---
kind: "section"
citation: "12 U.S.C. § 1790d"
title: "12"
title_heading: "Banks and Banking"
number: "1790d"
heading: "Prompt corrective action"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1790d"
units:
  - "Chapter 14 — Federal Credit Unions"
  - "Subchapter II — Share Insurance"
---

# §1790d. Prompt corrective action

- (a) **Resolving problems to protect Fund—**
  - (1) **Purpose—** The purpose of this section is to resolve the problems of [insured credit unions](/usc/12/1752.md?p=7) at the least possible long-term loss to the [Fund](/usc/12/1752.md?p=8).
  - (2) **Prompt corrective action required—** The [Board](/usc/12/1752.md?p=4) shall carry out the purpose of this section by taking prompt corrective action to resolve the problems of [insured credit unions](/usc/12/1752.md?p=7).
- (b) **Regulations required—**
  - (1) **Insured credit unions—**
    - (A) **In general—** The [Board](/usc/12/1752.md?p=4) shall, by regulation, prescribe a system of prompt corrective action for [insured credit unions](/usc/12/1752.md?p=7) that is—
      - (i) consistent with this section; and
      - (ii) comparable to [section 1831o](/usc/12/1831o.md) of this title.
    - (B) **Cooperative character of credit unions—** The [Board](/usc/12/1752.md?p=4) shall design the system required under [subparagraph (A)](#b-1-A) to take into [account](/usc/12/1752.md?p=5) that [credit](/usc/12/5481.md?p=7) unions are not-for-profit cooperatives that—
      - (i) do not issue capital stock;
      - (ii) must rely on retained earnings to build net worth; and
      - (iii) have [boards](/usc/12/1752.md?p=4) of [directors](/usc/12/5481.md?p=10) that consist primarily of volunteers.
  - (2) **New credit unions—**
    - (A) **In general—** In addition to regulations under [paragraph (1)](#b-1), the [Board](/usc/12/1752.md?p=4) shall, by regulation, prescribe a system of prompt corrective action that shall apply to new [credit](/usc/12/5481.md?p=7) unions in lieu of this section and the regulations prescribed under [paragraph (1)](#b-1).
    - (B) **Criteria for alternative system—** The [Board](/usc/12/1752.md?p=4) shall design the system prescribed under [subparagraph (A)](#b-2-A)—
      - (i) to carry out the purpose of this section;
      - (ii) to recognize that [credit](/usc/12/5481.md?p=7) unions (as cooperatives that do not issue capital stock) initially have no net worth, and give new [credit](/usc/12/5481.md?p=7) unions reasonable time to accumulate net worth;
      - (iii) to create adequate incentives for new [credit](/usc/12/5481.md?p=7) unions to become adequately capitalized by the time that they either—
        - (I) have been in operation for more than 10 years; or
        - (II) have more than $10,000,000 in total assets;
      - (iv) to impose appropriate restrictions and requirements on new [credit](/usc/12/5481.md?p=7) unions that do not make sufficient progress toward becoming adequately capitalized; and
      - (v) to prevent evasion of the purpose of this section.
- (c) **Net worth categories—**
  - (1) **In general—** For purposes of this section the following definitions shall apply:
    - (A) **Well capitalized—** An [insured credit union](/usc/12/1752.md?p=7) is “well capitalized” if—
      - (i) it has a net worth ratio of not less than 7 percent; and
      - (ii) it meets any applicable risk-based net worth requirement under [subsection (d)](#d).
    - (B) **Adequately capitalized—** An [insured credit union](/usc/12/1752.md?p=7) is “adequately capitalized” if—
      - (i) it has a net worth ratio of not less than 6 percent; and
      - (ii) it meets any applicable risk-based net worth requirement under [subsection (d)](#d).
    - (C) **Undercapitalized—** An [insured credit union](/usc/12/1752.md?p=7) is “undercapitalized” if—
      - (i) it has a net worth ratio of less than 6 percent; or
      - (ii) it fails to meet any applicable risk-based net worth requirement under [subsection (d)](#d).
    - (D) **Significantly undercapitalized—** An [insured credit union](/usc/12/1752.md?p=7) is “significantly undercapitalized”—
      - (i) if it has a net worth ratio of less than 4 percent; or
      - (ii) if—
        - (I) it has a net worth ratio of less than 5 percent; and
        - (II) it—
          - (aa) fails to submit an acceptable net worth restoration plan within the time allowed under [subsection (f)](#f); or
          - (bb) materially fails to implement a net worth restoration plan accepted by the [Board](/usc/12/1752.md?p=4).
