U.S Code last checked for updates: Jul 20, 2024
§ 1787.
Payment of insurance
(a)
Liquidation by Board; bond; appointment of agent; fees to be fixed by Board
(1)
(A)
Upon its finding that a Federal credit union insured under this subchapter is bankrupt or insolvent, the Board shall close such credit union for liquidation and appoint itself liquidating agent therefor.
(B)
Not later than 10 days after the date on which the Board closes a credit union for liquidation pursuant to paragraph (1), or accepts appointment as liquidating agent pursuant to subsection (b), such insured credit union may apply to the United States district court for the judicial district in which the principal office of such insured credit union is located or the United States District Court for the District of Columbia, for an order requiring the Board to show cause why it should not be prohibited from continuing such liquidation. Except as otherwise provided in this subparagraph, no court may take any action for or toward the removal of any liquidating agent or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a liquidating agent.
(2)
Notwithstanding any other provision of law, the Board as liquidating agent of a closed Federal credit union insured under this subchapter shall not be required to furnish bond and shall have the right to appoint an agent or agents to assist it in its duties as such liquidating agent. All fees, compensation, and expenses of liquidation and administration thereof shall be fixed by the Board and may be paid by them out of funds coming into its possession as such liquidating agent.
(3)
Liquidation to facilitate prompt corrective action.—
The Board may close any credit union for liquidation, and appoint itself or another (including, in the case of a State-chartered insured credit union, the State official having jurisdiction over the credit union) as liquidating agent of that credit union, if—
(A)
the Board determines that—
(i)
the credit union is significantly undercapitalized, as defined in section 1790d of this title, and has no reasonable prospect of becoming adequately capitalized, as defined in section 1790d of this title; or
(ii)
the credit union is critically undercapitalized, as defined in section 1790d of this title; and
(B)
in the case of a State-chartered insured credit union, the Board has complied with section 1790d(l) of this title.
(b)
Powers and duties of Board as conservator or liquidating agent
(1)
Rulemaking authority of Board
(2)
General powers
(A)
Successor to credit union
The Board shall, as conservator or liquidating agent, and by operation of law, succeed to—
(i)
all rights, titles, powers, and privileges of the credit union, and of any member, accountholder, officer, or director of such credit union with respect to the credit union and the assets of the credit union; and
(ii)
title to the books, records, and assets of any previous conservator or other legal custodian of such credit union.
(B)
Operate the credit union
The Board may, as conservator or liquidating agent—
(i)
take over the assets of and operate the credit union with all the powers of the members or shareholders, the directors, and the officers of the credit union and shall be authorized to conduct all business of the credit union;
(ii)
collect all obligations and money due the credit union;
(iii)
perform all functions of the credit union in the name of the credit union which is consistent with the appointment as conservator or liquidating agent; and
(iv)
preserve and conserve the assets and property of such credit union.
(C)
Functions of credit union’s officers, directors, and shareholders
(D)
Powers as conservator
The Board may, as conservator, take such action as may be—
(i)
necessary to put the credit union in a sound and solvent condition; and
(ii)
appropriate to carry on the business of the credit union and preserve and conserve the assets and property of the credit union.
(E)
Additional powers as liquidating agent
(F)
Payment of valid obligations
(G)
Attachment of assets and injunctive relief
(H)
Standards
(i)
Showing
(ii)
State proceeding
(I)
Subpoena authority
(i)
In general
(ii)
Authority of Board
(iii)
Rule of construction
(J)
Incidental powers
The Board may, as conservator or liquidating agent—
(i)
exercise all powers and authorities specifically granted to conservators or liquidating agents, respectively, under this chapter and such incidental powers as shall be necessary to carry out such powers; and
(ii)
take any action authorized by this chapter,
which the Board determines is in the best interests of the credit union, its account holders, or the Board.
(K)
Exemption from criminal prosecution
(3)
Authority of liquidating agent to determine claims
(A)
In general
(B)
Notice requirements
The liquidating agent, in any case involving the liquidation or winding up of the affairs of a closed credit union, shall—
(i)
promptly publish a notice to the credit union’s creditors to present their claims, together with proof, to the liquidating agent by a date specified in the notice which shall be not less than 90 days after the publication of such notice; and
(ii)
republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i).
(C)
Mailing required
The liquidating agent shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the credit union’s books—
(i)
at the creditor’s last address appearing in such books; or
(ii)
upon discovery of the name and address of a claimant not appearing on the credit union’s books within 30 days after the discovery of such name and address.
