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Each depositor insured to at least $250,000 per insured bank

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2000 - Rules and Regulations


Subpart R—Submission and Review of Safety and Soundness Compliance Plans and Issuance of Orders to Correct Safety and Soundness Deficiencies

§ 308.300  Scope.

The rules and procedures set forth in this subpart apply to insured state nonmember banks and to state-licensed insured branches of foreign banks, that are subject to the provisions of section 39 of the Federal Deposit Insurance Act (section 39) (12 U.S.C. 1831p--1).

[Codified to 12 CFR § 308.300]

[Section 308.300 added at 60 Fed. Reg. 35684, July 10, 1995, effective August 9, 1995]

§ 308.301  Purpose.

Section 39 of the FDI Act requires the FDIC to establish safety and soundness standards. Pursuant to section 39, a bank may be required to submit a compliance plan if it is not in compliance with a safety and soundness standard established by guideline under section 39(a) or (b). An enforceable order under section 8 of the FDI Act may be issued if, after being notified that it is in violation of a safety and soundness standard established under section 39, the bank fails to submit an acceptable compliance plan or fails in any material respect to implement an accepted plan. This subpart establishes procedures for requiring submission of a compliance plan and issuing an enforceable order pursuant to section 39.

[Codified to 12 C.F.R. § 308.301]

[Section 308.301 added at 60 Fed. Reg. 35684, July 10, 1995, effective August 9, 1995]

§ 308.302  Determination and notification of failure to meet a safety and soundness standard and request for compliance plan.

(a)  Determination. The FDIC may, based upon an examination, inspection or any other information that becomes available to the FDIC, determine that a bank has failed to satisfy the safety and soundness standards set out in part 364 of this chapter and in the Interagency Guidelines Establishing Standards for Safety and Soundness in appendix A and the Interagency Guidelines Establishing Information Security Standards in appendix B to part 364 of this chapter.

(b)  Request for compliance plan. If the FDIC determines that a bank has failed a safety and soundness standard pursuant to paragraph (a) of this section, the FDIC may request, by letter or through a report of examination, the submission of a compliance plan and the bank shall be deemed to have notice of the request three days after mailing of the letter by the FDIC or delivery of the report of examination.

[Codified to 12 C.F.R. § 308.302]

[Section 308.302 added at 60 Fed. Reg. 35684, July 10, 1995, effective August 9, 1995; amended at 66 Fed. Reg. 8638, February 1, 2001, effective July 1, 2001]

§ 308.303  Filing of safety and soundness compliance plan.

(a)  Schedule for filing compliance plan--(1)  In general. A bank shall file a written safety and soundness compliance plan with the FDIC within 30 days of receiving a request for a compliance plan pursuant to § 308.302(b), unless the FDIC notifies the bank in writing that the plan is to be filed within a different period.

(2)  Other plans. If a bank is obligated to file, or is currently operating under, a capital restoration plan submitted pursuant to section 38 of the FDI Act (12 U.S.C. 1831o), a cease-and-desist order entered into pursuant to section 8 of the FDI Act, a formal or informal agreement, or a response to a report of examination or report of inspection, it may, with the permission of the FDIC, submit a compliance plan under this section as part of that plan, order, agreement, or response, subject to the deadline provided in paragraph (a)(1) of this section.

(b)Contents of plan. The compliance plan shall include a description of the steps the bank will take to correct the deficiency and the time within which those steps will be taken.

(c)  Review of safety and soundness compliance plans. Within 30 days after receiving a safety and soundness compliance plan under this subpart, the FDIC shall provide written notice to the bank of whether the plan has been approved or seek additional information from the bank regarding the plan. The FDIC may extend the time within which notice regarding approval of a plan will be provided.

(d)  Failure to submit or implement a compliance plan--(1)  Supervisory actions. If a bank fails to submit an acceptable plan within the time specified by the FDIC or fails in any material respect to implement a compliance plan, then the FDIC shall, by order, require the bank to correct the deficiency and may take further actions provided in section 39(e)(2)(B). Pursuant to section 39(e)(3), the FDIC may be required to take certain actions if the bank commenced operations or experienced a change in control within the previous 24-month period, or the bank experienced extraordinary growth during the previous 18-month period.

(2)  Extraordinary growth. For purposes of paragraph (d)(1) of this section, extraordinary growth means an increase in assets of more than 7.5 percent during any quarter within the 18-month period preceding the issuance of a request for submission of a compliance plan, by a bank that is not well capitalized for purposes of section 38 of the FDI Act. For purposes of calculating an increase in assets, assets acquired through merger or acquisition approved pursuant to the Bank Merger Act (12 U.S.C. 1828(c)) will be excluded.

