62 of the Revised Statutes, consisting of R.S. §§ 5133 to 5244, which are classified to sections 21, 22 to 24a, 25a, 26 to 29, 35 to 37, 39, 43, 51, 52, 53, 56, 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 101a, 102, 104, 107 to 110, 123, 124, 131 to 138, 141 to 144, 151, 152, 161, 164, 168 to 175, 181 to 186, 192 to 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, sections 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§ 5133 to 5244 to the Code, see Tables. AMENDMENTS 1999 Par. Seventh. Pub. L. 106-102 inserted at end "In addition to the provisions in this paragraph for dealing in, underwriting, or purchasing securities, the limitations and restrictions contained in this paragraph as to dealing in, underwriting, and purchasing investment securities for the national bank's own account shall not apply to obligations (including limited obligation bonds, revenue bonds, and obligations that satisfy the requirements of section 142(b)(1) of title 26) issued by or on behalf of any State or political subdivision of a State, including any municipal corporate instrumentality of 1 or more States, or any public agency or authority of any State or political subdivision of a State, if the national bank is well capitalized (as defined in section 18310 of this title)." 1996-Par. Seventh. Pub. L. 104-208, §101(c) [§ 710(b)], in seventh sentence, inserted "Bank for Economic Cooperation and Development in the Middle East and North Africa," after "the Inter-American Development Bank". EFFECTIVE DATE OF 1999 AMENDMENT Pub. L. 106-102, title I, §161, Nov. 12, 1999, 113 Stat. 1384, provided that: "This title [enacting sections 24a, 1820a, 1828a, 1828b, 1831v, 1831w, and 1848a of this title and section 6701 of Title 15, Commerce and Trade, amending this section, sections 25a, 335, 371c, 1821, 1835a, 1841 to 1844, 1849, 1850. 1864, 1971, 2903, 3101, 3106, and 3107 of this title, and section 18a of Title 15, repealing sections 78 and 377 of this title, and enacting provisions set out as notes under sections 252, 1843, and 4801 of this title and section 41 of Title 15] (other than section 104 [enacting section 6701 of Title 15]) and the amendments made by this title shall take effect 120 days after the date of the enactment of this Act [Nov. 12, 1999]."' EFFECTIVE DATE OF 1996 AMENDMENT Amendment by section 2704(d)(7) of Pub. L. 104-208 effective Jan. 1, 1999, if no insured depository institution is a savings association on that date, see section 2704(c) of Pub. L. 104-208, set out as a note under section 1821 of this title. § 24a. Financial subsidiaries of national banks (a) Authorization to conduct in subsidiaries certain activities that are financial in nature (1) In general Subject to paragraph (2), a national bank may control a financial subsidiary, or hold an interest in a financial subsidiary. (2) Conditions and requirements A national bank may control a financial subsidiary, or hold an interest in a financial subsidiary, only if— (A) the financial subsidiary engages only in (1) activities that are financial in nature or incidental to a financial activity pursuant to subsection (b) of this section; and (ii) activities that are permitted for national banks to engage in directly (subject to the same terms and conditions that gov ern the conduct of the activities by a national bank); not (B) the activities engaged in by the financial subsidiary as a principal do include (i) insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability, or death (except to the extent permitted under section 302 or 303(c) of the Gramm-Leach-Bliley Act [15 U.S.C. 6712 or 6713(c)]) or providing or issuing annuities the income of which is subject to tax treatment under section 72 of title 26; (ii) real estate development or real estate investment activities, unless otherwise expressly authorized by law; or (iii) any activity permitted in subparagraph (H) or (I) of section 1843(k)(4) of this title, except activities described in section 1843(k)(4)(H) of this title that may be permitted in accordance with section 122 of the Gramm-Leach-Bliley Act; (C) the national bank and each depository institution affiliate of the national bank are well capitalized and well managed; (D) the aggregate consolidated total assets of all financial subsidiaries of the national bank do not exceed the lesser of— (i) 45 percent of the consolidated total assets of the parent bank; or (ii) $50,000,000,000; (E) except as provided in paragraph (4), the national bank meets any applicable rating or other requirement set forth in paragraph (3); and (F) the national bank has received the approval of the Comptroller of the Currency for the financial subsidiary to engage in such activities, which approval shall be based solely upon the factors set forth in this section. (3) Rating or comparable requirement (A) In general A national bank meets the requirements of this paragraph if— (i) the bank is 1 of the 50 largest insured banks and has not fewer than 1 issue of outstanding eligible debt that is currently rated within the 3 highest investment grade rating categories by a nationally recognized statistical rating organization; or (ii) the bank is 1 of the second 50 largest insured banks and meets the criteria set forth in clause (i) or such other criteria as the Secretary of the Treasury and the Board of Governors of the Federal