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Statutory Authority for Regulation YY

FEDERAL RESERVE ACT
See section 9 at 1-054 et seq. and section 21 at 1-180 et seq.

HOME OWNERS’ LOAN ACT

See section 10(g) at 4-763.

FEDERAL DEPOSIT INSURANCE ACT

See section 8 at 1-355 et seq., section 18 at 1-386 et seq., section 37 at 1-400.3 et seq., section 38 at 1-400.4 et seq., section 39 at 1-401 et seq., and section 46 at 1-401.73 et seq.
4-793

SMALL BUSINESS LOAN SECURITIZATION AND SECONDARY MARKET ENHANCEMENT ACT

SECTION 208—Insured Depository Institution Capital Requirements for Transfers of Small Business Obligations
(a) Accounting principles. The accounting principles applicable to the transfer of a small business loan or a lease of personal property with recourse contained in reports or statements required to be filed with Federal banking agencies by a qualified insured depository institution shall be consistent with generally accepted accounting principles.
(b) Capital and reserve requirements. With respect to the transfer of a small business loan or lease of personal property with recourse that is a sale under generally accepted accounting principles, each qualified insured depository institution shall—
(1) establish and maintain a reserve equal to an amount sufficient to meet the reasonable estimated liability of the institution under the recourse arrangement; and
(2) include, for purposes of applicable capital standards and other capital measures, only the amount of the retained recourse in the risk-weighted assets of the institution.
(c) Qualified institutions criteria. An insured depository institution is a qualified insured depository institution for purposes of this section if, without regard to the accounting principles or capital requirements referred to in subsections (a) and (b) of this section, the institution is—
(1) well capitalized; or
(2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized.
(d) Aggregate amount of recourse. The total outstanding amount of recourse retained by a qualified insured depository institution with respect to transfers of small business loans and leases of personal property under subsections (a) and (b) of this section shall not exceed—
(1) 15 percent of the risk-based capital of the institution; or
(2) such greater amount, as established by the appropriate Federal banking agency by regulation or order.
(e) Institutions that cease to be qualified or exceed aggregate limits. If an insured depository institution ceases to be a qualified insured depository institution or exceeds the limits under subsection (d) of this section, this section shall remain applicable to any transfers of small business loans or leases of personal property that occurred during the time that the institution was qualified and did not exceed such limit.
(f) Prompt corrective action not affected. The capital of an insured depository institution shall be computed without regard to this section in determining whether the institution is adequately capitalized, undercapitalized, significantly undercapitalized, or critically undercapitalized under section 1831o of this title.
(g) Regulations required. Not later than 180 days after September 23, 1994, each appropriate Federal banking agency shall promulgate final regulations implementing this section.
(h) Alternative system permitted.
(1) In general. At the discretion of the appropriate Federal banking agency, this section shall not apply if the regulations of the agency provide that the aggregate amount of capital and reserves required with respect to the transfer of small business loans and leases of personal property with recourse does not exceed the aggregate amount of capital and reserves that would be required under subsection (b) of this section.
(2) Existing transactions not affected. Notwithstanding paragraph (1), this section shall remain in effect with respect to transfers of small business loans and leases of personal property with recourse by qualified insured depository institutions occurring before the effective date of regulations referred to in paragraph (1).
(i) Definitions. For purposes of this section—
(1) the term “adequately capitalized” has the same meaning as in section 1831o(b) of this title;
(2) the term “appropriate Federal banking agency” has the same meaning as in section 1813 of this title;
(3) the term “capital standards” has the same meaning as in section 1831o(c) of this title;
(4) the term “Federal banking agencies” has the same meaning as in section 1813 of this title;
(5) the term “insured depository institution” has the same meaning as in section 1813 of this title;
(6) the term “other capital measures” has the meaning as in section 1831o(c) of this title;
(7) the term “recourse” has the meaning given to such term under generally accepted accounting principles;
(8) the term “small business” means a business that meets the criteria for a small business concern established by the Small Business Administration under section 632(a) of title 15; and
(9) the term “well capitalized” has the same meaning as in section 1831o(b) of this title.
[12 USC 1835. As added by act of Sept. 23, 1994 (108 Stat. 2201). This section was enacted as part of the Small Business Loan Securitization and Secondary Market Enhancement Act of 1994 and as part of the Riegle Community Development and Regulatory Improvement Act of 1994, and not as part of the Federal Deposit Insurance Act which comprises this chapter.]

BANK HOLDING COMPANY ACT

See section 5 at 4–083 et seq.

INTERNATIONAL BANKING ACT

See section 1 at 1-562 et seq.

DEPOSITORY INSTITUTIONS DEREGULATION AND MONETARY CONTROL ACT

See section 901 at 1-638.

