[Federal Register Volume 59, Number 105 (Thursday, June 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13365]
[[Page Unknown]]
[Federal Register: June 2, 1994]
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FEDERAL DEPOSIT INSURANCE CORPORATION
Delegations of Authority With Respect to Undercapitalized
Institutions
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Notice.
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SUMMARY: FDIC has delegated limited authority to its Executive Director
for Supervision and Resolutions and/or its Director, Division of
Supervision (DOS), to determine that action other than appointing a
receiver would better achieve the statutory purpose of minimizing long-
term loss to the deposit insurance fund from resolving the problems of
insured depository institutions and to make certain other
determinations relating to prompt corrective action.
FOR FURTHER INFORMATION: Jesse G. Snyder, (202) 898-6915, Assistant
Director, Operations Branch, Office of Supervision and Applications,
Division of Supervision, FDIC, 550 17th Street NW., Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
I. Background
Effective December 19, 1992, section 38(h)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1831o(h)(3)) mandates appointment of a
receiver not later than 90 days after an institution becomes critically
undercapitalized unless the appropriate regulator, with FDIC
concurrence, determines that an alternative course of action ``would
better achieve the purpose of [section 38 to resolve the problems of
insured depository institutions at the least possible long-term loss to
the deposit insurance fund]''. Such a determination is valid for up to
90 days and may be reinstated for additional periods of up to 90 days
by new determinations properly documented. After one year a receiver
must be appointed unless the head of the appropriate regulatory agency
and the Chairperson of the FDIC certify that ``the institution is
viable and not expected to fail'' and the institution also meets four
other specific criteria.
Section 38 also permits the appropriate federal banking agency of
an undercapitalized institution to determine not to take certain
otherwise mandated corrective actions under subsection (f) if to do so
would not further the purpose of section 38.
II. Delegation of Authority
A. Deferring Appointment of Receiver
In connection with the resolution of critically undercapitalized
institutions, there are certain cases where it is appropriate to extend
the 90-day receivership deadline, such as where the chartering
authority or appropriate federal banking agency sets a resolution date
beyond the deadline in order to accommodate the information gathering
needs required to facilitate an orderly resolution. Another example
might be an institution with a promising recapitalization in progress
which will not be fully effected prior to the deadline but has a good
chance of being successful. It is appropriate that such matters be
acted on at the staff level, under delegated authority, with respect to
the first determination to defer the appointment of a receiver for up
to 90 days for a particular institution. Accordingly, the Board has
delegated authority to the Executive Director for Supervision and
Resolutions, the Director, DOS, and where confirmed in writing by the
Director, to an associate director, to make determinations under
section 38(h)(3)(A)(ii) with respect to institutions for which the FDIC
is the appropriate federal banking agency, and to affirmatively concur
with actions thereunder by other appropriate federal banking agencies,
as to any action in lieu of appointing a receiver for a critically
undercapitalized institution.
This delegated authority does not extend to actually appointing a
conservator or a receiver under section 38(h)(3)(A)(i), or to
concurring therein, and also does not include authority to grant or
concur in more than one deferral per institution or to withhold FDIC
concurrence with respect to any action taken under section 38(h)(3)(A)
by an appropriate federal banking agency in lieu of appointing a
receiver. Each action under delegated authority will be documented in
writing, setting forth how deferring the appointment of a receiver or
conservator for the initial 90-day period will minimize long-term loss
to the deposit insurance fund.
B. Waiver of Certain Corrective Actions
Section 38(f) requires that at least the following three types of
specific action be taken against critically and significantly
undercapitalized institutions, as well as against undercapitalized
institutions which have failed to submit and implement an acceptable
capital restoration plan, unless the agency determines that the actions
would not further the purpose of section 38: (1) Requiring the sale of
securities or consolidation with another institution; (2) requiring
compliance with section 23A of the Federal Reserve Act without benefit
of the exemption therein for transactions with certain affiliated
institutions; and (3) restricting the interest rates paid on deposits
to prevailing rates. Where, for example, a near-term resolution or
recapitalization of an institution is anticipated, the pursuit of such
formal actions against an institution would not normally minimize loss
to the insurance fund. In those and other cases, making such
determinations would be appropriately delegable to staff. Accordingly,
the Board has delegated such authority under section 38(f)(3) to the
Executive Director for Supervision and Resolutions, the Director, DOS,
or an associate director designated in writing by such Director. Each
such action under delegated authority must be documented in writing,
clearly setting forth the reasons therefor.
By order of the Board of Directors.
Dated at Washington, DC, this 24th day of May 1994.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Acting Executive Secretary.
[FR Doc. 94-13365 Filed 6-1-94; 8:45 am]
BILLING CODE 6714-01-P
