§5386 — Title 12 Banks and Banking | U.S. Code

Summary

When the Corporation acts under this subchapter, it must find the action is needed to protect the financial stability of the United States and not to save the covered financial company. Shareholders cannot be paid until all other claims and the Fund are fully paid. Unsecured creditors must take losses following the claim priority in section 5390. The Corporation must remove management and board members who caused the failure if they have not already been removed. The Corporation may not take an ownership interest or become a shareholder in any covered financial company or covered subsidiary.

Title 12, §5386

Banks and Banking — Source: USLM XML via OLRC

In taking action under this subchapter, the Corporation shall—

(1)determine that such action is necessary for purposes of the financial stability of the United States, and not for the purpose of preserving the covered financial company;

(2)ensure that the shareholders of a covered financial company do not receive payment until after all other claims and the Fund are fully paid;

(3)ensure that unsecured creditors bear losses in accordance with the priority of claim provisions in section 5390 of this title;

(4)ensure that management responsible for the failed condition of the covered financial company is removed (if such management has not already been removed at the time at which the Corporation is appointed receiver);

(5)ensure that the members of the board of directors (or body performing similar functions) responsible for the failed condition of the covered financial company are removed, if such members have not already been removed at the time the Corporation is appointed as receiver; and

(6)not take an equity interest in or become a shareholder of any covered financial company or any covered subsidiary.

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.

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.

§5386 Mandatory Terms and Conditions for All Orderly Liquidation Actions