Provisions applicable to undercapitalized institutions

(1) Monitoring required Each appropriate Federal banking agency shall— (A) closely monitor the condition of any undercapitalized insured depository institution; (B) closely monitor compliance with capital restoration plans, restrictions, and requirements imposed under this section; and (C) periodically review the plan, restrictions, and requirements applicable to any undercapitalized insured depository institution to determine whether the plan, restrictions, and requirements are achieving the purpose of this section.

(2) Capital restoration plan required (A) In general Any undercapitalized insured depository institution shall submit an acceptable capital restoration plan to the appropriate Federal banking agency within the time allowed by the agency under subparagraph (D). (B) Contents of plan The capital restoration plan shall— (i) specify— (I) the steps the insured depository institution will take to become adequately capitalized; (II) the levels of capital to be attained during each year in which the plan will be in effect; (III) how the institution will comply with the restrictions or requirements then in effect under this section; and (IV) the types and levels of activities in which the institution will engage; and (ii) contain such other information as the appropriate Federal banking agency may require. (C) Criteria for accepting plan The appropriate Federal banking agency shall not accept a capital restoration plan unless the agency determines that— (i) the plan— (I) complies with subparagraph (B); (II) is based on realistic assumptions, and is likely to succeed in restoring the institution’s capital; and (III) would not appreciably increase the risk (including credit risk, interest-rate risk, and other types of risk) to which the institution is exposed; and (ii) if the insured depository institution is undercapitalized, each company having control of the institution has— (I) guaranteed that the institution will comply with the plan until the institution has been adequately capitalized on average during each of 4 consecutive calendar quarters; and (II) provided appropriate assurances of performance. (D) Deadlines for submission and review of plans The appropriate Federal banking agency shall by regulation establish deadlines that— (i) provide insured depository institutions with reasonable time to submit capital restoration plans, and generally require an institution to submit a plan not later than 45 days after the institution becomes undercapitalized; (ii) require the agency to act on capital restoration plans expeditiously, and generally not later than 60 days after the plan is submitted; and (iii) require the agency to submit a copy of any plan approved by the agency to the Corporation before the end of the 45-day period beginning on the date such approval is granted. (E) Guarantee liability limited (i) In general The aggregate liability under subparagraph (C)(ii) of all companies having control of an insured depository institution shall be the lesser of— (I) an amount equal to 5 percent of the institution’s total assets at the time the institution became undercapitalized; or (II) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time the institution fails to comply with a plan under this subsection. (ii) Certain affiliates not affected This paragraph may not be construed as— (I) requiring any company not having control of an undercapitalized insured depository institution to guarantee, or otherwise be liable on, a capital restoration plan; (II) requiring any person other than an insured depository institution to submit a capital restoration plan; or (III) affecting compliance by brokers, dealers, government securities brokers, and government securities dealers with the financial responsibility requirements of the Securities Exchange Act of 1934 [ 15 U.S.C. 78a et seq.] and regulations and orders thereunder.

(3) Asset growth restricted An undercapitalized insured depository institution shall not permit its average total assets during any calendar quarter to exceed its average total assets during the preceding calendar quarter unless— (A) the appropriate Federal banking agency has accepted the institution’s capital restoration plan; (B) any increase in total assets is consistent with the plan; and (C) the institution’s ratio of tangible equity to assets increases during the calendar quarter at a rate sufficient to enable the institution to become adequately capitalized within a reasonable time.

(4) Prior approval required for acquisitions, branching, and new lines of business An undercapitalized insured depository institution shall not, directly or indirectly, acquire any interest in any company or insured depository institution, establish or acquire any additional branch office, or engage in any new line of business unless— (A) the appropriate Federal banking agency has accepted the insured depository institution’s capital restoration plan, the institution is implementing the plan, and the agency determines that the proposed action is consistent with and will further the achievement of the plan; or (B) the Board of Directors determines that the proposed action will further the purpose of this section.

(5) Discretionary safeguards The appropriate Federal banking agency may, with respect to any undercapitalized insured depository institution, take actions described in any subparagraph of subsection (f)(2) if the agency determines that those actions are necessary to carry out the purpose of this section.