Federal Deposit Insurance Corporation Improvement Act Of 1991 Title I, Subtitle D
Act providing that stringent regulatory actions may be taken against depository institutions according to their level of capital adequacy: well capitalized; adequately capitalized; under capitalized; significantly under capitalized; and critically under capitalized. If an institution is classified as well capitalized or adequately capitalized, no special regulatory steps must be taken, but those institutions that fall into the three remaining categories are subject to progressively more demanding restrictions. If an institution is declared to be under capitalized, the following applies: the institution must adopt an acceptable capital restoration plan; limits are placed on the institution's growth; capital distributions cannot be made; and acquisitions and establishment of new branches cannot be made without prior approval of its capital plan. If an institution is declared to be significantly under capitalized, the institution must: sell shares; restrict interest paid on deposits; restrict the growth of assets; prohibit the receiving of deposits from correspondent banks; and terminate particular executive officers and/or directors. If an institution is declared to be critically under capitalized, it cannot:
- pay interest on subordinated debt;
- repay principal on subordinated debt;
- participate in highly leveraged transactions without prior FDIC approval;
- make material changes in accounting methods;
- pay excessive compensation or bonuses;
- change its charters or by-laws;
- engage in transactions that require prior notice to the primary regulator to include expansion, acquisition, or the sale of assets.
Popular Insurance Terms
Method of depreciating an asset in which its useful life is divided into an appropriate number of years (or other periods), the final salvage value is deducted, and the asset is written off ...
Payment by the insurance company to the insured for the actual expenses incurred by the insured, such as medical expenses. ...
Contributions to a pension plan on a fixed basis according to a formula, with variable benefits. Contributions can be made under an allocated funding instrument (paid to an insurance ...
Transaction by a tax-exempt organization with a person from inside the organization (disqualified person) that provides an economic benefit to that person that is in excess of the value of ...
Type of inland marine insurance that provides coverage for jewels, watches, gold, silver, platinum, pearls, precious and semiprecious stones. Property can be owned by the insured jeweler, ...
Modification of the major medical insurance policy that provides coverage for the terminating employee who otherwise would not be covered by a health insurance policy. Usually, this ...
Assembly of people formed only for obtaining group insurance. Such a group is uninsurable and violates underwriting principles concerning group insurance. ...
Real property (structure (s) attached to the land) that is occupied and/or is under the care, custody, or control of an individual, individuals, or an organization for which an insurance ...
State law that stipulates the establishment of required reserves for claims made basis liability coverage contracts, removes the excess statutory reserves, and directs that all amounts that ...
Have a question or comment?
We're here to help.