§2279bb–6 Supervisory Actions Applicable to Level Iii

Summary

If the Corporation is placed in level III, it must send the Director a plan for restoring its capital within the time the Director sets, and then follow the approved plan. It cannot pay any dividend that would push it into level IV. Other dividend payments need the Director’s prior approval, and the Director may approve them only if the payment (i) will help the Corporation meet the risk-based capital level and the minimum capital level promptly, (ii) will help the Corporation’s long-term safety and soundness, or (iii) is otherwise in the public interest. The Director must immediately reclassify the Corporation to level IV if no approved plan is submitted or if the Director finds the Corporation failed, in good faith, to make reasonable efforts to follow the approved plan and schedule. The Director may also take other actions while the Corporation is in level III. These include limiting or cutting obligations (including off-balance-sheet items), restricting or shrinking assets, banning dividends, requiring new capital to reach level II, forcing changes to risky activities, or appointing a conservator. The rule took effect on January 1, 1992.