    - (E) **Critically undercapitalized—** An [insured credit union](/usc/12/1752.md?p=7) is “critically undercapitalized” if it has a net worth ratio of less than 2 percent (or such higher net worth ratio, not to exceed 3 percent, as the [Board](/usc/12/1752.md?p=4) may specify by regulation).
  - (2) **Adjusting net worth levels—**
    - (A) **In general—** If, for purposes of [section 1831o(c)](/usc/12/1831o.md?p=c) of this title, the Federal banking agencies increase or decrease the required minimum level for the leverage limit (as those terms are used in [section 1831o](/usc/12/1831o.md) of this title), the [Board](/usc/12/1752.md?p=4) may, by regulation, and subject to subparagraph (B) of this paragraph, correspondingly increase or decrease 1 or more of the net worth ratios specified in subparagraphs [(A)](#c-1-A) through [(D)](#c-1-D) of paragraph (1) of this subsection in an amount that is equal to not more than the difference between the required minimum level most recently established by the Federal banking agencies and 4 percent of total assets (with respect to institutions regulated by those agencies).
    - (B) **Determinations required—** The [Board](/usc/12/1752.md?p=4) may increase or decrease net worth ratios under [subparagraph (A)](#c-2-A) only if the [Board](/usc/12/1752.md?p=4)—
      - (i) determines, in consultation with the Federal banking agencies, that the reason for the increase or decrease in the required minimum level for the leverage limit also justifies the adjustment in net worth ratios; and
      - (ii) determines that the resulting net worth ratios are sufficient to carry out the purpose of this section.
    - (C) **Transition period required—** If the [Board](/usc/12/1752.md?p=4) increases any net worth ratio under this paragraph, the [Board](/usc/12/1752.md?p=4) shall give [insured credit unions](/usc/12/1752.md?p=7) a reasonable period of time to meet the increased ratio.
- (d) **Risk-based net worth requirement for complex credit unions—**
  - (1) **In general—** The regulations required under [subsection (b)(1)](#b-1) shall include a risk-based net worth requirement for [insured credit unions](/usc/12/1752.md?p=7) that are complex, as defined by the [Board](/usc/12/1752.md?p=4) based on the portfolios of assets and liabilities of [credit](/usc/12/5481.md?p=7) unions.
  - (2) **Standard—** The [Board](/usc/12/1752.md?p=4) shall design the risk-based net worth requirement to take [account](/usc/12/1752.md?p=5) of any material risks against which the net worth ratio required for an [insured credit union](/usc/12/1752.md?p=7) to be adequately capitalized may not provide adequate protection.
- (e) **Earnings-retention requirement applicable to credit unions that are not well capitalized—**
  - (1) **In general—** An [insured credit union](/usc/12/1752.md?p=7) that is not well capitalized shall annually set aside as net worth an amount equal to not less than 0.4 percent of its total assets.
  - (2) **Board’s authority to decrease earnings-retention requirement—**
    - (A) **In general—** The [Board](/usc/12/1752.md?p=4) may, by order, decrease the 0.4 percent requirement in [paragraph (1)](#e-1) with respect to a [credit](/usc/12/5481.md?p=7) union to the extent that the [Board](/usc/12/1752.md?p=4) determines that the decrease—
      - (i) is necessary to avoid a significant redemption of shares; and
      - (ii) would further the purpose of this section.
    - (B) **Periodic review required—** The [Board](/usc/12/1752.md?p=4) shall periodically review any order issued under [subparagraph (A)](#e-2-A).
- (f) **Net worth restoration plan required—**
  - (1) **In general—** Each [insured credit union](/usc/12/1752.md?p=7) that is undercapitalized shall submit an acceptable net worth restoration plan to the [Board](/usc/12/1752.md?p=4) within the time allowed under this subsection.
  - (2) **Assistance to small credit unions—** The [Board](/usc/12/1752.md?p=4) (or the staff of the [Board](/usc/12/1752.md?p=4)) shall, upon timely request by an [insured credit union](/usc/12/1752.md?p=7) with total assets of less than $10,000,000, and subject to such regulations or guidelines as the [Board](/usc/12/1752.md?p=4) may prescribe, assist that [credit](/usc/12/5481.md?p=7) union in preparing a net worth restoration plan.
  - (3) **Deadlines for submission and review of plans—** The [Board](/usc/12/1752.md?p=4) shall, by regulation, establish deadlines for submission of net worth restoration plans under this subsection that—