(4)
Rulemaking authority relating to determination of claims
(5)
Procedures for determination of claims
(A)
Determination period
(i)
In general
(ii)
Extension of time
(iii)
Mailing of notice sufficient
The requirements of clause (i) shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears—
(I)
on the credit union’s books;
(II)
in the claim filed by the claimant; or
(III)
in documents submitted in proof of the claim.
(iv)
Contents of notice of disallowance
If any claim filed under clause (i) is disallowed, the notice to the claimant shall contain—
(I)
a statement of each reason for the disallowance; and
(II)
the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim.
(B)
Allowance of proven claims
(C)
Disallowance of claims filed after end of filing period
(i)
In general
(ii)
Certain exceptions
Clause (i) shall not apply with respect to any claim filed by any claimant after the date specified in the notice published under paragraph (3)(B)(i) and such claim may be considered by the liquidating agent if—
(I)
the claimant did not receive notice of the appointment of the liquidating agent in time to file such claim before such date; and
(II)
such claim is filed in time to permit payment of such claim.
(D)
Authority to disallow claims
(E)
No judicial review of determination pursuant to subparagraph (D)
(F)
Legal effect of filing
(i)
Statute of limitation tolled
(ii)
No prejudice to other actions
(6)
Provision for agency review or judicial determination of claims
(A)
In general
Before the end of the 60-day period beginning on the earlier of—
(i)
the end of the period described in paragraph (5)(A)(i) with respect to any claim against a credit union for which the Board is liquidating agent; or
(ii)
the date of any notice of disallowance of such claim pursuant to paragraph (5)(A)(i),
the claimant may request administrative review of the claim in accordance with subparagraph (A) or (B) of paragraph (7) or file suit on such claim (or continue an action commenced before the appointment of the liquidating agent) in the district or territorial court of the United States for the district within which the credit union’s principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim).
(B)
Statute of limitations
If any claimant fails to—
(i)
request administrative review of any claim in accordance with subparagraph (A) or (B) of paragraph (7); or
(ii)
file suit on such claim (or continue an action commenced before the appointment of the liquidating agent),
before the end of the 60-day period described in subparagraph (A), the claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the liquidating agent) as of the end of such period, such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.
(7)
Review of claims
(A)
Administrative hearing
(B)
Other review procedures
(i)
In general
(ii)
Criteria
(iii)
Voluntary binding or nonbinding procedures
(iv)
Consideration of incentives
(8)
Expedited determination of claims
(A)
Establishment required
The Board shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (5) for claimants who—
(i)
allege the existence of legally valid and enforceable or perfected security interests in assets of any credit union for which the Board has been appointed liquidating agent; and
(ii)
allege that irreparable injury will occur if the routine claims procedure is followed.
(B)
Determination period
Before the end of the 90-day period beginning on the date any claim is filed in accordance with the procedures established pursuant to subparagraph (A), the Board shall—
(i)
determine—
(I)
whether to allow or disallow such claim; or
(II)
whether such claim should be determined pursuant to the procedures established pursuant to paragraph (5); or
(ii)
notify the claimant of the determination, and if the claim is disallowed, a statement of each reason for the disallowance and the procedure for obtaining agency review or judicial determination.
(C)
Period for filing or renewing suit
Any claimant who files a request for expedited relief shall be permitted to file a suit, or to continue a suit filed before the appointment of the liquidating agent, seeking a determination of the claimant’s rights with respect to such security interest after the earlier of—
(i)
the end of the 90-day period beginning on the date of the filing of a request for expedited relief; or
(ii)
the date the Board denies the claim.
(D)
Statute of limitations
(E)
Legal effect of filing
(i)
Statute of limitation tolled
(ii)
No prejudice to other actions
(9)
Agreement as basis of claim
(A)
Requirements
(B)
Exception to contemporaneous execution requirement
(10)
Payment of claims
(A)
In general
(B)
Payment of dividends on claims
(11)
Distribution of assets
(A)
Subrogated claims; claims of uninsured accountholders and other creditors
The liquidating agent shall—
(i)
retain for the account of the Board such portion of the amounts realized from any liquidation as the Board may be entitled to receive in connection with the subrogation of the claims of accountholders; and
(ii)
pay to accountholders and other creditors the net amounts available for distribution to them.
