Page:United States Statutes at Large Volume 112 Part 2.djvu/40

 112 STAT. 924 PUBLIC LAW 105-219—AUG. 7, 1998 "(2) NEW CREDIT UNIONS. — "(A) IN GENERAL.—In addition to regulations under paragraph (1), the Board shall, by regulation, prescribe a system of prompt corrective action that shall apply to new credit unions in lieu of this section and the regulations prescribed under paragraph (1). "(B) CRITERIA FOR ALTERNATIVE SYSTEM.The Board shall design the system prescribed under subparagraph (A>- "(i) to carry out the purpose of this section; "(ii) to recognize that credit unions (as cooperatives that do not issue capital stock) initially have no net worth, and give new credit unions reasonable time to accumulate net worth; "(iii) to create adequate incentives for new credit 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 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 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). "(B) ADEQUATELY CAPITALIZED. —An insured credit union 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). " (C) UNDERCAPITALIZED.— An insured credit union 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) SIGNIFICANTLY UNDERCAPITALIZED.—An insured credit union 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—

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