    - (A) provide [insured credit unions](/usc/12/1752.md?p=7) with reasonable time to submit net worth restoration plans; and
    - (B) require the [Board](/usc/12/1752.md?p=4) to act on net worth restoration plans expeditiously.
  - (4) **Failure to submit acceptable plan within time allowed—**
    - (A) **Failure to submit any plan—** If an [insured credit union](/usc/12/1752.md?p=7) fails to submit a net worth restoration plan within the time allowed under [paragraph (3)](#f-3), the [Board](/usc/12/1752.md?p=4) shall—
      - (i) promptly notify the [credit](/usc/12/5481.md?p=7) union of that failure; and
      - (ii) give the [credit](/usc/12/5481.md?p=7) union a reasonable opportunity to submit a net worth restoration plan.
    - (B) **Submission of unacceptable plan—** If an [insured credit union](/usc/12/1752.md?p=7) submits a net worth restoration plan within the time allowed under [paragraph (3)](#f-3), and the [Board](/usc/12/1752.md?p=4) determines that the plan is not acceptable, the [Board](/usc/12/1752.md?p=4) shall—
      - (i) promptly notify the [credit](/usc/12/5481.md?p=7) union of why the plan is not acceptable; and
      - (ii) give the [credit](/usc/12/5481.md?p=7) union a reasonable opportunity to submit a revised plan.
  - (5) **Accepting plan—** The [Board](/usc/12/1752.md?p=4) may accept a net worth restoration plan only if the [Board](/usc/12/1752.md?p=4) determines that the plan is based on realistic assumptions and is likely to succeed in restoring the net worth of the [credit](/usc/12/5481.md?p=7) union.
- (g) **Restrictions on undercapitalized credit unions—**
  - (1) **Restriction on asset growth—** An [insured credit union](/usc/12/1752.md?p=7) that is undercapitalized shall not generally permit its average total assets to increase, unless—
    - (A) the [Board](/usc/12/1752.md?p=4) has accepted the net worth restoration plan of the [credit](/usc/12/5481.md?p=7) union for that action;
    - (B) any increase in total assets is consistent with the net worth restoration plan; and
    - (C) the net worth ratio of the [credit](/usc/12/5481.md?p=7) union increases at a rate that is consistent with the net worth restoration plan.
  - (2) **Restriction on member business loans—** Notwithstanding [section 1757a(a) of this title](/usc/12/1757a.md?p=a), an [insured credit union](/usc/12/1752.md?p=7) that is undercapitalized may not make any increase in the total amount of member business loans (as defined in [section 1757a(c) of this title](/usc/12/1757a.md?p=c)) outstanding at that [credit](/usc/12/5481.md?p=7) union at any one time, until such time as the [credit](/usc/12/5481.md?p=7) union becomes adequately capitalized.
- (h) **More stringent treatment based on other supervisory criteria—** With respect to the exercise of authority by the [Board](/usc/12/1752.md?p=4) under regulations comparable to [section 1831o(g)](/usc/12/1831o.md?p=g) of this title—
  - (1) the [Board](/usc/12/1752.md?p=4) may not reclassify an [insured credit union](/usc/12/1752.md?p=7) into a lower net worth category, or treat an [insured credit union](/usc/12/1752.md?p=7) as if it were in a lower net worth category, for reasons not pertaining to the safety and soundness of that [credit](/usc/12/5481.md?p=7) union; and
  - (2) the [Board](/usc/12/1752.md?p=4) may not delegate its authority to reclassify an [insured credit union](/usc/12/1752.md?p=7) into a lower net worth category or to treat an [insured credit union](/usc/12/1752.md?p=7) as if it were in a lower net worth category.
- (i) **Action required regarding critically undercapitalized credit unions—**
  - (1) **In general—** The [Board](/usc/12/1752.md?p=4) shall, not later than 90 days after the date on which an [insured credit union](/usc/12/1752.md?p=7) becomes critically undercapitalized—
    - (A) appoint a conservator or liquidating agent for the [credit](/usc/12/5481.md?p=7) union; or
    - (B) take such other action as the [Board](/usc/12/1752.md?p=4) determines would better achieve the purpose of this section, after documenting why the action would better achieve that purpose.