(B)
Distribution to shareholders of amounts remaining after payment of all other claims and expenses
(12)
Suspension of legal actions
(A)
In general
After the appointment of a conservator or liquidating agent for an insured credit union, the conservator or liquidating agent may request a stay for a period not to exceed—
(i)
45 days, in the case of any conservator; and
(ii)
90 days, in the case of any liquidating agent,
(B)
Grant of stay by all courts required
(13)
Additional rights and duties
(A)
Prior final adjudication
(B)
Rights and remedies of conservator or liquidating agent
In the event of any appealable judgment, the Board as conservator or liquidating agent shall—
(i)
have all the rights and remedies available to the credit union (before the appointment of such conservator or liquidating agent) and the Board in its corporate capacity, including removal to Federal court and all appellate rights; and
(ii)
not be required to post any bond in order to pursue such remedies.
(C)
No attachment or execution
(D)
Limitation on judicial review
Except as otherwise provided in this subsection, no court shall have jurisdiction over—
(i)
any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any credit union for which the Board has been appointed liquidating agent, including assets which the Board may acquire from itself as such liquidating agent; or
(ii)
any claim relating to any act or omission of such credit union or the Board as liquidating agent.
(14)
Statute of limitations for actions brought by conservator or liquidating agent
(A)
In general
Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Board as conservator or liquidating agent shall be—
(i)
in the case of any contract claim, the longer of—
(I)
the 6-year period beginning on the date the claim accrues; or
(II)
the period applicable under State law; and
(ii)
in the case of any tort claim, the longer of—
(I)
the 3-year period beginning on the date the claim accrues; or
(II)
the period applicable under State law.
(B)
Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of limitation begins to run on any claim described in such subparagraph shall be the later of—
(i)
the date of the appointment of the Board as conservator or liquidating agent; or
(ii)
the date on which the cause of action accrues.
(15)
Accounting and recordkeeping requirements
(A)
In general
(B)
Annual accounting or report
(C)
Availability of reports
(D)
Recordkeeping requirement
(i)
In general
(ii)
Old records
(16)
Fraudulent transfers
(A)
In general
(B)
Right of recovery
To the extent a transfer is avoided under subparagraph (A), the Board may recover, for the benefit of the insured credit union, the property transferred, or, if a court so orders, the value of such property (at the time of such transfer) from—
(i)
the initial transferee of such transfer or the institution-affiliated party or person for whose benefit such transfer was made; or
(ii)
any immediate or mediate transferee of any such initial transferee.
(C)
Rights of transferee or obligee
The Board may not recover under subparagraph (B) from—
(i)
any transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith; or
(ii)
any immediate or mediate good faith transferee of such transferee.
(D)
Rights under this paragraph
(c)
Provisions relating to contracts entered into before appointment of conservator or liquidating agent
(1)
Authority to repudiate contracts
In addition to any other rights a conservator or liquidating agent may have, the conservator or liquidating agent for any insured credit union may disaffirm or repudiate any contract or lease—
(A)
to which such credit union is a party;
(B)
the performance of which the conservator or liquidating agent, in the conservator’s or liquidating agent’s discretion, determines to be burdensome; and
(C)
the disaffirmance or repudiation of which the conservator or liquidating agent determines, in the conservator’s or liquidating agent’s discretion, will promote the orderly administration of the credit union’s affairs.
(2)
Timing of repudiation
(3)
Claims for damages for repudiation
(A)
In general
Except as otherwise provided in subparagraph (C) and paragraphs (4), (5), and (6), the liability of the conservator or liquidating agent for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be—
(i)
limited to actual direct compensatory damages; and
(ii)
determined as of—
(I)
the date of the appointment of the conservator or liquidating agent; or
(II)
in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudiation of such contract or agreement.
(B)
No liability for other damages
For purposes of subparagraph (A), the term “actual direct compensatory damages” does not include—
(i)
punitive or exemplary damages;
(ii)
damages for lost profits or opportunity; or
(iii)
damages for pain and suffering.
(C)
Measure of damages for repudiation of financial contracts
In the case of any qualified financial contract or agreement to which paragraph (8) applies, compensatory damages shall be—
(i)
deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized in the industries for such contract and agreement claims; and
(ii)
paid in accordance with this subsection and subsection (f) except as otherwise specifically provided in this section.
(4)
Leases under which the credit union is the lessee
(A)
In general
(B)
Payments of rent
Notwithstanding subparagraph (A), the lessor under a lease to which such subparagraph applies shall—
(i)
be entitled to the contractual rent accruing before the later of the date—
(I)
the notice of disaffirmance or repudiation is mailed; or
(II)
the disaffirmance or repudiation becomes effective,
 unless the lessor is in default or breach of the terms of the lease;
(ii)
have no claim for damages under any acceleration clause or other penalty provision in the lease; and
(iii)
have a claim for any unpaid rent, subject to all appropriate offsets and defenses, due as of the date of the appointment which shall be paid in accordance with this subsection and subsection (b).
