§2279bb–6 Supervisory actions applicable to level III

Summary

If the Corporation is classified as level III, it must give the Director a plan to restore its capital within whatever time the Director sets, and then carry out the plan once the Director approves it. It cannot pay any dividend that would push it into level IV, and it may only make other dividend payments if the Director approves them before payment. The Director will approve a dividend only if it will quickly help the Corporation meet required capital levels, help its long-term safety and soundness, or serve the public interest. The Director must move the Corporation to level IV right away if the Corporation does not submit an approved plan or if the Director finds the Corporation has not made good-faith, reasonable efforts to follow the approved plan and its schedule. While the Corporation is at level III, the Director may also limit or cut its obligations (including off-balance-sheet items), restrict or shrink its assets, stop dividend payments, require new capital so it can reach level II, force the company to end or change risky activities, or appoint a conservator. These rules took effect on January 1, 1992.