  - (2) **Periodic redeterminations required—** Any determination by the [Board](/usc/12/1752.md?p=4) under [paragraph (1)(B)](#i-1-B) to take any action with respect to an [insured credit union](/usc/12/1752.md?p=7) in lieu of appointing a conservator or liquidating agent shall cease to be effective not later than the end of the 180-day period beginning on the date on which the determination is made, and a conservator or liquidating agent shall be appointed for that [credit](/usc/12/5481.md?p=7) union under [paragraph (1)(A)](#i-1-A), unless the [Board](/usc/12/1752.md?p=4) makes a new determination under [paragraph (1)(B)](#i-1-B) before the end of the effective period of the prior determination.
  - (3) **Appointment of liquidating agent required if other action fails to restore net worth—**
    - (A) **In general—** Notwithstanding paragraphs [(1)](#i-1) and [(2)](#i-2), the [Board](/usc/12/1752.md?p=4) shall appoint a liquidating agent for an [insured credit union](/usc/12/1752.md?p=7) if the [credit](/usc/12/5481.md?p=7) union is critically undercapitalized on average during the calendar quarter beginning 18 months after the date on which the [credit](/usc/12/5481.md?p=7) union became critically undercapitalized.
    - (B) **Exception—** Notwithstanding [subparagraph (A)](#i-3-A), the [Board](/usc/12/1752.md?p=4) may continue to take such other action as the [Board](/usc/12/1752.md?p=4) determines to be appropriate in lieu of appointment of a liquidating agent if—
      - (i) the [Board](/usc/12/1752.md?p=4) determines that—
        - (I) the [insured credit union](/usc/12/1752.md?p=7) has been in substantial compliance with an approved net worth restoration plan that requires consistent improvement in the net worth of the [credit](/usc/12/5481.md?p=7) union since the date of the approval of the plan; and
        - (II) the [insured credit union](/usc/12/1752.md?p=7) has positive [net income](/usc/12/1441a–1.md?p=4) or has an upward trend in earnings that the [Board](/usc/12/1752.md?p=4) projects as sustainable; and
      - (ii) the [Board](/usc/12/1752.md?p=4) certifies that the [credit](/usc/12/5481.md?p=7) union is viable and not expected to fail.
  - (4) **Nondelegation—**
    - (A) **In general—** Except as provided in [subparagraph (B)](#i-4-B), the [Board](/usc/12/1752.md?p=4) may not delegate the authority of the [Board](/usc/12/1752.md?p=4) under this subsection.
    - (B) **Exception—** The [Board](/usc/12/1752.md?p=4) may delegate the authority of the [Board](/usc/12/1752.md?p=4) under this subsection with respect to an [insured credit union](/usc/12/1752.md?p=7) that has less than $5,000,000 in total assets, if the [Board](/usc/12/1752.md?p=4) permits the [credit](/usc/12/5481.md?p=7) union to appeal any adverse action to the [Board](/usc/12/1752.md?p=4).
- (j) **Reviews required when share insurance fund experiences losses—**
  - (1) **In general—** If the [Fund](/usc/12/1752.md?p=8) incurs a material loss with respect to an [insured credit union](/usc/12/1752.md?p=7), the Inspector General of the [Board](/usc/12/1752.md?p=4) shall—
    - (A) submit to the [Board](/usc/12/1752.md?p=4) a written report reviewing the supervision of the [credit](/usc/12/5481.md?p=7) union by the [Administration](/usc/12/1752.md?p=3) (including the implementation of this section by the [Administration](/usc/12/1752.md?p=3)), which shall include—
      - (i) a description of the reasons why the problems of the [credit](/usc/12/5481.md?p=7) union resulted in a material loss to the [Fund](/usc/12/1752.md?p=8); and
      - (ii) recommendations for preventing any such loss in the future; and
    - (B) submit a copy of the report under [subparagraph (A)](#j-1-A) to—
      - (i) the Comptroller General of the United States;
      - (ii) the Corporation;
      - (iii) in the case of a report relating to a [State credit union](/usc/12/1752.md?p=6), the appropriate [State](/usc/12/1707.md?p=d) supervisor; and
      - (iv) to any Member of Congress, upon request.
  - (2) **Material loss defined—** For purposes of determining whether the [Fund](/usc/12/1752.md?p=8) has incurred a material loss with respect to an [insured credit union](/usc/12/1752.md?p=7), a loss is material if it exceeds the sum of—
    - (A) $25,000,000; and
    - (B) an amount equal to 10 percent of the total assets of the [credit](/usc/12/5481.md?p=7) union on the date on which the [Board](/usc/12/1752.md?p=4) initiated assistance under [section 1788 of this title](/usc/12/1788.md) or was appointed liquidating agent.
  - (3) **Public disclosure required—**
    - (A) **In general—** The [Board](/usc/12/1752.md?p=4) shall disclose a report under this subsection, upon request under [section 552 of title 5](/usc/5/552.md), without excising—
