(a) Mandatory supervisory actions

(1) Capital restoration plan

An enterprise that is classified as significantly undercapitalized shall, within the time period under section 4622(b) and (d) of this title, submit to the Director a capital restoration plan that complies with section 4622 of this title and carry out the plan after approval.

(2) Restrictions on capital distributions

(A) Prior approval

An enterprise that is classified as significantly undercapitalized may not make any capital distribution that would result in the enterprise being reclassified as critically undercapitalized. An enterprise that is classified as significantly undercapitalized enterprise ^[1] may not make any other capital distribution unless the Director approves the distribution.

(B) Standard for approval

The Director may approve a capital distribution by an enterprise classified as significantly undercapitalized only if the Director determines that the distribution

(i)

will enhance the ability of the enterprise to meet the risk-based capital level and the minimum capital level for the enterprise promptly,

(ii)

will contribute to the long-term financial safety and soundness of the enterprise, or

(iii)

is otherwise in the public interest.

(b) Discretionary supervisory actions

In addition to any other actions taken by the Director (including actions under subsection (a) of this section), the Director may, at any time, take any of the following actions with respect to an enterprise that is classified as significantly undercapitalized:

(1) Limitation on increase in obligations

Limit any increase in, or order the reduction of, any obligations of the enterprise, including off-balance sheet obligations.

(2) Limitation on growth

Limit or prohibit the growth of the assets of the enterprise or require contraction of the assets of the enterprise.

(3) Acquisition of new capital

Require the enterprise to acquire new capital in a form and amount determined by the Director.

(4) Restriction of activities

Require the enterprise to terminate, reduce, or modify any activity that the Director determines creates excessive risk to the enterprise.

(5) Reclassification from significantly to critically undercapitalized

The Director may reclassify as critically undercapitalized an enterprise that is classified as significantly undercapitalized (and the enterprise shall be subject to the provisions of section 4617 of this title) if -

(A)

the enterprise does not submit a capital restoration plan that is substantially in compliance with section 4622 of this title within the applicable period or the Director does not approve the capital restoration plan submitted by the enterprise; or

(B)

the Director determines that the enterprise has failed to make, in good faith, reasonable efforts necessary to comply with the capital restoration plan and fulfill the schedule for the plan approved by the Director.

(6) Conservatorship

Appoint a conservator for the enterprise in accordance with the provisions of section 4619 of this title (excluding subsection (a)(1) and (2)), but only if the Director determines -

(A)

that the amount of core capital of the enterprise is less than the minimum capital level established for the enterprise under section 4612 of this title; and

(B)

that alternative remedies available to the Director under this chapter are not satisfactory.

(c) Effective date

This section shall take effect upon the first classification of the enterprises within capital classifications that occurs under section 4614 of this title