Reserve System may jointly establish by regulation and determine to be comparable to and consistent with the purposes of the rating required in clause (i). (B) Consolidated total assets For purposes of this paragraph, the size of an insured bank shall be determined on the basis of the consolidated total assets of the bank as of the end of each calendar year. (4) Financial agency subsidiary The requirement in paragraph (2)(E) shall not apply with respect to the ownership or control of a financial subsidiary that engages in activities described in subsection (b)(1) of this section solely as agent and not directly or indirectly as principal. (5) Regulations required Before the end of the 270-day period beginning on November 12, 1999, the Comptroller of the Currency shall, by regulation, prescribe procedures to implement this section. (6) Indexed asset limit The dollar amount contained in paragraph (2)(D) shall be adjusted according to an indexing mechanism jointly established by regulation by the Secretary of the Treasury and the Board of Governors of the Federal Reserve System. (7) Coordination with section 1843(1)(2) of this title Section 1843(1)(2) of this title applies to a national bank that controls a financial subsidiary in the manner provided in that section. (b) Activities that are financial in nature (1) Financial activities (A) In general An activity shall be financial in nature or incidental to such financial activity only if (i) such activity has been defined to be financial in nature or incidental to a financial activity for bank holding companies pursuant to section 1843(k)(4) of this title; or (ii) the Secretary of the Treasury determines the activity is financial in nature or incidental to a financial activity in accordance with subparagraph (B). (B) Coordination between the Board and the Secretary of the Treasury (i) Proposals raised before the Secretary of the Treasury (I) Consultation The Secretary of the Treasury shall notify the Board of, and consult with the Board concerning, any request, proposal, or application under this section for a determination of whether an activity is financial in nature or incidental to a financial activity. (II) Board view The Secretary of the Treasury shall not determine that any activity is financial in nature or incidental to a financial activity under this section if the Board notifies the Secretary in writing, not later than 30 days after the date of receipt of the notice described in subclause (I) (or such longer period as the Secretary determines to be appropriate under the circumstances) that the Board believes that the activity is not financial in nature or incidental to a financial activity or is not otherwise permissible under this section. (ii) Proposals raised by the Board (I) Board recommendation The Board may, at any time, recommend in writing that the Secretary of the Treasury find an activity to be finan- Not later than 30 days after the date of receipt of a written recommendation from the Board under subclause (I) (or such longer period as the Secretary of the Treasury and the Board determine to be appropriate under the circumstances), the Secretary shall determine whether to initiate a public rulemaking proposing that the subject recommended activity be found to be financial in nature or incidental to a financial activity under this section, and shall notify the Board in writing of the determination of the Secretary and, in the event that the Secretary determines not to seek public comment on the proposal, the reasons for that determination. (2) Factors to be considered In determining whether an activity is financial in nature or incidental to a financial activity, the Secretary shall take into account (A) the purposes of this Act1 and the Gramm-Leach-Bliley Act; (B) changes or reasonably expected changes in the marketplace in which banks compete; (C) changes or reasonably expected changes in the technology for delivering financial services; and (D) whether such activity is necessary or appropriate to allow a bank and the subsidiaries of a bank to— (1) compete effectively with any company seeking to provide financial services in the United States; (ii) efficiently deliver information and services that are financial in nature through the use of technological means, including any application necessary to protect the security or efficacy of systems for the transmission of data or financial transactions; and (iii) offer customers any available or emerging technological means for using financial services or for the document imaging of data. (3) Authorization of new financial activities The Secretary of the Treasury shall, by regulation or order and in accordance with paragraph (1)(B), define, consistent with the purposes of this Act1 and the Gramm-Leach-Bliley Act, the following activities as, and the extent to which such activities are, financial in nature or incidental to a financial activity: (A) Lending, exchanging, transferring, investing for others, or safeguarding financial assets other than money or securities. (B) Providing any device or other instrumentality for transferring money or other financial assets. (C) Arranging, effecting, or facilitating financial transactions for the account of third parties. 