      - (i) any portion under [section 552(b)(5) of title 5](/usc/5/552.md?p=b-5); or
      - (ii) any information about the [insured credit union](/usc/12/1752.md?p=7) (other than trade secrets) under [section 552(b)(8) of title 5](/usc/5/552.md?p=b-8).
    - (B) **Rule of construction—** [Subparagraph (A)](#j-3-A) may not be construed as requiring the agency to disclose the name of any customer of the [insured credit union](/usc/12/1752.md?p=7) (other than an institution-affiliated party), or information from which the identity of such customer could reasonably be ascertained.
  - (4) **Losses that are not material—**
    - (A) **Semiannual report—** For the 6-month period ending on March 31, 2010, and each 6-month period thereafter, the Inspector General of the [Board](/usc/12/1752.md?p=4) shall—
      - (i) identify any losses that the Inspector General estimates were incurred by the [Fund](/usc/12/1752.md?p=8) during such 6-month period, with respect to [insured credit unions](/usc/12/1752.md?p=7);
      - (ii) for each loss to the [Fund](/usc/12/1752.md?p=8) that is not a material loss, determine—
        - (I) the grounds identified by the [Board](/usc/12/1752.md?p=4) or the [State](/usc/12/1707.md?p=d) official having jurisdiction over a [State credit union](/usc/12/1752.md?p=6) for appointing the [Board](/usc/12/1752.md?p=4) as the liquidating agent for any Federal or [State credit union](/usc/12/1752.md?p=6); and
        - (II) whether any unusual circumstances exist that might warrant an in-depth review of the loss; and
      - (iii) prepare and submit a written report to the [Board](/usc/12/1752.md?p=4) and to Congress on the results of the determinations of the Inspector General that includes—
        - (I) an identification of any loss that warrants an in-depth review, and the reasons such review is warranted, or if the Inspector General determines that no review is warranted, an explanation of such determination; and
        - (II) for each loss identified in [subclause (I)](#j-4-A-iii-I) that warrants an in-depth review, the date by which such review, and a report on the review prepared in a manner consistent with reports under [paragraph (1)(A)](#j-1-A), will be completed.
    - (B) **Deadline for semiannual report—** The Inspector General of the [Board](/usc/12/1752.md?p=4) shall—
      - (i) submit each report required under [subparagraph (A)](#j-4-A) expeditiously, and not later than 90 days after the end of the 6-month period covered by the report; and
      - (ii) provide a copy of the report required under [subparagraph (A)](#j-4-A) to any Member of Congress, upon request.
  - (5) **GAO review—** The Comptroller General of the United States shall, under such conditions as the Comptroller General determines to be appropriate—
    - (A) review each report made under [paragraph (1)](#j-1), including the extent to which the Inspector General of the [Board](/usc/12/1752.md?p=4) complied with the requirements under [section 419 of title 5](/usc/5/419.md) with respect to each such report; and
    - (B) recommend improvements to the supervision of [insured credit unions](/usc/12/1752.md?p=7) (including improvements relating to the implementation of this section).
- (k) **Appeals process—** Material supervisory determinations, including decisions to require prompt corrective action, made pursuant to this section by [Administration](/usc/12/1752.md?p=3) officials other than the [Board](/usc/12/1752.md?p=4) may be appealed to the [Board](/usc/12/1752.md?p=4) pursuant to the independent appellate process required by [section 4806 of this title](/usc/12/4806.md) (or, if the [Board](/usc/12/1752.md?p=4) so specifies, pursuant to separate procedures prescribed by regulation).
- (l) **Consultation and cooperation with State credit union supervisors—**
  - (1) **In general—** In implementing this section, the [Board](/usc/12/1752.md?p=4) shall consult and seek to work cooperatively with [State](/usc/12/1707.md?p=d) officials having jurisdiction over [State](/usc/12/1707.md?p=d)-chartered [insured credit unions](/usc/12/1752.md?p=7).
  - (2) **Evaluating net worth restoration plan—** In evaluating any net worth restoration plan submitted by a [State](/usc/12/1707.md?p=d)-chartered [insured credit union](/usc/12/1752.md?p=7), the [Board](/usc/12/1752.md?p=4) shall seek the views of the [State](/usc/12/1707.md?p=d) official having jurisdiction over the [credit](/usc/12/5481.md?p=7) union.
