Capital standards

(A) Leverage limit The leverage limit prescribed under paragraph (1) shall require a savings association to maintain core capital in an amount not less than 3 percent of the savings association’s total assets.

(B) Tangible capital requirement The tangible capital requirement prescribed under paragraph (1) shall require a savings association to maintain tangible capital in an amount not less than 1.5 percent of the savings association’s total assets.

(C) Risk-based capital requirement Notwithstanding paragraph (1)(C), the risk-based capital requirement prescribed under paragraph (1) may deviate from the risk-based capital standards applicable to national banks to reflect interest-rate risk or other risks, but such deviations shall not, in the aggregate, result in materially lower levels of capital being required of savings associations under the risk-based capital requirement than would be required under the risk-based capital standards applicable to national banks.

(A) In general In determining compliance with capital standards prescribed under paragraph (1), all of a savings association’s investments in and extensions of credit to any subsidiary engaged in activities not permissible for a national bank shall be deducted from the savings association’s capital.

(B) Exception for agency activities Subparagraph (A) shall not apply with respect to a subsidiary engaged, solely as agent for its customers, in activities not permissible for a national bank unless the appropriate Federal banking agency, in the sole discretion of the appropriate Federal banking agency, determines that, in the interests of safety and soundness, this subparagraph should cease to apply to that subsidiary.

(C) Other exceptions Subparagraph (A) shall not apply with respect to any of the following: (i) Mortgage banking subsidiaries A savings association’s investments in and extensions of credit to a subsidiary engaged solely in mortgage-banking activities. (ii) Subsidiary insured depository institutions A savings association’s investments in and extensions of credit to a subsidiary— (I) that is itself an insured depository institution or a company the sole investment of which is an insured depository institution, and (II) that was acquired by the parent insured depository institution prior to May 1, 1989 . (iii) Certain Federal savings banks Any Federal savings association existing as a Federal savings association on August 9, 1989 — (I) that was chartered prior to October 15, 1982 , as a savings bank or a cooperative bank under State law; or (II) that acquired its principal assets from an association that was chartered prior to October 15, 1982 , as a savings bank or a cooperative bank under State law.

(D) Repealed. Pub. L. 111–203, title III, § 369(5)(L)(iii)(II) , July 21, 2010 , 124 Stat. 1562

(E) Consolidation of subsidiaries not separately capitalized In determining compliance with capital standards prescribed under paragraph (1), the assets and liabilities of each of a savings association’s subsidiaries (other than any subsidiary described in subparagraph (C)(ii)) shall be consolidated with the savings association’s assets and liabilities, unless all of the savings association’s investments in and extensions of credit to the subsidiary are deducted from the savings association’s capital pursuant to subparagraph (A).

(A) [Reserved].

(B) On or after January 1, 1991 On or after January 1, 1991 , the appropriate Federal banking agency— (i) shall prohibit any asset growth by any savings association not in compliance with capital standards, except as provided in subparagraph (C); and (ii) shall require any savings association not in compliance with capital standards to comply with a capital directive issued by the appropriate Federal banking agency (which may include such restrictions, including restrictions on the payment of dividends and on compensation, as the appropriate Federal banking agency determines to be appropriate).

(C) Limited growth exception The appropriate Federal banking agency may permit any savings association that is subject to subparagraph (B) to increase its assets in an amount not exceeding the amount of net interest credited to the savings association’s deposit liabilities if— (i) the savings association obtains the prior approval of the appropriate Federal banking agency; (ii) any increase in assets is accompanied by an increase in tangible capital in an amount not less than 6 percent of the increase in assets (or, in the discretion of the appropriate Federal banking agency if the leverage limit then applicable is less than 6 percent, in an amount equal to the increase in assets multiplied by the percentage amount of the leverage limit); (iii) any increase in assets is accompanied by an increase in capital not less in percentage amount than required under the risk-based capital standard then applicable; (iv) any increase in assets is invested in low-risk assets, such as first mortgage loans secured by 1- to 4-family residences and fully secured consumer loans; and (v) the savings association’s ratio of core capital to total assets is not less than the ratio existing on January 1, 1991 .

