§4616 Supervisory actions applicable to significantly undercapitalized regulated entities

Summary

A regulated entity that the agency calls "significantly undercapitalized" must, within the time set in sections 4622(b) and 4622(d), send the Director a capital restoration plan that follows section 4622 and must follow the plan once it is approved. It may not make any capital payment that would make it "critically undercapitalized." Any other capital payment needs the Director’s written approval. The Director can approve a payment only if the Director finds it will promptly help the entity meet its risk-based and minimum capital levels, will help the entity’s long-term safety and soundness, or is otherwise in the public interest. The Director must also, at any time, take one or more corrective actions. Those can include limiting or cutting obligations (including off-balance-sheet ones), stopping asset growth or forcing asset shrinkage, requiring new capital in a form and amount the Director sets, forcing the firm to stop or change risky activities, or taking board and officer actions (such as ordering a new board election, making the firm remove any director or executive who served more than 180 days right before the firm became undercapitalized, or requiring qualified executives who may need the Director’s approval). The Director may reclassify the firm as critically undercapitalized if the firm does not submit an acceptable plan in time or fails to make good-faith, reasonable efforts to follow an approved plan. The firm also may not pay any executive a bonus or pay an executive more than that officer’s average pay (excluding bonuses, stock options, and profit sharing) during the 12 calendar months before the month it became significantly undercapitalized without the Director’s prior written approval.