  - (3) **Deciding whether to appoint conservator or liquidating agent—** With respect to any decision by the [Board](/usc/12/1752.md?p=4) on whether to appoint a conservator or liquidating agent for a [State](/usc/12/1707.md?p=d)-chartered [insured credit union](/usc/12/1752.md?p=7)—
    - (A) the [Board](/usc/12/1752.md?p=4) shall—
      - (i) seek the views of the [State](/usc/12/1707.md?p=d) official having jurisdiction over the [credit](/usc/12/5481.md?p=7) union; and
      - (ii) give that official an opportunity to take the proposed action;
    - (B) the [Board](/usc/12/1752.md?p=4) shall, upon timely request of an official referred to in [subparagraph (A)](#l-3-A), promptly provide the official with—
      - (i) a written statement of the reasons for the proposed action; and
      - (ii) reasonable time to respond to that statement;
    - (C) if the official referred to in [subparagraph (A)](#l-3-A) makes a timely written response that disagrees with the proposed action and gives reasons for that disagreement, the [Board](/usc/12/1752.md?p=4) shall not appoint a conservator or liquidating agent for the [credit](/usc/12/5481.md?p=7) union, unless the [Board](/usc/12/1752.md?p=4), after considering the views of the official, has determined that—
      - (i) the [Fund](/usc/12/1752.md?p=8) faces a significant risk of loss with respect to the [credit](/usc/12/5481.md?p=7) union if a conservator or liquidating agent is not appointed; and
      - (ii) the appointment is necessary to reduce—
        - (I) the risk that the [Fund](/usc/12/1752.md?p=8) would incur a loss with respect to the [credit](/usc/12/5481.md?p=7) union; or
        - (II) any loss that the [Fund](/usc/12/1752.md?p=8) is expected to incur with respect to the [credit](/usc/12/5481.md?p=7) union; and
    - (D) the [Board](/usc/12/1752.md?p=4) may not delegate any determination under [subparagraph (C)](#l-3-C).
- (m) **Corporate credit unions exempted—** This section does not apply to any [insured credit union](/usc/12/1752.md?p=7) that—
  - (1) operates primarily for the purpose of serving [credit](/usc/12/5481.md?p=7) unions; and
  - (2) permits individuals to be members of the [credit](/usc/12/5481.md?p=7) union only to the extent that applicable law requires that such [persons](/usc/12/5481.md?p=19) own shares.
- (n) **Other authority not affected—** This section does not limit any authority of the [Board](/usc/12/1752.md?p=4) or a [State](/usc/12/1707.md?p=d) to take action in addition to (but not in derogation of) any action that is required under this section.
- (o) **Definitions—** For purposes of this section the following definitions shall apply:
  - (1) **Federal banking agency—** The term “Federal banking agency” has the same meaning as in [section 1813 of this title](/usc/12/1813.md).
  - (2) **Net worth—** The term “net worth”—
    - (A) with respect to any [insured credit union](/usc/12/1752.md?p=7), means the retained earnings balance of the [credit](/usc/12/5481.md?p=7) union, as determined under generally accepted accounting principles, together with any amounts that were previously retained earnings of any other [credit](/usc/12/5481.md?p=7) union with which the [credit](/usc/12/5481.md?p=7) union has combined;
    - (B) with respect to any [insured credit union](/usc/12/1752.md?p=7), includes, at the [Board](/usc/12/1752.md?p=4)’s discretion and subject to rules and regulations established by the [Board](/usc/12/1752.md?p=4), assistance provided under [section 1788 of this title](/usc/12/1788.md) to facilitate a least-cost resolution consistent with the best interests of the [credit](/usc/12/5481.md?p=7) union system; and
    - (C) with respect to a low-income [credit](/usc/12/5481.md?p=7) union, includes secondary capital [accounts](/usc/12/1752.md?p=5) that are—
      - (i) uninsured; and
      - (ii) subordinate to all other claims against the [credit](/usc/12/5481.md?p=7) union, including the claims of creditors, shareholders, and the [Fund](/usc/12/1752.md?p=8).
  - (3) **Net worth ratio—** The term “net worth ratio” means, with respect to a [credit](/usc/12/5481.md?p=7) union, the ratio of the net worth of the [credit](/usc/12/5481.md?p=7) union to the total assets of the [credit](/usc/12/5481.md?p=7) union.
  - (4) **New credit union—** The term “new [credit](/usc/12/5481.md?p=7) union” means an [insured credit union](/usc/12/1752.md?p=7) that—
    - (A) has been in operation for less than 10 years; and
    - (B) has not more than $10,000,000 in total assets.