(5)
Leases under which the credit union is the lessor
(A)
In general
If the conservator or liquidating agent repudiates an unexpired written lease of real property of the credit union under which the credit union is the lessor and the lessee is not, as of the date of such repudiation, in default, the lessee under such lease may either—
(i)
treat the lease as terminated by such repudiation; or
(ii)
remain in possession of the leasehold interest for the balance of the term of the lease unless the lessee defaults under the terms of the lease after the date of such repudiation.
(B)
Provisions applicable to lessee remaining in possession
If any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of such subparagraph—
(i)
the lessee—
(I)
shall continue to pay the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and
(II)
may offset against any rent payment which accrues after the date of the repudiation of the lease, any damages which accrue after such date due to the nonperformance of any obligation of the credit union under the lease after such date; and
(ii)
the conservator or liquidating agent shall not be liable to the lessee for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II).
(6)
Contracts for the sale of real property
(A)
In general
If the conservator or liquidating agent repudiates any contract (which meets the requirements of each paragraph of section 1788(a)(3) of this title) for the sale of real property and the purchaser of such real property under such contract is in possession and is not, as of the date of such repudiation, in default, such purchaser may either—
(i)
treat the contract as terminated by such repudiation; or
(ii)
remain in possession of such real property.
(B)
Provisions applicable to purchaser remaining in possession
If any purchaser of real property under any contract described in subparagraph (A) remains in possession of such property pursuant to clause (ii) of such subparagraph—
(i)
the purchaser—
(I)
shall continue to make all payments due under the contract after the date of the repudiation of the contract; and
(II)
may offset against any such payments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the credit union under the contract; and
(ii)
the conservator or liquidating agent shall—
(I)
not be liable to the purchaser for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under clause (i)(II);
(II)
deliver title to the purchaser in accordance with the provisions of the contract; and
(III)
have no obligation under the contract other than the performance required under subclause (II).
(C)
Assignment and sale allowed
(i)
In general
(ii)
No liability after assignment and sale
(7)
Provisions applicable to service contracts
(A)
Services performed before appointment
In the case of any contract for services between any person and any insured credit union for which the Board has been appointed conservator or liquidating agent, any claim of such person for services performed before the appointment of the conservator or the liquidating agent shall be—
(i)
a claim to be paid in accordance with subsection (b); and
(ii)
deemed to have arisen as of the date the conservator or liquidating agent was appointed.
(B)
Services performed after appointment and prior to repudiation
If, in the case of any contract for services described in subparagraph (A), the conservator or liquidating agent accepts performance by the other person before the conservator or liquidating agent makes any determination to exercise the right of repudiation of such contract under this section—
(i)
the other party shall be paid under the terms of the contract for the services performed; and
(ii)
the amount of such payment shall be treated as an administrative expense of the conservatorship or liquidation.
(C)
Acceptance of performance no bar to subsequent repudiation
(8)
Certain qualified financial contracts
(A)
Rights of parties to contracts
Subject to paragraphs (9) and (10) of this subsection and notwithstanding any other provision of this chapter (other than subsection (b)(9) of this section and section 1788(a)(3) of this title), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—
(i)
any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with an insured credit union which arises upon the appointment of the Board as liquidating agent for such credit union at any time after such appointment;
(ii)
any right under any security agreement or arrangement or other credit enhancement related to 1 or more qualified financial contracts described in clause (i); 1
1
 So in original. Probably should be followed by “or”.
(iii)
any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with 1 or more contracts and agreements described in clause (i), including any master agreement for such contracts or agreements.
