§ 4614. Capital classifications
(a)
Enterprises
For purposes of this subchapter, the Director shall classify the enterprises according to the following capital classifications:
(1)
Adequately capitalized
An enterprise shall be classified as adequately capitalized if the enterprise—
(A)
maintains an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise under section
4611 of this title; and
(B)
maintains an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise under section
4612 of this title.
(2)
Undercapitalized
An enterprise shall be classified as undercapitalized if—
(3)
Significantly undercapitalized
An enterprise shall be classified as significantly undercapitalized if—
(A)
the enterprise—
(i)
does not maintain an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise;
(ii)
does not maintain an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise; and
(iii)
maintains an amount of core capital that is equal to or exceeds the critical capital level established for the enterprise under section
4613 of this title; or
(b)
Federal Home Loan Banks
(1)
Establishment and criteria
For purposes of this subchapter, the Director shall, by regulation—
(A)
establish the capital classifications specified under paragraph (2) for the Federal Home Loan Banks;
(B)
establish criteria for each such capital classification based on the amount and types of capital held by a bank and the risk-based, minimum, and critical capital levels for the banks and taking due consideration of the capital classifications established under subsection (a) for the enterprises, with such modifications as the Director determines to be appropriate to reflect the difference in operations between the banks and the enterprises; and
(c)
Discretionary classification
(1)
Grounds for reclassification
The Director may reclassify a regulated entity under paragraph (2) if—
(A)
at any time, the Director determines in writing that the regulated entity is engaging in conduct that could result in a rapid depletion of core or total capital or the value of collateral pledged as security has decreased significantly or that the value of the property subject to mortgages held by the regulated entity (or securitized in the case of an enterprise) has decreased significantly;
(2)
Reclassification
In addition to any other action authorized under this chapter, including the reclassification of a regulated entity for any reason not specified in this subsection, if the Director takes any action described in paragraph (1), the Director may classify a regulated entity—
(d)
Quarterly determination
The Director shall determine the capital classification of the regulated entities for purposes of this subchapter on not less than a quarterly basis (and as appropriate under subsection (c) of this section).
(e)
Restriction on capital distributions
(1)
In general
A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized.
(2)
Exception
Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition—
(f)
Implementation
Notwithstanding any other provision of this section, during the period beginning on October 28, 1992, and ending upon the effective date of section
4615 of this title (as provided in section
4615
(c) [1] of this title), an enterprise shall be classified as adequately capitalized if the enterprise maintains an amount of core capital that is equal to or exceeds the minimum capital level for the enterprise under section
4612 of this title.
[1] See References in Text note below.