### Question
How is the "low-quality asset" defined?


### Answer
The term **low-quality asset** is defined in *12 U.S.C. § 371c* as follows -

> an asset that falls in any one or more of the following categories:


(A) an asset classified as "substandard", "doubtful", or "loss" or treated as "other loans especially mentioned" in the most recent report of examination or inspection of an affiliate prepared by either a Federal or State supervisory agency

#### Citation:
  - *12 U.S.C. § 371c*
  - Heading: **CHAPTER 3-FEDERAL RESERVE SYSTEM > SUBCHAPTER X-POWERS AND DUTIES OF MEMBER BANKS**

