQUIDITY INVESTMENTS

SEC. 332. Section 5A(b)(l)(B) of the Federal Home Loan Bank Act (12 U.S.C. 1425a(b)(l)(B)) is amended by striking out "and commercial banks" and inserting in lieu thereof the following: ", institutions which are, or are eligible to become, members thereof, and commercial banks". REGULATORY JURISDICTION

SEC. 333. Section 2(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)) is amended by inserting after "Islands" the following: ", except an institution the accounts of which are insured by the Federal Savings and Loan Insurance Corporation or an institution chartered by the Federal Home Loan Bank Board,". BRANCHING

Ante, p. 1503.

26 USC 7701.

Ante, p. 1483.

SEC. 334. Section 5 of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464), as amended by sections 112, 121, and 331, is amended by adding at the end thereof the following: "(r)(1) No association may establish, retain, or operate a branch outside the State in which the association has its home office, unless the association qualifies as a domestic building and loan association under section 7701(a)(19) of the Internal Revenue Code of 1954 or meets the asset composition test imposed by subparagraph (c) of that section on institutions seeking so to qualify. No out-of-State branch so established shall be retained or operated unless the total assets of the association attributable to all branches of the association in that State would qualify the branches as a whole, were they otherwise eligible, for treatment as a domestic building and loan association under said section 7701(a)(19). "(2) The limitations of paragraph (1) shall not apply if— "(A) the branch results from a transaction authorized under section 408(m) of the National Housing Act; "(B) the branch was authorized for the association prior to the enactment of the Depository Institutions Amendments of 1982; "(C) the law of the State in which the branch is or is to be located would permit establishment of the branch were the association an institution of the savings and loan or savings bank type chartered by the State in which its home office is located; or "(D) the branch was operated lawfully as a branch under State law prior to the association's conversion to a Federal charter. "(3) The Board, for good cause shown, may allow associations up to two years to comply with the requirements of this subsection.".

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96 STAT. 1505

HOLDING COMPANY ACTIVITIES

SEC. 335. Section 408 of the National Housing Act (12 U.S.C. 1730a), as amended by section 123, is amended by adding at the end ^^*«. P-1483. thereof the following: "(n) A savings and loan holding company, or any subsidiary thereof which is not an insured institution, whose subsidiary insured institution fails to qualify as a domestic building and loan association under section 7701(a)(19) of the Internal Revenue Code of 1954, may not commence, or continue for more than three years 26 USC 7701. after such failure, any business activity other than those specified for multiple savings and loan holding companies and their subsidiaries under subsection (c)(2) of this section.". PART C—PREEMPTION OF DUE ON SALE PROHIBITIONS DUE-ON S A L E C L A U S E S

SEC. 341. (a) For the purpose of this section— Definitions. (1) the term "due-on-sale clause" means a contract provision ^^ USC i70lj-3. which authorizes a lender, at its option, to declare due and payable sums secured by the lender's security instrument if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender's prior written consent; (2) the term "lender" means a person or government agency making a real property loan or any assignee or transferee, in whole or in part, of such a person or agency; (3) the term "real property loan" means a loan, mortgage, advance, or credit sale secured by a lien on real property, the stock allocated to a dwelling unit in a cooperative housing corporation, or a residential manufactured home, whether real or personal property; and (4) the term "residential manufactured home" means a manufactured home as defined in section 603(6) of the National Manufactured Home Construction and Safety Standards Act of 1974 which is used as a residence; and 42 USC 5402. (5) the term "State" means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, American Samoa, and the Trust Territory of the Pacific Islands. (b)(1) Notwithstanding any provision of the constitution or laws (including the judicial decisions) of any State to the contrary, a lender may, subject to subsection (c), enter into or enforce a contract containing a due-on-sale clause with respect to a real property loan. (2) Except as otherwise provided in subsection (d), the exercise by the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all rights and remedies of the lender and the borrower shall be fixed and governed by the contract. (3) In the exercise of its option under a due-on-sale clause, a lender is encouraged to permit an assumption of a real property loan at the existing contract rate or at a rate which is at or below the average between the contract and market rates, and nothing in this section shall be interpreted to prohibit any such assumption. (c)(1) In the case of a contract involving a real property loan which was made or assumed, including a transfer of the liened property

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PUBLIC LAW 97-320—OCT. 15, 1982

subject to the real property loan, during the period beginning on the date a State adopted a constitutional provision or statute prohibiting the exercise of due-on-sale clauses, or the date on which the highest court of such State has rendered a decision (or if the highest court has not so decided, the date on which the next highest appellate court has rendered a decision resulting in a final judgment if such decision applies State-wide) prohibiting such exercise, and ending on the date of enactment of this section, the provisions of subsection (b) shall apply only in the case of a transfer which occurs on or after the expiration of 3 years after the date of enactment of this Act, except that— (A) a State, by a State law enacted by the State legislature prior to the close of such 3-year period, with respect to real property loans originated in the State by lenders other than national banks, Federal savings and loan associations. Federal savings banks, and Federal credit unions, may otherwise regulate such contracts, in which case subsection (h) shall apply only if such State law so provides; and (B) the Comptroller of the Currency with respect to real property loans originated by national banks or the National Credit Union Administration Board with respect to real property loans originated by Federal credit unions may, by regulation prescribed prior to the close of such period, otherwise regulate such contracts, in which case subsection (b) shall apply only if such regulation so provides. (2)(A) For any contract to which subsection (b) does not apply pursuant to this subsection, a lender may require any successor or transferee of the borrower to meet customary credit standards applied to loans secured by similar property, and the lender may declare the loan due and payable pursuant to the terms of the contract upon transfer to any successor or transferee of the borrower who fails to meet such customary credit standards. (B) A lender may not exercise its option pursuant to a due-on-sale clause in the case of a transfer of a real property loan which is subject to this subsection where the transfer occurred prior to the date of enactment of this Act, (C) This subsection does not apply to a loan which was originated by a Federal savings and loan association or Federal savings bank. (d) A lender may not exercise its option pursuant to a due-on-sale clause upon— (1) the creation of a lien or other encumbrance subordinate to the lender's security instrument which does not relate to a transfer of rights of occupancy in the property; (2) the creation of a purchase money security interest for household appliances; (3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; (4) the granting of a leasehold interest of three years or less not containing an option to purchase; (5) a transfer to a relative resulting from the death of a borrower; (6) a transfer where the spouse or children of the borrower become an owner of the property; (7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;

