(a) Limitations on activities.
(1) In general. Upon receiving a notice regarding performance under the Community
Reinvestment Act in accordance with paragraph (a)(2) of this section,
a financial holding company may not—
(i) commence
any additional activity under section 4(k) or 4(n) of the BHC Act;
or
(ii) directly
or indirectly acquire control, including all or substantially all
of the assets, of a company engaged in any activity under section
4(k) or 4(n) of the BHC Act.
(2) Notification. A financial holding company receives notice for purposes of this
paragraph at the time that the appropriate federal banking agency
for any insured depository institution controlled by the company or
the Board provides notice to the institution or company that the institution
has received a rating of “needs to improve record of meeting community
credit needs” or “substantial noncompliance in meeting community credit
needs” in the institution’s most recent examination under the Community
Reinvestment Act.
4-056.31
(b) Exceptions for certain activities.
(1) Continuation of investment activities. The prohibition in paragraph
(a) of this section does not prevent a financial holding company from
continuing to make investments in the ordinary course of conducting
merchant banking activities under section 4(k)(4)(H) of the BHC Act
or insurance company investment activities under section 4(k)(4)(I)
of the BHC Act if—
(i) the financial holding company lawfully
was a financial holding company and commenced the merchant banking
activity under section 4(k)(4)(H) of the BHC Act or the insurance
company investment activity under section 4(k)(4)(I) of the BHC Act
prior to the time that an insured depository institution controlled
by the financial holding company received a rating below “satisfactory
record of meeting community credit needs” under the Community Reinvestment
Act; and
(ii) the
Board has not, in the exercise of its supervisory authority, advised
the financial holding company that these activities must be restricted.
(2) Activities that are closely related to banking. The prohibition in paragraph (a) of this section does not prevent
a financial holding company from commencing any additional activity
or acquiring control of a company engaged in any activity under section
4(c) of the BHC Act, if the company complies with the notice, approval,
and other requirements of that section and section 4(j) of the BHC
Act.
4-056.32
(c) Duration
of prohibitions. The prohibitions described in paragraph (a)
of this section shall continue in effect until such time as each insured
depository institution controlled by the financial holding company
has achieved at least a rating of “satisfactory record of meeting
community credit needs” under the Community Reinvestment Act at the
most recent examination of the institution.