(D) Additional restrictions in case of excessive risks or rates The appropriate Federal banking agency may restrict the asset growth of any savings association that the appropriate Federal banking agency determines is taking excessive risks or paying excessive rates for deposits.

(E) Failure to comply with plan, regulation, or order The appropriate Federal banking agency may treat as an unsafe and unsound practice any material failure by a savings association to comply with any plan, regulation, or order under this paragraph.

(F) Effect on other regulatory authority This paragraph does not limit any authority of the appropriate Federal banking agency under this chapter or any other provision of law.

(A) Application for exemption Any savings association not in compliance with the capital standards prescribed under paragraph (1) may apply to the appropriate Federal banking agency for an exemption from any applicable sanction or penalty for noncompliance which the appropriate Federal banking agency may impose under this chapter.

(B) Effect of grant of exemption If the appropriate Federal banking agency approves any savings association’s application under subparagraph (A), the only sanction or penalty to be imposed by the appropriate Federal banking agency under this chapter for the savings association’s failure to comply with the capital standards prescribed under paragraph (1) is the growth limitation contained in paragraph (6)(B) or paragraph (6)(C), whichever is applicable.

(C) Standards for approval or disapproval (i) Approval The appropriate Federal banking agency may approve an application for an exemption if the appropriate Federal banking agency determines that— (I) such exemption would pose no significant risk to the Deposit Insurance Fund; (II) the savings association’s management is competent; (III) the savings association is in substantial compliance with all applicable statutes, regulations, orders, and supervisory agreements and directives; and (IV) the savings association’s management has not engaged in insider dealing, speculative practices, or any other activities that have jeopardized the association’s safety and soundness or contributed to impairing the association’s capital. (ii) Denial or revocation of approval The appropriate Federal banking agency shall deny any application submitted under clause (i) and revoke any prior approval granted with respect to any such application if the appropriate Federal banking agency determines that the association’s failure to meet any capital standards prescribed under paragraph (1) is accompanied by— (I) a pattern of consistent losses; (II) substantial dissipation of assets; (III) evidence of imprudent management or business behavior; (IV) a material violation of any Federal law, any law of any State to which such association is subject, or any applicable regulation; or (V) any other unsafe or unsound condition or activity, other than the failure to meet such capital standards.

(D) Submission of plan required Any application submitted under subparagraph (A) shall be accompanied by a plan which— (i) meets the requirements of paragraph (6)(A)(ii); and (ii) is acceptable to the appropriate Federal banking agency.

(E) Failure to comply with plan The appropriate Federal banking agency shall treat as an unsafe and unsound practice any material failure by any savings association which has been granted an exemption under this paragraph to comply with the provisions of any plan submitted by such association under subparagraph (D).

(F) Exemption not available with respect to unsafe or unsound practices This paragraph does not limit any authority of the appropriate Federal banking agency under any other provision of law, including section 8 of the Federal Deposit Insurance Act [ 12 U.S.C. 1818 ], to take any appropriate action with respect to any unsafe or unsound practice or condition of any savings association, other than the failure of such savings association to comply with the capital standards prescribed under paragraph (1).

For purposes of this subsection—

(A) Core capital Unless the Comptroller prescribes a more stringent definition, the term “core capital” means core capital as defined by the Comptroller of the Currency for national banks, less any unidentifiable intangible assets.

(B) Tangible capital The term “tangible capital” means core capital minus any intangible assets (as intangible assets are defined by the Comptroller for national banks).

(C) Total assets The term “total assets” means total assets (as total assets are defined by the Comptroller of the Currency for national banks) adjusted in the same manner as total assets would be adjusted in determining compliance with the leverage limit applicable to national banks if the savings association were a national bank.

(A) In general The standards prescribed under paragraph (1) shall include all relevant substantive definitions established by the Comptroller of the Currency for national banks.

(B) Special rule If the Comptroller of the Currency has not made effective regulations defining core capital or establishing a risk-based capital standard, the appropriate Federal banking agency shall use the definition and standard contained in the Comptroller’s most recently published final regulations.