## Source credit

(June 26, 1934, ch. 750, title II, § 216, as added Pub. L. 105–219, title III, § 301(a), Aug. 7, 1998, 112 Stat. 923; amended Pub. L. 109–351, title V, § 504, title VII, § 726(25), Oct. 13, 2006, 120 Stat. 1975, 2003; Pub. L. 111–203, title IX, § 988(a), July 21, 2010, 124 Stat. 1938; Pub. L. 111–382, § 3, Jan. 4, 2011, 124 Stat. 4135; Pub. L. 117–286, § 4(b)(33), Dec. 27, 2022, 136 Stat. 4346.)

## Notes

### Editorial Notes

### Amendments

2022—Subsec. (j)(5)(A). Pub. L. 117–286 substituted “section 419 of title 5” for “section 8L of the Inspector General Act of 1978 (5 U.S.C. App.)”.

2011—Subsec. (o)(2). Pub. L. 111–382 amended par. (2) generally. Prior to amendment, text read as follows: “The term ‘net worth’—

“(A) with respect to any insured credit union, means the retained earnings balance of the credit union, as determined under generally accepted accounting principles, together with any amounts that were previously retained earnings of any other credit union with which the credit union has combined; and

“(B) with respect to a low-income credit union, includes secondary capital accounts that are—

“(i) uninsured; and

“(ii) subordinate to all other claims against the credit union, including the claims of creditors, shareholders, and the Fund.”

