[Code of Federal Regulations]
[Title 12, Volume 3, Parts 220 to 299]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR225.84]

[Page 111]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y)--Table of Contents
 
                 Subpart I--Financial Holding Companies
 
Sec. 225.84  What are the consequences of failing to maintain a satisfactory or better rating under the Community Reinvestment Act at all insured depository 
          institution subsidiaries?

    (a) Limitations on activities--(1) In general. Upon receiving a 
notice regarding performance under the Community Reinvestment Act in 
accordance with paragraph (a)(2) of this section, a financial holding 
company may not:
    (i) Commence any additional activity under subsection 4(k) or 4(n) 
of the Bank Holding Company Act; or
    (ii) Directly or indirectly acquire control of a company engaged in 
any activity under subsections 4(k) or 4(n) of the Bank Holding Company 
Act.
    (2) Notification. A financial holding company receives notice for 
purposes of this paragraph at the time that the appropriate Federal 
banking agency for any insured depository institution controlled by the 
company or the Board provides notice to the institution or company that 
the institution has received a rating of ``needs to improve record of 
meeting community credit needs'' or ``substantial noncompliance in 
meeting community credit needs'' in the institution's most recent 
examination under the Community Reinvestment Act.
    (b) Exception for certain activities--(1) Continuation of investment 
activities. The prohibition in paragraph (a) of this section does not 
prevent a financial holding company from continuing to make investments 
in the ordinary course of conducting investment activities under section 
4(k)(4)(H) or insurance company investment activities under section 
4(k)(4)(I) of the Bank Holding Company Act if:
    (i) The financial holding company lawfully was a financial holding 
company and commenced the investment activity under section 4(k)(4)(H) 
or the insurance company investment activities under section 4(k)(4)(I) 
prior to the time that an insured depository institution controlled by 
the financial holding company received a rating below ``satisfactory 
record of meeting community credit needs'' under the Community 
Reinvestment Act; and (ii) The Board has not, in the exercise of its 
supervisory authority, advised the financial holding company that these 
activities must be restricted.
    (2) Activities that are closely related to banking. The prohibition 
in paragraph (a) of this section does not prevent a financial holding 
company from commencing any additional activity or acquiring control of 
a company engaged in any activity under section 4(c) of the Bank Holding 
Company Act, if the company complies with the notice, approval, and 
other requirements under that section and section 4(j).
    (c) Duration of prohibitions. The prohibitions described in 
paragraph (a) of this section shall continue in effect until such time 
as each insured depository institution controlled by the financial 
holding company has achieved at least a rating of ``satisfactory record 
of meeting community credit needs'' under the Community Reinvestment Act 
at the most recent examination of the institution.

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