Page:United States Statutes at Large Volume 102 Part 2.djvu/375

 PUBLIC LAW 100-418—AUG. 23, 1988

102 STAT. 1379

securitization and debt conversion techniques, discounted debt repurchases, and the International Debt Management Authority described in section 3111 no later than 1 year after the date of the enactment of this Act.

PART III—REGULATORY PROVISIONS AFFECTING INTERNATIONAL DEBT SEC. 3121. PROVISIONS RELATING TO THE REGULATION OF DEPOSITORY INSTITUTIONS.

(a) REGULATORY OBJECTIVES.—It is the sense of the Congress that regulations prescribed by Federal banking regulatory agencies which affect the international assets of United States commercial banks should grant the widest possible latitude to the banks for negotiating principal and interest reductions with respect to obligations of heavily indebted sovereign borrowers. (b) FLEXIBILITY IN DEBT RESTRUCTURING.—It is the intent of the

Loans.

Congress that, in applying generally accepted accounting standards. Federal agencies which regulate and oversee the operations of depository institutions (within the meaning given to such term by clauses (i) through (vi) of section 19(b)(l)(A) of the Federal Reserve Act) apply to such institutions maximum flexibility in determining the asset value of restructured loans to heavily indebted sovereign borrowers and in accounting for the effects of such restructuring prospectively. (c) RECAPITALIZATION.—It is the intent of the Congress that Federal agencies which regulate and oversee the operations of depository institutions (within the meaning given to such term by clauses (i) through (vi) of section 19(b)(l)(A) of the Federal Reserve Act) should require depository institutions with substantial amounts of loans to heavily indebted sovereign borrowers to seek, as appropriate, expsuided recapitalization through equity financing to ensure that prudent institutioned capital-to-total asset ratios are established and maintained. (d) RESERVES FOR LOAN LOSSES.—It is the intent of the Congress that Federal agencies which regulate and oversee the operations of depository institutions (within the meaning given to such term by clauses (i) through (vi) of section 19(b)(l)(A) of the Federal Reserve Act) should seek to ensure that appropriate levels of reserves be established by depository institutions engaged in substantial lending to heavily indebted sovereign borrowers in accordance with both the credit and country risks associated with such lending. (e) DATA ON BANKS FOREIGN LOAN RISKS.—Section 913 of the

International Lending Supervision Act of 1983 is amended by adding 12 USC 3912. at the end thereof the following new subsection: "(d) To ensure that Congress is fully informed of the risks to our Reports. banking system posed by troubled foreign loans, the Federal banking agencies, before March 31, 1989, and on April 30 of each succeeding year, shall jointly submit to the Committee on Banking, Housing, and Urbem Affairs of the Senate and Committee on Banking, Finance and Urban Affairs of the House of Representatives a report that shall include the following: "(1) The level of loan exposure of those banking institutions under the iurisdiction of each agency which is rated 'valueimpaired', substandard', 'other transfer risk problems', or in any other troubled debt category as may be established by the

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