Sec. 601. Capital election

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A banking organization may make an election under this section to be treated as a qualifying banking organization for purposes of the regulatory relief described under section 602. A banking organization may qualify to be treated as a qualifying banking organization if— the banking organization has an average leverage ratio of at least 10 percent; with respect to a depository institution holding company, each insured depository institution subsidiary of the holding company simultaneously makes the election described under subsection (a); and with respect to an insured depository institution, any parent depository institution holding company of the institution simultaneously makes the election described under subsection (a).

To make an election under this section, a banking organization shall submit an election to the appropriate Federal banking agency (and any applicable State bank supervisor that regulates the banking organization) containing— a notice of such election; the banking organization’s average leverage ratio, as well as the organization’s quarterly leverage ratio for each of the most recently completed four calendar quarters; if the banking organization is a depository institution holding company, the information described under paragraph

(2)for each of the organization’s insured depository institution subsidiaries; and if the banking organization is an insured depository institution, the information described under paragraph

(2)for any parent depository institution holding company of the institution. An election made under this section shall take effect at the end of the 30-day period beginning on the date that the appropriate Federal banking agency receives the application described under subsection (c), unless the appropriate Federal banking agency determines that the banking organization has not met the requirements described under subsection (b). If the appropriate Federal banking agency determines that a banking organization submitting an election notice under subsection

(c)does not meet the requirements described under subsection (b), the agency shall— notify the banking organization (and any applicable State bank supervisor that regulates the banking organization), in writing, of such determination as soon as possible after such determination is made, but in no case later than the end of the 30-day period beginning on the date that the appropriate Federal banking agency receives the election; and include in such notification the specific reasons for such determination and steps that the banking organization can take to meet such requirements. In the case of a banking organization that is a newly-chartered insured depository institution or a banking organization that becomes a banking organization because it controls a newly-chartered insured depository institution, such banking organization may be treated as a qualifying banking organization immediately upon becoming a banking organization, if— an election to be treated as a qualifying banking organization was included in the application filed with the appropriate Federal banking agency in connection with becoming a banking organization; and as of the date the banking organization becomes a banking organization, the banking organization’s tangible equity divided by the banking organization’s leverage exposure, expressed as a percentage, is at least 10 percent. If, with respect to the most recently completed calendar quarter, the appropriate Federal banking agency determines that a qualifying banking organization’s quarterly leverage ratio is below 10 percent— the appropriate Federal banking agency shall notify the qualifying banking organization and any applicable State bank supervisor that regulates the banking organization of such determination; the appropriate Federal banking agency may prohibit the banking organization from making a capital distribution; and the banking organization shall, within 3 months of the first such determination, submit a capital restoration plan to the appropriate Federal banking agency. If a banking organization described under subparagraph

(A)does not, within the 1-year period beginning on the date of such determination, raise the organization’s quarterly leverage ratio for a calendar quarter ending in such 1-year period to at least 10 percent, the banking organization’s election under this section shall be terminated, and the appropriate Federal banking agency shall notify any applicable State bank supervisor that regulates the banking organization of such termination. With respect to a qualifying banking organization described under subparagraph

(A)that is an insured depository institution, any parent depository institution holding company of the qualifying banking organization shall— if the appropriate Federal banking agency determines it appropriate, be prohibited from making a capital distribution (other than a capital contribution to such qualifying banking organization described under subparagraph (A)); and if the qualifying banking organization has an election terminated under subparagraph (B), any such parent depository institution holding company shall also have its election under this section terminated. If, with respect to the most recently completed calendar quarter, the appropriate Federal banking agency determines that a qualifying banking organization’s quarterly leverage ratio is below 6 percent, the banking organization’s election under this section shall be terminated, and the appropriate Federal banking agency shall notify any applicable State bank supervisor that regulates the banking organization of such termination. With respect to a qualifying banking organization described under subparagraph

(A)that is an insured depository institution, any parent depository institution holding company of the qualifying banking organization shall also have its election under this section terminated. If a banking organization has an election under this section terminated, the banking organization may not apply for another election under this section until the banking organization has maintained a quarterly leverage ratio of at least 10 percent for 8 consecutive calendar quarters.