2010—Subsec. (j). Pub. L. 111–203 amended subsec. (j) generally. Prior to amendment, text read as follows: “For purposes of determining whether the Fund has incurred a material loss with respect to an insured credit union (such that the inspector general of the Board must make a report), a loss is material if it exceeds the sum of—

“(1) $10,000,000; and

“(2) an amount equal to 10 percent of the total assets of the credit union at the time at which the Board initiated assistance under section 1788 of this title or was appointed liquidating agent.”

2006—Subsec. (n). Pub. L. 109–351, § 726(25), inserted “any action” before “that is required”.

Subsec. (o)(2)(A). Pub. L. 109–351, § 504, inserted “the” before “retained earnings balance” and “, together with any amounts that were previously retained earnings of any other credit union with which the credit union has combined” before semicolon.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2010 Amendment

Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of this title.

### Effective Date

Pub. L. 105–219, title III, § 301(e), Aug. 7, 1998, 112 Stat. 931, provided that: In general.—Except as provided in paragraph (2), section 216 of the Federal Credit Union Act [12 U.S.C. 1790d] (as added by this section) shall become effective 2 years after the date of enactment of this Act [Aug. 7, 1998]. Risk-based net worth requirement.—Section 216(d) of the Federal Credit Union Act (as added by this section) shall become effective on January 1, 2001.”

### Regulations

Pub. L. 105–219, title III, § 301(d), Aug. 7, 1998, 112 Stat. 930, provided that: In general.—Except as provided in paragraph (2), the Board shall— publish in the Federal Register proposed regulations to implement section 216 of the Federal Credit Union Act [12 U.S.C. 1790d] (as added by subsection (a) of this section) not later than 270 days after the date of enactment of this Act [Aug. 7, 1998]; and promulgate final regulations to implement section 216 not later than 18 months after the date of enactment of this Act.Risk-based net worth requirement.— Advance notice of proposed rulemaking.—Not later than 180 days after the date of enactment of this Act, the Board shall publish in the Federal Register an advance notice of proposed rulemaking, as required by section 216(d) of the Federal Credit Union Act, as added by this Act. Final regulations.—The Board shall promulgate final regulations, as required by section 216(d) not later than 2 years after the date of enactment of this Act.”

### Consultation Required

Pub. L. 105–219, title III, § 301(c), Aug. 7, 1998, 112 Stat. 930, provided that: “In developing regulations to implement section 216 of the Federal Credit Union Act [12 U.S.C. 1790d] (as added by subsection (a) of this section), the Board shall consult with the Secretary, the Federal banking agencies, and the State officials having jurisdiction over State-chartered insured credit unions.”

### Report to Congress

Pub. L. 105–219, title III, § 301(f), Aug. 7, 1998, 112 Stat. 931, provided that: “When the Board publishes proposed regulations pursuant to subsection (d)(1)(A) [set out above], or promulgates final regulations pursuant to subsection (d)(1)(B) [set out above], the Board shall submit to the Congress a report that specifically explains— how the regulations carry out section 216(b)(1)(B) of the Federal Credit Union Act [12 U.S.C. 1790d(b)(1)(B)] (as added by this section), relating to the cooperative character of credit unions; and how the regulations differ from section 38 of the Federal Deposit Insurance Act [12 U.S.C. 1831o], and the reasons for those differences.”

### Definitions

Pub. L. 105–219, § 3, Aug. 7, 1998, 112 Stat. 914, provided that: “As used in this Act [see Short Title of 1998 Amendment note set out under section 1751 of this title]— the term ‘Administration’ means the National Credit Union Administration; the term ‘Board’ means the National Credit Union Administration Board; the term ‘Federal banking agencies’ has the same meaning as in section 3 of the Federal Deposit Insurance Act [12 U.S.C. 1813]; the terms ‘insured credit union’ and ‘State-chartered insured credit union’ have the same meanings as in section 101 of the Federal Credit Union Act [12 U.S.C. 1752]; and the term ‘Secretary’ means the Secretary of the Treasury.”