INTERNATIONAL LENDING SUPERVISION ACT

See section 905 at 3-672.15 et seq. and sections 907-910 at 3-672.25 et seq.
4-793.1

DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT

SECTION 161—Reports by and Examinations of Nonbank Financial Companies by the Board of Governors
(a) Reports.
(1) In general. The Board of Governors may require each nonbank financial company supervised by the Board of Governors, and any subsidiary thereof, to submit reports under oath, to keep the Board of Governors informed as to—
(A) the financial condition of the company or subsidiary, systems of the company or subsidiary for monitoring and controlling financial, operating, and other risks, and the extent to which the activities and operations of the company or subsidiary pose a threat to the financial stability of the United States; and
(B) compliance by the company or subsidiary with the requirements of this subchapter.
(2) Use of existing reports and information. In carrying out subsection (a), the Board of Governors shall, to the fullest extent possible, use—
(A) reports and supervisory information that a nonbank financial company or subsidiary thereof has been required to provide to other Federal or State regulatory agencies;
(B) information otherwise obtainable from Federal or State regulatory agencies;
(C) information that is otherwise required to be reported publicly; and
(D) externally audited financial statements of such company or subsidiary.
(3) Availability. Upon the request of the Board of Governors, a nonbank financial company supervised by the Board of Governors, or a subsidiary thereof, shall promptly provide to the Board of Governors any information described in paragraph (2).
(b) Examinations.
(1) In general. Subject to paragraph (2), the Board of Governors may examine any nonbank financial company supervised by the Board of Governors and any subsidiary of such company, to inform the Board of Governors of—
(A) the nature of the operations and financial condition of the company and such subsidiary;
(B) the financial, operational, and other risks of the company or such subsidiary that may pose a threat to the safety and soundness of such company or subsidiary or to the financial stability of the United States;
(C) the systems for monitoring and controlling such risks; and
(D) compliance by the company or such subsidiary with the requirements of this subchapter.
(2) Use of examination reports and information. For purposes of this subsection, the Board of Governors shall, to the fullest extent possible, rely on reports of examination of any subsidiary depository institution or functionally regulated subsidiary made by the primary financial regulatory agency for that subsidiary, and on information described in subsection (a)(2).
(c) Coordination with primary financial regulatory agency. The Board of Governors shall—
(1) provide reasonable notice to, and consult with, the primary financial regulatory agency for any subsidiary before requiring a report or commencing an examination of such subsidiary under this section; and
(2) avoid duplication of examination activities, reporting requirements, and requests for information, to the fullest extent possible.
[12 USC 5361.]
4-793.2

SECTION 162—Enforcement

(a) In general. Except as provided in subsection (b), a nonbank financial company supervised by the Board of Governors and any subsidiaries of such company (other than any depository institution subsidiary) shall be subject to the provisions of subsections (b) through (n) of section 1818 of this title, in the same manner and to the same extent as if the company were a bank holding company, as provided in section 1818(b)(3) of this title.
(b) Enforcement authority for functionally regulated subsidiaries.
(1) Referral. If the Board of Governors determines that a condition, practice, or activity of a depository institution subsidiary or functionally regulated subsidiary of a nonbank financial company supervised by the Board of Governors does not comply with the regulations or orders prescribed by the Board of Governors under this Act, or otherwise poses a threat to the financial stability of the United States, the Board of Governors may recommend, in writing, to the primary financial regulatory agency for the subsidiary that such agency initiate a supervisory action or enforcement proceeding. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation.
(2) Back-up authority of the Board of Governors. If, during the 60-day period beginning on the date on which the primary financial regulatory agency receives a recommendation under paragraph (1), the primary financial regulatory agency does not take supervisory or enforcement action against a subsidiary that is acceptable to the Board of Governors, the Board of Governors (upon a vote of its members) may take the recommended supervisory or enforcement action, as if the subsidiary were a bank holding company subject to supervision by the Board of Governors.
[12 USC 5362.]
4-793.3

SECTION 165—Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the Board of Governors and Certain Bank Holding Companies

See section 165(a) and (d) at 4–782 et seq.
*     *     *     *     *
(i) Stress tests.
(1) By the Board of Governors.
(A) Annual tests required. The Board of Governors, in coordination with the appropriate primary financial regulatory agencies and the Federal Insurance Office, shall conduct annual analyses in which nonbank financial companies supervised by the Board of Governors and bank holding companies described in subsection (a) are subject to evaluation of whether such companies have the capital, on a total consolidated basis, necessary to absorb losses as a result of adverse economic conditions.
(B) Test parameters and consequences. The Board of Governors—
(i) shall provide for at least 3 different sets of conditions under which the evaluation required by this subsection shall be conducted, including baseline, adverse, and severely adverse;
(ii) may require the tests described in subparagraph (A) at bank holding companies and nonbank financial companies, in addition to those for which annual tests are required under subparagraph (A);
(iii) may develop and apply such other analytic techniques as are necessary to identify, measure, and monitor risks to the financial stability of the United States;
(iv) shall require the companies described in subparagraph (A) to update their resolution plans required under subsection (d)(1), as the Board of Governors determines appropriate, based on the results of the analyses; and
(v) shall publish a summary of the results of the tests required under subparagraph (A) or clause (ii) of this subparagraph.
(2) By the company.
(A) Requirement. A nonbank financial company supervised by the Board of Governors and a bank holding company described in subsection (a) shall conduct semiannual stress tests. All other financial companies that have total consolidated assets of more than $10,000,000,000 and are regulated by a primary Federal financial regulatory agency shall conduct annual stress tests. The tests required under this subparagraph shall be conducted in accordance with the regulations prescribed under subparagraph (C).
(B) Report. A company required to conduct stress tests under subparagraph (A) shall submit a report to the Board of Governors and to its primary financial regulatory agency at such time, in such form, and containing such information as the primary financial regulatory agency shall require.
(C) Regulations. Each Federal primary financial regulatory agency, in coordination with the Board of Governors and the Federal Insurance Office, shall issue consistent and comparable regulations to implement this paragraph that shall—
(i) define the term “stress test” for purposes of this paragraph;
(ii) establish methodologies for the conduct of stress tests required by this paragraph that shall provide for at least 3 different sets of conditions, including baseline, adverse, and severely adverse;
(iii) establish the form and content of the report required by subparagraph (B); and
(iv) require companies subject to this paragraph to publish a summary of the results of the required stress tests.
[12 USC 5365(i).]
4-793.4

