Louisiana Revised Statutes 6:1233 – Effect of unauthorized investments
Terms Used In Louisiana Revised Statutes 6:1233
- Appraisal: A determination of property value.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
A. Every loan or other investment made in violation of this Chapter shall be due and payable according to its terms, and the obligation thereof shall not be impaired.
B. Every director or officer of a savings bank who knowingly shall violate, participate in, or assent to, or who knowingly shall permit any of the officers or agents of the savings bank to make investments not authorized by this Chapter, shall be liable individually for all damage which the savings bank may sustain in consequence of such violation, in addition to any criminal penalties prescribed by this Title.
C.(1) The commissioner may require every director or officer of a savings bank who knowingly shall violate, participate in, or assent to, or who to knowingly shall permit any of the officers or agents of the savings bank to make investments not authorized by this Chapter, to deposit with the savings bank an indemnity bond, insurance, or collateral of a kind and amount sufficient to indemnify the savings bank against damages which the savings bank may sustain in consequence of such violation.
(2) The amount considered sufficient to indemnify the savings bank shall, in the case of an unauthorized investment, be the difference between the book value and the market value of the investment at the time the commissioner makes his determination that such investment is unauthorized. The amount considered sufficient to indemnify the savings bank, in the case of an unauthorized loan, shall be the difference between the book value of the loan and the amount that could have been made under the provisions of this Chapter.
(3) Whenever an unauthorized investment has been sold or disposed of without recourse, the commissioner shall release all or such part of the indemnity after deducting any loss. Whenever the balance of an unauthorized loan has been reduced to an amount which would permit such loan to be made under the provisions of this Chapter, the indemnity shall be released, provided that the commissioner in making such determination may require an independent appraisal of the security.
Acts 1990, No. 816, §1, eff. Sept. 1, 1990.