{"identifier":"/us/usc/t12/s1835","title":12,"num":"\u00a7\u202f1835.","heading":"Insured depository institution capital requirements for transfers of small business obligations","text":"\u00a7\u202f1835.\nInsured depository institution capital requirements for transfers of small business obligations\n(a)\nAccounting principles\nThe 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.\n(b)\nCapital and reserve requirements\nWith 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\u2014\n(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\n(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.\n(c)\nQualified institutions criteria\nAn 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), the institution is\u2014\n(1) well capitalized; or\n(2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized.\n(d)\nAggregate amount of recourse\nThe 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) shall not exceed\u2014\n(1) 15 percent of the risk-based capital of the institution; or\n(2) such greater amount, as established by the appropriate Federal banking agency by regulation or order.\n(e)\nInstitutions that cease to be qualified or exceed aggregate limits\nIf an insured depository institution ceases to be a qualified insured depository institution or exceeds the limits under subsection (d), 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.\n(f)\nPrompt corrective action not affected\nThe 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 1831\no\n(g)\nRegulations required\nNot later than 180 days after\nSeptember 23, 1994\n(h)\nAlternative system permitted\n(1)\nIn general\nAt 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).\n(2)\nExisting transactions not affected\nNotwithstanding 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).\n(i)\nDefinitions\nFor purposes of this section\u2014\n(1) the term \u201cadequately capitalized\u201d has the same meaning as in section 1831\no\n(2) the term \u201cappropriate Federal banking agency\u201d has the same meaning as in\nsection 1813 of this title\n(3) the term \u201ccapital standards\u201d has the same meaning as in section 1831\no\n(4) the term \u201cFederal banking agencies\u201d has the same meaning as in\nsection 1813 of this title\n(5) the term \u201cinsured depository institution\u201d has the same meaning as in\nsection 1813 of this title\n(6) the term \u201cother capital measures\u201d has the meaning as in section 1831\no\n(7) the term \u201crecourse\u201d has the meaning given to such term under generally accepted accounting principles;\n(8) the term \u201csmall business\u201d means a business that meets the criteria for a small business concern established by the Small Business Administration under\nsection 632(a) of title 15\n(9) the term \u201cwell capitalized\u201d has the same meaning as in section 1831\no","url":"https://projectusc.org/usc/t12/s1835.html","content":[{"t":"sec","id":"/us/usc/t12/s1835","children":[{"t":"num","text":"\u00a7\u202f1835."},{"t":"heading","text":"Insured depository institution capital requirements for transfers of small business obligations"},{"t":"subsec","id":"/us/usc/t12/s1835/a","children":[{"t":"num","text":"(a)"},{"t":"heading","text":"Accounting principles"},{"t":"content","children":[{"t":"p","text":"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.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/b","children":[{"t":"num","text":"(b)"},{"t":"heading","text":"Capital and reserve requirements"},{"t":"chapeau","text":"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\u2014"},{"t":"para","id":"/us/usc/t12/s1835/b/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" establish and maintain a reserve equal to an amount sufficient to meet the reasonable estimated liability of the institution under the recourse arrangement; and","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/b/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" 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.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/c","children":[{"t":"num","text":"(c)"},{"t":"heading","text":"Qualified institutions criteria"},{"t":"chapeau","text":"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), the institution is\u2014"},{"t":"para","id":"/us/usc/t12/s1835/c/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" well capitalized; or","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/c/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/d","children":[{"t":"num","text":"(d)"},{"t":"heading","text":"Aggregate amount of recourse"},{"t":"chapeau","text":"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) shall not exceed\u2014"},{"t":"para","id":"/us/usc/t12/s1835/d/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" 15 percent of the risk-based capital of the institution; or","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/d/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" such greater amount, as established by the appropriate Federal banking agency by regulation or order.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/e","children":[{"t":"num","text":"(e)"},{"t":"heading","text":"Institutions that cease to be qualified or exceed aggregate limits"},{"t":"content","children":[{"t":"p","text":"If an insured depository institution ceases to be a qualified insured depository institution or exceeds the limits under subsection (d), 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.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/f","children":[{"t":"num","text":"(f)"},{"t":"heading","text":"Prompt corrective action not affected"},{"t":"content","children":[{"t":"p","text":"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 1831","children":[{"t":"text","text":"o","tail":" of this title."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/g","children":[{"t":"num","text":"(g)"},{"t":"heading","text":"Regulations required"},{"t":"content","children":[{"t":"p","text":"Not later than 180 days after ","children":[{"t":"text","text":"September 23, 1994","tail":", each appropriate Federal banking agency shall promulgate final regulations implementing this section."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/h","children":[{"t":"num","text":"(h)"},{"t":"heading","text":"Alternative system permitted"},{"t":"para","id":"/us/usc/t12/s1835/h/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"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).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/h/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Existing transactions not affected"},{"t":"content","children":[{"t":"p","text":"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).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t12/s1835/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"Definitions"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t12/s1835/i/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" the term \u201cadequately capitalized\u201d has the same meaning as in section 1831","children":[{"t":"text","text":"o","tail":"(b) of this title;"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" the term \u201cappropriate Federal banking agency\u201d has the same meaning as in ","children":[{"t":"ref","text":"section 1813 of this title","href":"/us/usc/t12/s1813","tail":";"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/3","children":[{"t":"num","text":"(3)"},{"t":"content","text":" the term \u201ccapital standards\u201d has the same meaning as in section 1831","children":[{"t":"text","text":"o","tail":"(c) of this title;"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/4","children":[{"t":"num","text":"(4)"},{"t":"content","text":" the term \u201cFederal banking agencies\u201d has the same meaning as in ","children":[{"t":"ref","text":"section 1813 of this title","href":"/us/usc/t12/s1813","tail":";"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/5","children":[{"t":"num","text":"(5)"},{"t":"content","text":" the term \u201cinsured depository institution\u201d has the same meaning as in ","children":[{"t":"ref","text":"section 1813 of this title","href":"/us/usc/t12/s1813","tail":";"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/6","children":[{"t":"num","text":"(6)"},{"t":"content","text":" the term \u201cother capital measures\u201d has the meaning as in section 1831","children":[{"t":"text","text":"o","tail":"(c) of this title;"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/7","children":[{"t":"num","text":"(7)"},{"t":"content","text":" the term \u201crecourse\u201d has the meaning given to such term under generally accepted accounting principles;","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/8","children":[{"t":"num","text":"(8)"},{"t":"content","text":" the term \u201csmall business\u201d means a business that meets the criteria for a small business concern established by the Small Business Administration under ","children":[{"t":"ref","text":"section 632(a) of title 15","href":"/us/usc/t15/s632/a","tail":"; and"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t12/s1835/i/9","children":[{"t":"num","text":"(9)"},{"t":"content","text":" the term \u201cwell capitalized\u201d has the same meaning as in section 1831","children":[{"t":"text","text":"o","tail":"(b) of this title."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"}]}]}