[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