(B)
Applicability of other provisions
(C)
Certain transfers not avoidable
(i)
In general
(ii)
Exception for certain transfers
(D)
Certain contracts and agreements defined
For purposes of this subsection, the following definitions shall apply:
(i)
Qualified financial contract
(ii)
Securities contract
The term “securities contract”—
(I)
means a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or any option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such repurchase or reverse repurchase transaction is a “repurchase agreement”, as defined in clause (v));
(II)
does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan unless the Board determines by regulation, resolution, or order to include any such agreement within the meaning of such term;
(III)
means any option entered into on a national securities exchange relating to foreign currencies;
(IV)
means the guarantee (including by novation) by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such settlement is in connection with any agreement or transaction referred to in subclauses (I) through (XII) (other than subclause (II));
(V)
means any margin loan;
(VI)
means any extension of credit for the clearance or settlement of securities transactions;
(VII)
means any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled with a securities sale transaction;
(VIII)
means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;
(IX)
means any combination of the agreements or transactions referred to in this clause;
(X)
means any option to enter into any agreement or transaction referred to in this clause;
(XI)
means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this clause, except that the master agreement shall be considered to be a securities contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), (IV), (V), (VI), (VII), (VIII), (IX), or (X); and
(XII)
means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(iii)
Commodity contract
The term “commodity contract” means—
(I)
with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;
(II)
with respect to a foreign futures commission merchant, a foreign future;
(III)
with respect to a leverage transaction merchant, a leverage transaction;
(IV)
with respect to a clearing organization, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;
(V)
with respect to a commodity options dealer, a commodity option;
(VI)
any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;
(VII)
any combination of the agreements or transactions referred to in this clause;
(VIII)
any option to enter into any agreement or transaction referred to in this clause;
(IX)
a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII); or
(X)
any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(iv)
Forward contract
The term “forward contract” means—
(I)
a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date more than 2 days after the date the contract is entered into, including,2
2
 So in original. The comma probably should not appear.
a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a “repurchase agreement”, as defined in clause (v)), consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;
(II)
any combination of agreements or transactions referred to in subclauses (I) and (III);
(III)
any option to enter into any agreement or transaction referred to in subclause (I) or (II);
(IV)
a master agreement that provides for an agreement or transaction referred to in subclauses (I), (II), or (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, except that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or
(V)
any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
(v)
Repurchase agreement
The term “repurchase agreement” (which definition also applies to a reverse repurchase agreement)—
(I)
means an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage-related securities (as such term is defined in the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.]), mortgage loans, interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities or securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests with a simultaneous agreement by such transferee to transfer to the transferor thereof certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests as described above, at a date certain not later than 1 year after such transfers or on demand, against the transfer of funds, or any other similar agreement;
(II)
does not include any repurchase obligation under a participation in a commercial mortgage loan unless the Board determines by regulation, resolution, or order to include any such participation within the meaning of such term;
(III)
means any combination of agreements or transactions referred to in subclauses (I) and (IV);
(IV)
means any option to enter into any agreement or transaction referred to in subclause (I) or (III);
(V)
means a master agreement that provides for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a repurchase agreement under this clause, except that the master agreement shall be considered to be a repurchase agreement under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (III), or (IV); and
(VI)
means any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
 For purposes of this clause, the term “qualified foreign government security” means a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development (as determined by regulation or order adopted by the appropriate Federal banking authority).
(vi)
Swap agreement
The term “swap agreement” means—
(I)
any agreement, including the terms and conditions incorporated by reference in any such agreement, which is an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange, precious metals, or other commodity agreement; a currency swap, option, future, or forward agreement; an equity index or equity swap, option, future, or forward agreement; a debt index or debt swap, option, future, or forward agreement; a total return, credit spread or credit swap, option, future, or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option, future, or forward agreement;
(II)
any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option, or spot transaction on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;
(III)
any combination of agreements or transactions referred to in this clause;
(IV)
any option to enter into any agreement or transaction referred to in this clause;
(V)
a master agreement that provides for an agreement or transaction referred to in subclause (I), (II), (III), or (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, except that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), or (IV); and
(VI)
any security agreement or arrangement or other credit enhancement related to any agreements or transactions referred to in subclause (I), (II), (III), (IV), or (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
 Such term is applicable for purposes of this subsection only and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any swap agreement under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank Products Act of 2000 [7 U.S.C. 27 to 27f], the securities laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(47)]) and the Commodity Exchange Act [7 U.S.C. 1 et seq.].
(vii)
Treatment of master agreement as one agreement
(viii)
Transfer
(ix)
Person
(E)
Certain protections in event of appointment of conservator
Notwithstanding any other provision of this chapter (other than subsections (b)(9) and (c)(10) of this section, and section 1788(a)(3) of this title), any other Federal law, or the law of any State, no person shall be stayed or prohibited from exercising—
(i)
any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a credit union in a conservatorship based upon a default under such financial contract which is enforceable under applicable noninsolvency law;
(ii)
any right under any security agreement or arrangement or other credit enhancement related to 1 or more qualified financial contracts described in clause (i); 1
(iii)
any right to offset or net out any termination values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts.
(F)
Clarification
(G)
Walkaway clauses not effective
(i)
In general
(ii)
Limited suspension of certain obligations
In the case of a qualified financial contract referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time the liquidating agent is appointed until the earlier of—
(I)
the time such party receives notice that such contract has been transferred pursuant to subparagraph (A); or
(II)
5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent.
