Statute: 1971 ACT AS AMENDED
Title: Title VIII Agricultural Mortgage Secondary Market
Subtitle: Subtitle B-Regulation of Financial Safety and Soundness of Federal Agricultural Mortgage Corporation
U.S. Code Citation: 12 U.S.C. 2279bb-6
12 U.S.C. 2279bb-6 SEC. 8.37. SUPERVISORY ACTIONS APPLICABLE TO LEVEL III.
(a) MANDATORY SUPERVISORY ACTIONS.
(1) CAPITAL RESTORATION PLAN. If the Corporation is classified as within level III, the Corporation shall, within the time period determined by the Director, submit to the Director a capital restoration plan and, after approval, carry out the plan.
(2) RESTRICTIONS ON DIVIDENDS.
(A) PRIOR APPROVAL. If the Corporation is classified as within level III, the Corporation—
(i) may not make any payment of dividends that would result in the Corporation being reclassified as within level IV; and
(ii) may make any other payment of dividends only if the Director approves the payment before the payment.
(B) STANDARD FOR APPROVAL. If the Corporation is classified as within level III, the Director may approve a payment of dividends by the Corporation only if the Director determines that the payment (i) will enhance the ability of the Corporation to meet the risk-based capital level and the minimum capital level promptly, (ii) will contribute to the long-term safety and soundness of the Corporation, or (iii) is otherwise in the public interest.
(3) RECLASSIFICATION FROM LEVEL III TO LEVEL IV. The Director shall immediately reclassify the Corporation as within level IV if—
(A) the Corporation is classified as within level III; and
(B)(i) the Corporation does not submit a capital restoration plan that is approved by the Director; or
(ii) the Director determines that the Corporation has failed to make, in good faith, reasonable efforts necessary to comply with such a capital restoration plan and fulfill the schedule for the plan approved by the Director.
(b) DISCRETIONARY SUPERVISORY ACTIONS. In addition to any other actions taken by the Director (including actions under subsection (a)), the Director may, at any time, take any of the following actions if the Corporation is classified as within level III:
(1) LIMITATION ON INCREASE IN OBLIGATIONS. Limit any increase in, or order the reduction of, any obligations of the Corporation, including off-balance sheet obligations.
(2) LIMITATION ON GROWTH. Limit or prohibit the growth of the assets of the Corporation or require contraction of the assets of the Corporation.
(3) PROHIBITION ON DIVIDENDS. Prohibit the Corporation from making any payment of dividends.
(4) ACQUISITION OF NEW CAPITAL. Require the Corporation to acquire new capital in any form and in any amount sufficient to provide for the reclassification of the Corporation as within level II.
(5) RESTRICTION OF ACTIVITIES. Require the Corporation to terminate, reduce, or modify any activity that the Director determines creates excessive risk to the Corporation.
(6) CONSERVATORSHIP. Appoint a conservator for the Corporation consistent with this Act.
(c) EFFECTIVE DATE. This section shall take effect on January 1, 1992.
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