SECTION 167—Affiliations

(a) Affiliations. Nothing in this part shall be construed to require a nonbank financial company supervised by the Board of Governors, or a company that controls a nonbank financial company supervised by the Board of Governors, to conform the activities thereof to the requirements of section 1843 of this title.
(b) Requirement.
(1) In general.
(A) Board authority. If a nonbank financial company supervised by the Board of Governors conducts activities other than those that are determined to be financial in nature or incidental thereto under section 1843(k) of this title, the Board of Governors may require such company to establish and conduct all or a portion of such activities that are determined to be financial in nature or incidental thereto in or through an intermediate holding company established pursuant to regulation of the Board of Governors, not later than 90 days (or such longer period as the Board of Governors may deem appropriate) after the date on which the nonbank financial company supervised by the Board of Governors is notified of the determination of the Board of Governors under this section.
(B) Necessary actions. Notwithstanding subparagraph (A), the Board of Governors shall require a nonbank financial company supervised by the Board of Governors to establish an intermediate holding company if the Board of Governors makes a determination that the establishment of such intermediate holding company is necessary to—
(i) appropriately supervise activities that are determined to be financial in nature or incidental thereto; or
(ii) to* ensure that supervision by the Board of Governors does not extend to the commercial activities of such nonbank financial company.
(2) Internal financial activities. For purposes of this subsection, activities that are determined to be financial in nature or incidental thereto under section 1843(k) of this title, as described in paragraph (1), shall not include internal financial activities, including internal treasury, investment, and employee benefit functions. With respect to any internal financial activity engaged in for the company or an affiliate and a non-affiliate of such company during the year prior to July 21, 2010, such company (or an affiliate that is not an intermediate holding company or subsidiary of an intermediate holding company) may continue to engage in such activity, as long as not less than ⅔ of the assets or ⅔ of the revenues generated from the activity are from or attributable to such company or an affiliate, subject to review by the Board of Governors, to determine whether engaging in such activity presents undue risk to such company or to the financial stability of the United States.
(3) Source of strength. A company that directly or indirectly controls an intermediate holding company established under this section shall serve as a source of strength to its subsidiary intermediate holding company.
(4) Parent company reports. The Board of Governors may, from time to time, require reports under oath from a company that controls an intermediate holding company, and from the appropriate officers or directors of such company, solely for purposes of ensuring compliance with the provisions of this section, including assessing the ability of the company to serve as a source of strength to its subsidiary intermediate holding company pursuant to paragraph (3) and enforcing such compliance.
(5) Limited parent company enforcement.
(A) In general. In addition to any other authority of the Board of Governors, the Board of Governors may enforce compliance with the provisions of this subsection that are applicable to any company described in paragraph (1) that controls an intermediate holding company under section 8 of the Federal Deposit Insurance Act, and such company shall be subject to such section (solely for such purposes) in the same manner and to the same extent as if such company were a bank holding company.
(B) Application of other act. Any violation of this subsection by any company that controls an intermediate holding company may also be treated as a violation of the Federal Deposit Insurance Act for purposes of subparagraph (A).
(C) No effect on other authority. No provision of this paragraph shall be construed as limiting any authority of the Board of Governors or any other Federal agency under any other provision of law.
(c) Regulations. The Board of Governors—
(1) shall promulgate regulations to establish the criteria for determining whether to require a nonbank financial company supervised by the Board of Governors to establish an intermediate holding company under subsection (b); and
(2) may promulgate regulations to establish any restrictions or limitations on transactions between an intermediate holding company or a nonbank financial company supervised by the Board of Governors and its affiliates, as necessary to prevent unsafe and unsound practices in connection with transactions between such company, or any subsidiary thereof, and its parent company or affiliates that are not subsidiaries of such company, except that such regulations shall not restrict or limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or services.
[12 USC 5367.]
*
So in original. The word “to” probably should not appear.
4-793.5

SECTION 168—Regulations

The Board of Governors shall have authority to issue regulations to implement parts A and C and the amendments made thereunder. Except as otherwise specified in part A or C, not later than 18 months after the effective date of this Act, the Board of Governors shall issue final regulations to implement parts A and C, and the amendments made thereunder.
[12 USC 5368.]
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