1 So in original. (c) Capital deduction (1) Capital deduction required In determining compliance with applicable capital standards (A) the aggregate amount of the outstanding equity investment, including retained earnings, of a national bank in all financial subsidiaries shall be deducted from the assets and tangible equity of the national bank; and (B) the assets and liabilities of the financial subsidiaries shall not be consolidated with those of the national bank. (2) Financial statement disclosure of capital deduction Any published financial statement of a national bank that controls a financial subsidiary shall, in addition to providing information prepared in accordance with generally accepted accounting principles, separately present financial information for the bank in the manner provided in paragraph (1). (d) Safeguards for the bank A national bank that establishes or maintains a financial subsidiary shall assure that— (1) the procedures of the national bank for identifying and managing financial and operational risks within the national bank and the financial subsidiary adequately protect the national bank from such risks; (2) the national bank has, for the protection of the bank, reasonable policies and procedures to preserve the separate corporate identity and limited liability of the national bank and the financial subsidiaries of the national bank; and (3) the national bank is in compliance with this section. (e) Provisions applicable to national banks that fail to continue to meet certain requirements (1) In general If a national bank or insured depository institution affiliate does not continue to meet the requirements of subsection (a)(2)(C) of this section or subsection (d) of this section, the Comptroller of the Currency shall promptly give notice to the national bank to that effect describing the conditions giving rise to the notice. (2) Agreement to correct conditions Not later than 45 days after the date of receipt by a national bank of a notice given under paragraph (1) (or such additional period as the Comptroller of the Currency may permit), the national bank shall execute an agreement with the Comptroller of the Currency and any relevant insured depository institution affiliate shall execute an agreement with its appropriate Federal banking agency to comply with the requirements of subsection (a)(2)(C) of this section and subsection (d) of this section. (3) Imposition of conditions Until the conditions described in a notice under paragraph (1) are corrected (A) the Comptroller of the Currency may impose such limitations on the conduct or activities of the national bank or any subsidiary of the national bank as the Comptroller of the Currency determines to be appropriate under the circumstances and consistent with the purposes of this section; and (B) the appropriate Federal banking agency may impose such limitations on the conduct or activities of any relevant insured depository institution affiliate or any subsidiary of the institution as such agency determines to be appropriate under the circumstances and consistent with the purposes of this section. (4) Failure to correct If the conditions described in a notice to a national bank under paragraph (1) are not corrected within 180 days after the date of receipt by the national bank of the notice, the Comptroller of the Currency may require the national bank, under such terms and conditions as may be imposed by the Comptroller and subject to such extension of time as may be granted in the discretion of the Comptroller, to divest control of any financial subsidiary. (5) Consultation In taking any action under this subsection, the Comptroller shall consult with all relevant Federal and State regulatory agencies and authorities. (f) Failure to maintain public rating or meet applicable criteria (1) In general A national bank that does not continue to meet any applicable rating or other requirement of subsection (a)(2)(E) of this section after acquiring or establishing a financial subsidiary shall not, directly or through a subsidiary, purchase or acquire any additional equity capital of any financial subsidiary until the bank meets such requirements. (2) Equity capital For purposes of this subsection, the term "equity capital" includes, in addition to any equity instrument, any debt instrument issued by a financial subsidiary, if the instrument qualifies as capital of the subsidiary under any Federal or State law, regulation, or interpretation applicable to the subsidiary. (g) Definitions For purposes of this section, the following definitions shall apply: (1) Affiliate, company, control, and subsidiary The terms "affiliate", "company", "control", and "subsidiary" have the meanings given those terms in section 1841 of this title. (2) Appropriate Federal banking agency, de pository institution, insured bank, and insured depository institution The terms "appropriate Federal banking agency", "depository institution", "insured bank", and "insured depository institution" have the meanings given those terms in section 1813 of this title. (3) Financial subsidiary The term "financial subsidiary” means any company that is controlled by 1 or more in sured depository institutions other than a subsidiary that (A) engages solely in activities that national banks are permitted to engage in directly and are conducted subject to the same terms and conditions that govern the conduct of such activities by national banks; or (B) a national bank is specifically authorized by the express terms of a Federal statute (other than this section), and not by implication or interpretation, to control, such as by section 25 or 25A of the Federal Reserve Act [12 U.S.C. 601 et seq., 611 et seq.] or the Bank Service Company Act [12 U.S.C. 1861 et seq.]