§2279bb–4 Enforcement Levels

Summary

The Director must put the Corporation into one of four enforcement levels based on how much regulatory capital it has compared to three set benchmarks: the risk-based capital level (under section 2279bb–1), the minimum capital level (under section 2279bb–2), and the critical capital level (under section 2279bb–3). Level I means the Corporation meets or beats both the risk-based and minimum levels. Level II means it is below the risk-based level but still at or above the minimum level, or the Director has otherwise moved it to Level II. Level III means it is below the minimum but at or above the critical level, or the Director has moved it to Level III. Level IV means it is below the critical level, or the Director has moved it to Level IV. The Director can also move the Corporation up one level if they write that the Corporation is doing unapproved things that could quickly eat away core capital or if the value of mortgaged or guaranteed property falls a lot. The Director must check and set the level at least every quarter (and whenever those problems happen). The first such check was for the quarter ending March 31, 1992. If the Director decides the Corporation is in Level II or III, the Director must notify Congress and the Corporation in writing, say which level it is in, say that the Corporation is subject to the rules in sections 2279bb–5 or 2279bb–6 as appropriate, and explain the reasons for that decision.