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96 STAT. 1507

(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or (9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board. (e)(1) The Federal Home Loan Bank Board, in consultation with the Comptroller of the Currency and the National Credit Union Administration Board, is authorized to issue rules and regulations and to publish interpretations governing the implementation of this section. (2) Notwithstanding the provisions of subsection (d), the rules and regulations prescribed under this section may permit a lender to exercise its option pursuant to a due-on-sale clause with respect to a real property loan and any related agreement pursuant to which a borrower obtains the right to receive future income. (f) The Federal Home Loan Mortgage Corporation (hereinafter referred to as the "Corporation") shall not, prior to July 1, 1983, implement the change in its policy announced on July 2, 1982, with respect to enforcement of due-on-sale clauses in real property loans which are owned in whole or in part by the Corporation. (g) Federal Home Loan Bank Board regulations restricting the use of a balloon payment shall not apply to a loan, mortgage, advance, or credit sale to which this section applies. PART D—MISCELLANEOUS ATTORNEYS FEES

SEC. 351. The last sentence of section 5(d)(8)(A) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(d)(8)(A)) is amended by inserting ", which prevails," after "party". SECURITY FOR ADVANCES

SEC. 352. Section 10 of the Federal Loan Bank Act (12 U.S.C. 1430) is amended— (1) by amending subsection (a) to read as follows: "(a) Each Federal Home Loan Bank is authorized to make secured advances to its members upon such security as the Board may prescribe."; (2) by striking out the first two sentences of subsection (b); and (3) by striking out the word "twelve" wherever it appears in subsection (c) and inserting in lieu thereof the word "twenty". DELETION OF OBSOLETE REQUIREMENT

SEC. 353. Section 6(c)(2) of the Federal Home Loan Bank Act (12 U.S.C. 1426(c)(2)) is amended to read as follows: "(2) Notwithstanding any other provision of this subsection, no action shall be taken by any bank with respect to any member pursuant to any of the foregoing provisions of this subsection if the effect of such action would be to cause the aggregate outstanding advances, within the meaning of the last sentence of subsection (c) of section 10 of this Act or within the meaning of regulations of the 12 USC 1230. Board defining such term for the purposes of this sentence, made by such bank to such member to exceed twenty times the amounts paid

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PUBLIC LAW 97-320—OCT. 15, 1982

in by such member for outstanding capital stock held by such member.". COMPENSATION OF ADVISORY COMMITTEE MEMBERS

5 USC app.

SEC. 354. Section 8a of the Federal Home Loan Bank Act (12 U.S.C. 1428a) is amended by striking out the fifth sentence and inserting in lieu thereof the following: "Subject to the provisions of section 7 of the Federal Advisory Committee Act, all members and alternates of the Council may be compensated and shall be entitled to reimbursement from the Board for traveling expenses incurred in attendance at meetings of such Council.". WITHDRAWAL FROM MEMBERSHIP

SEC. 355. (a) Section 6(i) of the Federal Home Loan Bank Act (12 U.S.C. 1426(i)) is amended by inserting before the period at the end of the second sentence the following: ", except that in the case of a voluntary withdrawal, such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties applicable to such prepayment". (b) Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is amended by adding at the end thereof the following: "(m) Notwithstanding any other provision of this Act, an institution which withdraws from membership may acquire membership in any Federal Home Loan Bank only after the expiration of a period of five years thereafter, except where such withdrawal is a consequence of a transfer of membership on a non-interrupted basis between Banks.". TITLE IV—PROVISIONS RELATING TO NATIONAL AND MEMBER BANKS PART A—GENERAL PROVISIONS LENDING LIMITS

"Loans and extensions of credit.

SEC. 401. (a) Section 5200 of the Revised Statutes (12 U.S.C. 84) is amended to read as follows: "SEC. 5200. (a)(1) The total loans and extensions of credit by a national banking association to a person outstanding at one time and not fully secured, as determined in a manner consistent with paragraph (2) of this subsection, by collateral having a market value at least equal to the amount of the loan or extension of credit shall not exceed 15 per centum of the unimpaired capital and unimpaired surplus of the association. "(2) The total loans and extensions of credit by a national banking association to a person outstanding at one time and fully secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the funds outstanding shall not exceed 10 per centum of the unimpaired capital and unimpaired surplus of the association. This limitation shall be separate from and in addition to the limitation contained in paragraph (1) of this subsection. "(h) For the purposes of this section— "(1) the term 'loans and extensions of credit' shall include all direct or indirect advances of funds to a person made on the

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