§5381 — Title 12 Banks and Banking | U.S. Code

Summary

Defines the main words used when the government takes apart a big financial firm that fails. It explains what counts as the receiver’s administrative costs, what the Bankruptcy Code is (title 11), what a bridge financial company is (a new firm the Corporation can set up under section 5390(h)), what a claim is (any right to payment), what “company” and “financial company” cover (banks, nonbank firms the Fed watches, firms mostly doing financial work, and certain subsidiaries, but not Farm Credit System institutions, government entities, or some regulated entities), the Court used (U.S. District Court for the District of Columbia), what a covered broker or dealer is (registered under section 78o(b) of title 15 and a SIPC member), what a covered financial company is (one officially designated under section 5383(b), excluding insured depository institutions), what a covered subsidiary is (a subsidiary of a covered financial company except insured depository institutions, insurance companies, or covered brokers/dealers), the customer terms (same as in section 78lll of title 15), what the Fund is (the Orderly Liquidation Fund under section 5390(n)), what an insurance company is (an insurer regulated by a state and subject to state insolvency law), and that SIPC means the Securities Investor Protection Corporation. It also says a company is not “predominantly engaged” in financial activities if less than 85 percent of its consolidated revenue comes from those activities. The Corporation, with the Secretary, will set rules for that test, and revenue from owning or controlling a depository institution counts toward the total.

Title 12, §5381

Banks and Banking — Source: USLM XML via OLRC

(a)In this subchapter, the following definitions shall apply:

(1)The term “administrative expenses of the receiver” includes—

(A)the actual, necessary costs and expenses incurred by the Corporation as receiver for a covered financial company in liquidating a covered financial company; and

(B)any obligations that the Corporation as receiver for a covered financial company determines are necessary and appropriate to facilitate the smooth and orderly liquidation of the covered financial company.

(2)The term “Bankruptcy Code” means title 11.

(3)The term “bridge financial company” means a new financial company organized by the Corporation in accordance with section 5390(h) of this title for the purpose of resolving a covered financial company.

(4)The term “claim” means any right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.

(5)The term “company” has the same meaning as in section 1841(b) of this title, except that such term includes any company described in paragraph (11), the majority of the securities of which are owned by the United States or any State.

(6)The term “Court” means the United States District Court for the District of Columbia, unless the context otherwise requires.

(7)The term “covered broker or dealer” means a covered financial company that is a broker or dealer that—

(A)is registered with the Commission under section 78o(b) of title 15; and

(B)is a member of SIPC.

(8)The term “covered financial company”—

(A)means a financial company for which a determination has been made under section 5383(b) of this title; and

(B)does not include an insured depository institution.

(9)The term “covered subsidiary” means a subsidiary of a covered financial company, other than—

(A)an insured depository institution;

(B)an insurance company; or

(C)a covered broker or dealer.

(10)The terms “customer”, “customer name securities”, “customer property”, and “net equity” in the context of a covered broker or dealer, have the same meanings as in section 78lll of title 15.

(11)The term “financial company” means any company that—

(A)is incorporated or organized under any provision of Federal law or the laws of any State;

(B)is—

(i)a bank holding company, as defined in section 1841(a) of this title;

(ii)a nonbank financial company supervised by the Board of Governors;

(iii)any company that is predominantly engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto for purposes of section 1843(k) of this title other than a company described in clause (i) or (ii); or

(iv)any subsidiary of any company described in any of clauses (i) through (iii) that is predominantly engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto for purposes of section 1843(k) of this title (other than a subsidiary that is an insured depository institution or an insurance company); and

(C)is not a Farm Credit System institution chartered under and subject to the provisions of the Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et seq.), a governmental entity, or a regulated entity, as defined under section 4502(20) of this title.

(12)The term “Fund” means the Orderly Liquidation Fund established under section 5390(n) of this title.

(13)The term “insurance company” means any entity that is—

(A)engaged in the business of insurance;

(B)subject to regulation by a State insurance regulator; and

(C)covered by a State law that is designed to specifically deal with the rehabilitation, liquidation, or insolvency of an insurance company.

(14)The term “nonbank financial company” has the same meaning as in section 5311(a)(4)(C) of this title.

(15)The term “nonbank financial company supervised by the Board of Governors” has the same meaning as in section 5311(a)(4)(D) of this title.

(16)The term “SIPC” means the Securities Investor Protection Corporation.

(b)For purpose of the definition of the term “financial company” under subsection (a)(11), no company shall be deemed to be predominantly engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto for purposes of section 1843(k) of this title, if the consolidated revenues of such company from such activities constitute less than 85 percent of the total consolidated revenues of such company, as the Corporation, in consultation with the Secretary, shall establish by regulation. In determining whether a company is a financial company under this subchapter, the consolidated revenues derived from the ownership or control of a depository institution shall be included.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This subchapter, referred to in text, was in the original “this title”, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see Tables. The Farm Credit Act of 1971, referred to in subsec. (a)(11)(C), is Pub. L. 92–181, Dec. 10, 1971, 85 Stat. 583, which is classified principally to chapter 23 (§ 2001 et seq.) of this title. For complete classification of this Act to the Code, see

Short Title

note set out under section 2001 of this title and Tables.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title.

§5381 Definitions