(iii)
Walkaway clause defined
(H)
Recordkeeping requirements
(9)
Transfer of qualified financial contracts
(A)
In general
In making any transfer of assets or liabilities of a credit union in default which includes any qualified financial contract, the conservator or liquidating agent for such credit union shall either—
(i)
transfer to 1 financial institution, other than a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding—
(I)
all qualified financial contracts between any person or any affiliate of such person and the credit union in default;
(II)
all claims of such person or any affiliate of such person against such credit union under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general unsecured creditors of such credit union);
(III)
all claims of such credit union against such person or any affiliate of such person under any such contract; and
(IV)
all property securing or any other credit enhancement for any contract described in subclause (I) or any claim described in subclause (II) or (III) under any such contract; or
(ii)
transfer none of the qualified financial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and any affiliate of such person).
(B)
Transfer to foreign bank, foreign financial institution, or branch or agency of a foreign bank or financial institution
(C)
Transfer of contracts subject to the rules of a clearing organization
(D)
Definitions
For purposes of this paragraph—
(i)
the term “financial institution” means a broker or dealer, a depository institution, a futures commission merchant, a credit union, or any other institution, as determined by the Board by regulation to be a financial institution; and
(ii)
the term “clearing organization” has the same meaning as in section 4402 of this title.
(10)
Notification of transfer
(A)
In general
If—
(i)
the conservator or liquidating agent for an insured credit union in default makes any transfer of the assets and liabilities of such credit union; and
(ii)
the transfer includes any qualified financial contract,
the conservator or liquidating agent shall notify any person who is a party to any such contract of such transfer by 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent in the case of a liquidation, or the business day following such transfer in the case of a conservatorship.
(B)
Certain rights not enforceable
(i)
Liquidation
A person who is a party to a qualified financial contract with an insured credit union may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(A) of this subsection or section 4403 or 4404 of this title, solely by reason of or incidental to the appointment of a liquidating agent for the credit union institution (or the insolvency or financial condition of the credit union for which the liquidating agent has been appointed)—
(I)
until 5:00 p.m. (eastern time) on the business day following the date of the appointment of the liquidating agent; or
(II)
after the person has received notice that the contract has been transferred pursuant to paragraph (9)(A).
(ii)
Conservatorship
(iii)
Notice
(C)
Treatment of bridge banks 4
4
 So in original. Probably should be “bridge depository institutions”.
The following institutions shall not be considered to be a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding for purposes of paragraph (9):
(i)
A bridge depository institution.
(ii)
A credit union organized by the Board, for which a conservator is appointed either—
(I)
immediately upon the organization of the credit union; or
(II)
at the time of a purchase and assumption transaction between the credit union and the Board as receiver for a credit union in default.
(D)
“Business day” defined
(11)
Disaffirmance or repudiation of qualified financial contracts
In exercising the rights of disaffirmance or repudiation of a conservator or liquidating agent with respect to any qualified financial contract to which an insured credit union is a party, the conservator or liquidating agent for such credit union shall either—
(A)
disaffirm or repudiate all qualified financial contracts between—
(i)
any person or any affiliate of such person; and
(ii)
the credit union in default; or
(B)
disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such person or any affiliate of such person).
(12)
Certain security interests not avoidable
(13)
Authority to enforce contracts
(A)
In general
(B)
Certain rights not affected
(C)
Consent requirement
(i)
In general
(ii)
Certain exceptions
(iii)
Rule of construction
(14)
Exception for Federal Reserve and Federal home loan banks
No provision of this subsection shall apply with respect to—
(A)
any extension of credit from any Federal home loan bank or Federal Reserve bank to any insured depository institution; or
(B)
any security interest in the assets of the institution securing any such extension of credit.
(15)
Savings clause
(d)
Payment of insured deposits
(1)
In general
(2)
Proof of claims
(3)
Resolution of disputes
(4)
Statute of limitations
(e)
Subrogation of Board
(1)
In general
(2)
Dividends on subrogated amounts
(f)
Valuation of claims in default
(1)
In general
(2)
Maximum liability
(3)
Additional payments authorized
(A)
In general
(B)
Manner of payment
(g)
Limitation on court action
(h)
Liability of directors and officers
A director or officer of an insured credit union may be held personally liable for monetary damages in any civil action by, on behalf of, or at the request or direction of the Board, which action is prosecuted wholly or partially for the benefit of the Board—
(1)
acting as conservator or liquidating agent of such insured credit union,
(2)
acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by such liquidating agent or conservator, or
(3)
acting based upon a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed in whole or in part by an insured credit union or its affiliate in connection with assistance provided under section 1788 of this title,
for gross negligence, including any similar conduct or conduct that demonstrates a greater disregard of a duty of care (than gross negligence) including intentional tortious conduct, as such terms are defined and determined under applicable State law. Nothing in this paragraph shall impair or affect any right, if any, of the Board under other applicable law.
