Code of the District of Columbia

§ 26–1401.12. Limitations on loan power of universal banks.

(a) A universal bank shall not make loans under § 26-1401.09(a)(2) through the universal bank, or a subsidiary of the universal bank, in an aggregate amount that exceeds 20% of the universal bank’s capital; provided, that:

(1) For the purposes of computing this limitation, loans made to a municipal corporation shall not be included; and

(2) A universal bank may make loans under § 26-1401.09(a)(2) through the universal bank, or a subsidiary of the universal bank, in an aggregate amount not to exceed 50% of the universal bank’s capital if the loans made under § 26-1401.09(a)(2) are limited to a liability in the form of a note or bond that:

(A) Is secured by not less than an equal amount of bonds or notes of the United States issued since April 24, 1917 or in certificates of indebtedness of the United States;

(B) Is secured or covered by guarantees, commitments, or agreements to take over or purchase the note or bond, and the guarantee, commitment, or agreement is made by a Federal Reserve Bank, the Small Business Administration, the Department of Defense, or the Federal Maritime Commission; or

(C) Is secured by mortgages or deeds of trust insured by the Federal Housing Administration.

(b) A loan made under § 26-1401.09(a)(2) shall require the prior approval of the board of directors or other governing board of the universal bank or its subsidiary.

(c) An equity interest or other form of interest taken as security in a project funded through a loan made under § 26-1401.09(a)(3) shall require the prior approval of the board of directors or other governing board of the universal bank or its subsidiary.

(d) The Commissioner may suspend a universal bank’s authority under § 26-1401.09(a)(2) or (3) if the Commissioner determines that the universal bank is not exercising, or will not exercise, authority under § 26-1401.09(a)(2) or (3) in a safe and sound manner or that the condition of the universal bank is not, or will not be, safe and sound. In making a determination to suspend a universal bank’s authority under this subsection, the Commissioner shall consider the universal bank’s capital adequacy, asset quality, earnings quantity, earnings quality, adequacy of liquidity, and sensitivity to market risk; the ability of the management of the universal bank; and any other factor the Commissioner determines is appropriate. If the Commissioner suspends the authority of a universal bank under this subsection, the Commissioner may specify how the universal bank or its subsidiary shall treat an outstanding loan.

(e) A universal bank shall not purchase foreign bonds unless the Commissioner promulgates a rule authorizing the purchase of foreign bonds by universal banks; provided, that a universal bank may purchase a general obligation bond issued by a foreign national government if the bond is payable in United States funds. The Commissioner shall not promulgate a rule under this subsection authorizing a universal bank to invest in foreign bonds issued by a single issuer in an aggregate amount that exceeds 10% of the universal bank’s capital.

(f) A universal bank shall not consider any health information obtained from the records of an affiliate of the universal bank that is engaged in the business of insurance in the universal bank’s determination of whether to make a loan under § 26-1401.09(a)(2) or in the determination of whether to make any other loan, unless the person to whom the health information relates consents to the consideration of the health information in the universal bank’s determination of whether to make the loan.

(g) A universal bank shall not loan any part of its capital, surplus, or deposits on its own capital stock, notes, or debentures as collateral security; provided, that a universal bank may make a loan secured by its own capital stock, notes, or debentures to the same extent that the universal bank may make a loan secured by the capital stock, notes, and debentures of a holding company for the universal bank.

(h) The restrictions and limits in subsections (a), (e), and (f) of this section shall not apply to a liability:

(1) That is secured by not less than an equal dollar amount of direct obligations of the United States which will mature not more than 18 months after the date on which the liability is incurred;

(2) That is a direct obligation of the United States, the District, or a federal or District agency and that is fully and unconditionally guaranteed by the United States or the District;

(3) In the form of a note, debenture, or certificate of interest of the Commodity Credit Corporation; or

(4) Created by the discounting of bills of exchange drawn in good faith against actually existing values or the discounting of commercial or business paper actually owned by the person negotiating the commercial or business paper.


(June 9, 2001, D.C. Law 13-308, § 212, 48 DCR 3244.)

Section References

This section is referenced in § 26-1401.09.