. (4) Eligible debt The term "eligible debt" means unsecured long-term debt that— (A) is not supported by any form of credit enhancement, including a guarantee or standby letter of credit; and (B) is not held in whole or in any significant part by any affiliate, officer, director, principal shareholder, or employee of the bank or any other person acting on behalf of or with funds from the bank or an affiliate of the bank. (5) Well capitalized The term "well capitalized" has the meaning given the term in section 18310 of this title. (6) Well managed The term "well managed" means (A) in the case of a depository institution that has been examined, unless otherwise determined in writing by the appropriate Federal banking agency (i) the achievement of a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating under an equivalent rating system) in connection with the most recent examination or subsequent review of the depository institution; and (ii) at least a rating of 2 for management, if such rating is given; or (B) in the case of any depository institution that has not been examined, the existence and use of managerial resources that the appropriate Federal banking agency determines are satisfactory. (R.S. §5136A, as added Pub. L. 106-102, title I, § 121(a)(2), Nov. 12, 1999, 113 Stat. 1373.) REFERENCES IN TEXT The Gramm-Leach-Bliley Act, referred to in subsecs. (a)(2)(B)(iii), (b)(2)(A), (3), is Pub. L. 106-102, Nov. 12, 1999, 113 Stat. 1338. Section 122 of the Act is set out as a note under section 1843 of this title. For complete classification of this Act to the Code, see Short title of 1999 Amendment note set out under section 1811 of this title and Tables. Section 25 of the Federal Reserve Act, referred to in subsec. (g)(3)(B), is classified to subchapter I (§ 601 et seq.) of chapter 6 of this title. Section 25A of the Federal Reserve Act is classified to subchapter II (§ 611 et seq.) of chapter 6 of this title. The Bank Service Company Act, referred to in subsec. (g)(3)(B), is Pub. L. 87-856, Oct. 23, 1962, 76 Stat. 1132, as amended, which is classified generally to chap ter 18 (§ 1861 et seq.) of this title. For complete classification of this Act to the Code, see section 1861 of this title and Tables. PRIOR PROVISIONS A prior section 5136A of the Revised Statutes was renumbered section 5136B by Pub. L. 106-102 and is classified to section 25a of this title. EFFECTIVE DATE Section effective 120 days after Nov. 12, 1999, see section 161 of Pub. L. 106-102, set out as an Effective Date of 1999 Amendment note under section 24 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 335, 371c, 1831w, 1843, 1971 of this title. § 25a. Participation by national banks in lotteries and related activities [See main edition for text] (R.S. §5136B, formerly §5136A, as added Pub. L. 90-203, §1(a), Dec. 15, 1967, 81 Stat. 608; renumbered R.S. §5136B, Pub. L. 106-102, title I, § 121(a)(1), Nov. 12, 1999, 113 Stat. 1373.) § 26. Comptroller to determine if association can commence business REFERENCES IN TEXT Title 62 of the Revised Statutes, referred to in text, was in the original "this Title" meaning title 62 of the Revised Statutes, consisting of R.S. §§5133 to 5244, which are classified to sections 21, 22 to 24a, 25a, 26 to 29, 35 to 37, 39, 43, 51, 52, 53, 56, 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 101a, 102, 104, 107 to 110, 123, 124, 131 to 138, 141 to 144, 151, 152, 161, 164, 168 to 175, 181 to 186, 192 to 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, sections 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§ 5133 to 5244 to the Code, see Tables. §27. Certificate of authority to commence banking REFERENCES IN TEXT Title 62 of the Revised Statutes, referred to in subsec. (a), was in the original "this Title" meaning title 62 of the Revised Statutes, consisting of R.S. §§ 5133 to 5244, which are classified to sections 21, 22 to 24a, 25a, 26 to 29, 35 to 37, 39, 43, 51, 52, 53, 56, 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 101a, 102, 104, 107 to 110, 123, 124, 131 to 138, 141 to 144, 151, 152, 161, 164, 168 to 175, 181 to 186, 192 to 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, sections 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§5133 to 5244 to the Code, see Tables. §29. Power to hold real property REFERENCES IN TEXT Title 62 of the Revised Statutes, referred to in last par.. was in the original "this title" meaning title 62 of the Revised Statutes, consisting of R.S. §§ 5133 to 5244, which are classified to sections 21, 22 to 24a, 25a, 26 to 29, 35 to 37, 39, 43, 51, 52, 53, 56, 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 101a, 102, 104, 107 to 110, 123, 124, 131 to 138, 141 to 144, 151, 152, 161, 164, 168 to 175, 181 to 186, 192 to 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, sections 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§ 5133 to 5244 to the Code, see Tables. § 30. Change of name or location [See main edition for text of (a) to (c)] (d) Retention of "Federal" in