(e)  Amendment of compliance plan. A bank that has filed an approved compliance plan may, after prior written notice to and approval by the FDIC, amend the plan to reflect a change in circumstance. Until such time as a proposed amendment has been approved, the bank shall implement the compliance plan as previously approved.

[Codified to 12 C.F.R. § 308.303]

[Section 308.303 added at 60 Fed. Reg. 35684, July 10, 1995, effective August 9, 1995]

§ 308.304  Issuance of orders to correct deficiencies and to take or refrain from taking other actions.

(a)  Notice of intent to issue order--(1)  In general. The FDIC shall provide a bank prior written notice of the FDIC's intention to issue an order requiring the bank to correct a safety and soundness deficiency or to take or refrain from taking other actions pursuant to section 39 of the FDI Act. The bank shall have such time to respond to a proposed order as provided by the FDIC under paragraph (c) of this section.

(2)  Immediate issuance of final order. If the FDIC finds it necessary in order to carry out the purposes of section 39 of the FDI Act, the FDIC may, without providing the notice prescribed in paragraph (a)(1) of this section, issue an order requiring a bank immediately to take actions to correct a safety and soundness deficiency or take or refrain from taking other actions pursuant to section 39. A bank that is subject to such an immediately effective order may submit a written appeal of the order to the FDIC. Such an appeal must be received by the FDIC within 14 calendar days of the issuance of the order, unless the FDIC permits a longer period. The FDIC shall consider any such appeal, if filed in a timely matter, within 60 days of receiving the appeal. During such period of review, the order shall remain in effect unless the FDIC, in its sole discretion, stays the effectiveness of the order.

(b)  Contents of notice. A notice of intent to issue an order shall include:

(1)  A statement of the safety and soundness deficiency or deficiencies that have been identified at the bank;

(2)  A description of any restrictions, prohibitions, or affirmative actions that the FDIC proposes to impose or require;

(3)  The proposed date when such restrictions or prohibitions would be effective or the proposed date for completion of any required action; and

(4)  The date by which the bank subject to the order may file with the FDIC a written response to the notice.

(c)  Response to notice--(1)  Time for response. A bank may file a written response to a notice of intent to issue an order within the time period set by the FDIC. Such a response must be received by the FDIC within 14 calendar days from the date of the notice unless the FDIC determines that a different period is appropriate in light of the safety and soundness of the bank or other relevant circumstances.

(2)  Contents of response. The response should include:

(i)  An explanation why the action proposed by the FDIC is not an appropriate exercise of discretion under section 39;

(ii)  Any recommended modification of the proposed order; and

(iii)  Any other relevant information, mitigating circumstances, documentation, or other evidence in support of the position of the bank regarding the proposed order.

(d)  Agency consideration of response. After considering the response, the FDIC may:

(1)  Issue the order as proposed or in modified form;

(2)  Determine not to issue the order and so notify the bank; or

(3)  Seek additional information or clarification of the response from the bank, or any other relevant source.

(e)  Failure to file response. Failure by a bank to file with the FDIC, within the specified time period, a written response to a proposed order shall constitute a waiver of the opportunity to respond and shall constitute consent to the issuance of the order.

(f)  Request for modification of rescission of order. Any bank that is subject to an order under this subpart may, upon a change in circumstances, request in writing that the FDIC reconsider the terms of the order, and may propose that the order be rescinded or modified. Unless otherwise ordered by the FDIC, the order shall continue in place while such request is pending before the FDIC.

[Codified to 12 C.F.R. § 308.304]

[Section 308.304 added at 60 Fed. Reg. 35685, July 10, 1995, effective August 9, 1995]

§ 308.305  Enforcement of orders.

(a)  Judicial remedies. Whenever a bank fails to comply with an order issued under section 39, the FDIC may seek enforcement of the order in the appropriate United States district court pursuant to section 8(i)(1) of the FDI Act.

(b)  Failure to comply with order. Pursuant to section 8(i)(2)(A) of the FDI Act, the FDIC may assess a civil money penalty against any bank that violates or otherwise fails to comply with any final order issued under section 39 and against any institution-affiliated party who participates in such violation or noncompliance.

(c)  Other enforcement action. In addition to the actions described in paragraphs (a) and (b) of this section, the FDIC may seek enforcement of the provisions of section 39 or this part through any other judicial or administrative proceeding authorized by law.

[Codified to 12 C.F.R. § 308.305]

[Section 308.305 added at 60 Fed. Reg. 35685, July 10, 1995, effective August 9, 1995]


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