(i)
Damages
(j)
Board as liquidating agent of State-chartered credit unions
(k)
Insured amounts payable
(1)
Net insured amount
(A)
In general
(B)
Aggregation
(C)
Authority to define the extent of coverage
(2)
Government depositors or members
(A)
In general
(B)
Government depositor
In this paragraph, the term “government depositor” means a depositor that is—
(i)
an officer, employee, or agent of the United States having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter;
(ii)
an officer, employee, or agent of any State of the United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in such State;
(iii)
an officer, employee, or agent of the District of Columbia having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in the District of Columbia;
(iv)
an officer, employee, or agent of the Commonwealth of Puerto Rico, of the Panama Canal Zone, or of any territory or possession of the United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing the same in a credit union insured in accordance with this subchapter in the Commonwealth of Puerto Rico, the Panama Canal Zone, or any such territory or possession, respectively; or
(v)
an officer, employee, or agent of any Indian tribe (as defined in section 1452(c) of title 25) or agency thereof having official custody of tribal funds and lawfully investing the same in a credit union insured in accordance with this subchapter.
(C)
Authority to limit deposits
(3)
Notwithstanding any limitation in this subchapter or in any other provision of law relating to the amount of insurance available for the account of any one depositor or member, funds invested in a credit union insured in accordance with this subchapter pursuant to a pension or profit-sharing plan described in section 401(d) of title 26, and funds invested in such an insured credit union in the form of individual retirement accounts as described in section 408(a) of title 26, shall be insured in the amount of “$250,000 6
6
 So in original. Quotation marks probably should not appear.
(which amount shall be subject to inflation adjustments as provided under section 1821(a)(1)(F) of this title, except that $250,000 7
7
 So in original. Probably should be set off by quotation marks.
shall be substituted for $100,000 7 wherever such term appears in such section)” 6 per account. As to any plan qualifying under section 401(d) or section 408(a) of title 26, the term “per account” means the present vested and ascertainable interest of each beneficiary under the plan, excluding any remainder interest created by, or as a result of, the plan.
(4)
Coverage for certain employee benefit plan deposits
(A)
Pass-through insurance
(B)
Prohibition on acceptance of deposits
(C)
Definitions
For purposes of this paragraph, the following definitions shall apply:
(i)
Capital standards
(ii)
Employee benefit plan
The term “employee benefit plan”—
(I)
has the meaning given to such term in section 1002(3) of title 29;
(II)
includes any plan described in section 401(d) of title 26; and
(III)
includes any eligible deferred compensation plan described in section 457 of title 26.
(iii)
Pass-through share insurance
(D)
Rule of construction
(5)
Coverage for interest on lawyers trust accounts (IOLTA) and other similar escrow accounts
(A)
Pass-through insurance
(B)
Treatment of IOLTAs
(i)
Treatment as escrow accounts
(ii)
Treatment as member accounts
(C)
Definitions
For purposes of this paragraph:
(i)
Interest on lawyers trust account
(ii)
Pass-through share insurance
(D)
Rule of construction
(6)
Standard maximum share insurance amount defined
(l)
Payment; discharge of liability
(m)
Undisclosed names
(n)
Withholding of payment due to liability of credit union member
(o)
Unclaimed insured accounts; limitations
(p)
Sale of assets; security for loans; approval of court; agreements affecting interest of Board in any asset acquired by it
(1)
Liquidating agents of insured credit unions closed for liquidation on account of bankruptcy or insolvency may offer the assets of such credit unions for sale to the Board or as security for loans from the Board, upon receiving permission from the commission, board, or authority having supervision of such credit union, in the case of an insured State-chartered credit union, in accordance with express provisions of State law. The proceeds of every such sale or loan shall be utilized for the same purposes and in the same manner as other funds realized from the liquidation of the assets of such credit unions. The Board, in its discretion, may make loans on the security of or may purchase and liquidate or sell any part of the assets of an insured credit union closed for liquidation on account of bankruptcy or insolvency, but in any case in which the Board is acting as liquidating agent of a closed insured credit union, no such loan or purchase shall be made without the approval of a court of competent jurisdiction.