name of converted Federal savings association (1) In general Notwithstanding subsection (a) of this section or any other provision of law, any depository institution, the charter of which is converted from that of a Federal savings association to a national bank or a State bank after November 12, 1999, may retain the term "Federal" in the name of such institution if such institution remains an insured depository institution. (2) Definitions For purposes of this subsection, the terms "depository institution", "insured depository institution", "national bank", and "State bank" have the meanings given those terms in section 1813 of this title. (As amended Pub. L. 106-102, title VII, § 723, Nov. 12, 1999, 113 Stat. 1471.) AMENDMENTS 1999- Subsec. (d). Pub. L. 106-102 added subsec. (d). §36. Branch banks The conditions upon which a national banking association may retain or establish and operate a branch or branches are the following: [See main edition for text of (a) to (e)] (f) Law applicable to interstate branching operations (1) Law applicable to national bank branches [See main edition for text of (A) and (B)] (C) Review and report on actions by Comptroller The Comptroller of the Currency shall conduct an annual review of the actions it has taken with regard to the applicability of State law to national banks (or their branches) during the preceding year, and shall include in its annual report required under section 14 of this title the results of the review and the reasons for each such action. The first such review and report after July 3, 1997, shall encompass all such actions taken on or after January 1, 1992. [See main edition for text of (2) and (3); (g)] (h) Repealed. Pub. L. 104–208, div. A, title II, § 2204, Sept. 30, 1996, 110 Stat. 3009-405 [See main edition for text of (i)] (j) "Branch" defined The term "branch" as used in this section shall be held to include any branch bank, branch office, branch agency, additional office, or any branch place of business located in any State or Territory of the United States or in the District of Columbia at which deposits are received, or checks paid, or money lent. The term "branch", as used in this section, does not include an automated teller machine or a remote service unit. [See main edition for text of (k) and (l)] (As amended Pub. L. 104-208, div. A, title II, §§ 2204, 2205(a), Sept. 30, 1996, 110 Stat. 3009-405; Pub. L. 105-24, §2(b), July 3, 1997, 111 Stat. 239.) REFERENCES IN TEXT Section 1831u of this title, referred to in subsec. (d), was subsequently amended, and subsec. (f)(6) of section 1831u no longer defines the term "interstate merger transaction". However, such term is defined elsewhere in that section. AMENDMENTS 1997-Subsec. (f)(1)(C). Pub. L. 105-24 added subpar. (C). 1996 Subsec. (h). Pub. L. 104-208, §2204, struck out subsec. (h) which read as follows: "The aggregate capital of every national banking association and its branches shall at no time be less than the aggregate minimum capital required by law for the establishment of an equal number of national banking associations situated in the various places where such association and its branches are situated." Subsec. (j). Pub. L. 104-208, §2205(a), inserted at end "The term 'branch', as used in this section, does not include an automated teller machine or a remote service unit." RIGHT OF STATE TO OPT OUT Nothing in Pub. L. 105-24 to alter right of States under section 525 of Pub. L. 96-221, see section 3 of Pub. L. 105-24, set out as a note under section 1831a of this title. § 39. Reservation of rights of associations organized under Act of 1863 REFERENCES IN TEXT Title 62 of the Revised Statutes, referred to in text, was in the original “this Title" meaning title 62 of the Revised Statutes, consisting of R.S. §§5133 to 5244, which are classified to sections 21, 22 to 24a, 25a, 26 to 29, 35 to 37, 39, 43, 51, 52, 53, 56, 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 101a, 102, 104, 107 to 110, 123, 124, 131 to 138, 141 to 144, 151, 152, 161, 164, 168 to 175, 181 to 186, 192 to 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, sections 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§5133 to 5244 to the Code, see Tables. SUBCHAPTER II-CAPITAL, STOCK, AND STOCKHOLDERS § 59. Reduction of capital by vote of shareholders REFERENCES IN TEXT Title 62 of the Revised Statutes, referred to in text, was in the original "this Title" meaning title 62 of the Revised Statutes, consisting of R.S. §§ 5133 to 5244, which are classified to sections 21, 22 to 24a, 25a, 26 to 29, 35 to 37, 39, 43, 51, 52, 53, 56, 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 101a, 102, 104, 107 to 110, 123, 124, 131 to 138, 141 to 144, 151, 152, 161, 164, 168 to 175, 181 to 186, 192 to 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, sections 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§ 5133 to 5244 to the Code, see Tables. SUBCHAPTER III-DIRECTORS § 72. Qualifications Every director must, during his whole term of service, be a citizen of the United States, and at least a majority of the directors must have resided in the State, Territory, or District in which the association is located, or within one hundred miles of the location of the office of the association, for at least one year immediately preceding their election, and must be residents |