(2)
No agreement which tends to diminish or defeat the right, title, or interest of the Board in any asset acquired by it under this subsection, either as security for a loan or by purchase, shall be valid against the Board unless such agreement—
(A)
shall be in writing;
(B)
shall have been executed by the credit union and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the credit union;
(C)
shall have been approved by the board of directors of the credit union, which approval shall be reflected in the minutes of such board; and
(D)
shall have been, continuously, from the time of its execution, an official record of the credit union.
(q)
Prohibition on certain acquisitions of assets
(1)
Except as provided in paragraph (2), any individual who—
(A)
has been convicted of an offense under section 215, 657, 1006, 1014, 1032, 1341, 1343, or 1344 of title 18 or of conspiring to commit any such offense, affecting any insured credit union for which the Board is appointed conservator or liquidating agent; and
(B)
is in default on any loan or other extension of credit from such insured credit union which, if not paid, will cause substantial loss to the credit union, the National Credit Union Share Insurance Fund, or the Board,
may not purchase any asset of such credit union from the conservator or liquidating agent.
(2)
Settlement of claims
Paragraph (1) shall not apply to the sale or transfer by the Board of any asset of any insured credit union to any individual if the sale or transfer of the asset resolves or settles, or is part of the resolution or settlement, of—
(A)
1 or more claims that have been, or could have been, asserted by the Board against the individual; or
(B)
obligations owed by the individual to the insured credit union or the Board.
(r)
Foreign investigations
The Board, as conservator or liquidating agent of any insured credit union and for purposes of carrying out any power, authority, or duty with respect to an insured credit union—
(1)
may request the assistance of any foreign banking authority and provide assistance to any foreign banking authority in accordance with section 1786(u) of this title; and
(2)
may maintain an office to coordinate foreign investigations or investigations on behalf of foreign banking authorities.
(June 26, 1934, ch. 750, title II, § 207, as added Pub. L. 91–468, § 1(3), Oct. 19, 1970, 84 Stat. 1010; amended Pub. L. 93–495, title I, §§ 101(c), 104(a), Oct. 28, 1974, 88 Stat. 1501, 1503; Pub. L. 95–630, title V, § 502(b), title XIV, § 1401(c), Nov. 10, 1978, 92 Stat. 3681, 3712; Pub. L. 96–153, title III, § 323(c), Dec. 21, 1979, 93 Stat. 1120; Pub. L. 96–221, title III, § 308(c)(1), Mar. 31, 1980, 94 Stat. 148; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100–86, title VII, § 714(a), (b), Aug. 10, 1987, 101 Stat. 654, 655; Pub. L. 101–73, title IX, § 915(c), title XII, § 1217(a), Aug. 9, 1989, 103 Stat. 486, 530; Pub. L. 101–647, title XXV, §§ 2521(a)(2), 2526(b), 2528(b), 2532(d), 2534(b), Nov. 29, 1990, 104 Stat. 4864, 4876, 4878, 4882, 4883; Pub. L. 103–394, title V, § 501(c)(1), Oct. 22, 1994, 108 Stat. 4143; Pub. L. 105–219, title III, § 301(b)(2), Aug. 7, 1998, 112 Stat. 930; Pub. L. 109–8, title IX, §§ 901(a)(2), (b)(2), (c)(2), (d)(2), (e)(2), (f)(2), (g)(2), (h)(2), (i)(2), 902(b), 903(b), 904(b), 905(b), 908(b), Apr. 20, 2005, 119 Stat. 147, 148, 150, 152, 154, 156–159, 162, 166, 183; Pub. L. 109–173, § 2(d)(1), (2), Feb. 15, 2006, 119 Stat. 3602, 3604; Pub. L. 109–351, title VII, §§ 718(b), 720(b), 721(b), 722(b), 726(21)–(23), Oct. 13, 2006, 120 Stat. 1997–1999, 2003; Pub. L. 109–390, §§ 2(a)(2), (b)(2), (c)(2), 3(b), 6(b), Dec. 12, 2006, 120 Stat. 2693–2695, 2699; Pub. L. 110–289, div. A, title VI, § 1604(b)(2), July 30, 2008, 122 Stat. 2829; Pub. L. 111–203, title III, §§ 335(b), 343(b)(1), (3), July 21, 2010, 124 Stat. 1540, 1545; Pub. L. 113–252, § 2, Dec. 18, 2014, 128 Stat. 2893.)
cite as: 12 USC 1787