Otero Savings and Loan Association, a Colorado Corporation v. Federal Home Loan Bank Board and Federal Savings and Loan Insurance Corporation

GAN, Circuit Judges.*

I LOGAN, Judge: Circuit THE LEGALITY OF OTERO’S CHECK- IN PROGRAM UNDER Because its accounts are insured FSLIC, Otero is deemed an “insured institu- tion” within meaning of 12 U.S.C. 1724, and is “depository therefore a insti- tution” by definition under 12 U.S.C. 1832(b)(5). such, subject As Otero is 1832(a), provides: (a) depository No institution shall allow the owner deposit of a or account on paid which interest or dividends are make by negotiable withdrawals or trans- purpose ferable instruments for the * divergence Missouri, There City, is a of views on some Federal issues Reserve Bank of Kansas separate opinions before us. The (10th 1981). various 665 F.2d 275 Cir. express which follow those views and the con- majority panel currence of a in the con- stated, opinion clusion infra. Our in a related being 80-1946, today case is filed in No. Otero Savings Association, and Loan et al. v. The competitive and the threat ine-

making parties, except England transfers to third (cid:127) quality that such withdrawals be made in between and loan associa- Connecticut, Massachusetts, impe- tions and commercial banks was States Maine, Vermont, not, Island, Rhode New congressional tus to action. This does York, Jersey, Hampshire. however, and New New general limit forbidding we construe as 1832 which argues its two-account ATS bear- depositor withdrawals from interest 1832(a), system does not violate 12 U.S.C. § negotiable via or transferable reading applying only that section as parties, to third wheth- payable instruments is, single sys- NOW account accomplished directly er NOW paid tems in which interest or dividends are format. indirectly under the ATS format or directly upon savings accounts from which by negotiable withdrawals instruments are focuses on strongest argument permitted. interrelationship between 1832(a) legislation. after 1979 371a and §§ We reading believe a fair 1832(a) must not be read to argues It that § language 1832(a) of 12 indicates U.S.C. § prohibit because such an in- ATS accounts depository may that no institution offer an the 1979 amend- terpretation nullify account, bearing deposit interest demand ments 371a. The 1979 amendments to § operated directly whether as a one-account to offer expressly allow member banks ATS system indirectly NOW as a two-account 1979, 31, while accounts after December system. The is statutory language ATS 1832(a) institu- prohibits depository all enough apply types broad to to both until af- offering tions from such accounts accounts. We -nothing have found in the Thus, 31, Otero con- ter December 1980.2 legislative history of provision, enacted reject reading tends we the broad must 1973, in to Congress indicate that intended legislative rendering section 1832 to avoid to types differentiate between the two v. Mana- nullity. enactment a See F.T.C. Congress accounts. It is true that treated 988, Co., Retail 515 F.2d 994 ger, Credit systems separately ATS and in NOW later (D.C.Cir.1975); Acceptance Motors General legislation. But legislative history Whisnant, (5th Corp. v. 387 F.2d 774 Cir. subsequent acts is dubious value inter Bralove, (D.C. 1968); F.2d 64 Abbot v. 176 preting passed years an act six earlier. See Cir.1949). 85, n.4, Haynes States, v. United 390 87 U.S. 722, n.4, (1968); 88 S.Ct. 725 19 L.Ed.2d 923 inconsistency We find no fatal between 313, Price, 304, United States v. 361 U.S. 80 amended, 371a, section as and the broad 326, 331, (1960); S.Ct. 4 L.Ed.2d 334 United 1832, gen- section however. The reading of Workers, States v. United Mine 1832, prohibiting language eral section 258, 282, 67 S.Ct. 91 L.Ed. 884 any depository offering institution from in- (1947). bearing deposit terest demand accounts or either equivalents, their NOW ATS It is congressional also a fact accounts, give way specific reports must treating original enactment of 371a, federal granting 12 of section U.S.C. 1832 only refer to NOW accounts, authority to offer be, reserve member banks represented and it 31, 1979. us at accounts after December argument, savings oral no and ATS States, 398, 446 loan was Busic v. United U.S. using anything but NOW accounts See 381; 1747, at the Morton v. time of 100 64 L.Ed.2d legislation. No doubt 535, 2474, Mancari, 41 NOW account in New 417 94 S.Ct. development U.S. indefinitely to § 2. The 1979 of the 1979 amendment 371a amendment 371a was 1832(a) by allowing deposi- effective all December 1979 to March modified § and tory 31, 1980, Congress permit On March pository withdrawals enacted the De- institutions to Deregulation bearing except Institutions accounts of and Mone- interest tary 1980, Pub.L.No.96-221, by negotiable for-profit corporations, Control Act of or trans- 94 seq., parties (amending payable Stat. 132 et third af- scattered sections ferable instruments U.S.C.). of Title 12 The Act extended the effect ter December

283 region country extending before (1974). legislative history L.Ed.2d 290 Deregulation no Depository Institutions others. We think there is consti- rule to explanation for problem Act of 1980 offers no Con- tutional here. fed-

gress’ disparate granting treatment of 1832(a) applies we Thus hold U.S.C. § privileges eral reserve member banks ATS type ATS prohibit Otero’s “Check-In” year federally one earlier than all other during and that section account institutions. The under- depository insured constitutional. granting member lying policy reasons for start not concern year banks a one head do II us. HOLLOWAY, Judge: Circuit At oral no constitution arguments against appli al were made THE REMEDIAL VALIDITY OF THE cation of 12 1832 to this Colorado- U.S.C. § THE BANK BOARD ORDER OF based and loan association. Such chal- presented by issues are Two Board, arguments were made to the Bank the Federal lenges to the remedial order of however, proceedings administrative (1) Bank Board: whether Home Loan there, in briefs filed and the constitutional Bank Board has to enforce in the Bank Board’s deci issue was treated desist orders entered in cease and argument must be Any sion. constitutional brought proceedings eight upon exception provided based 1730(e)(1); (2) whether the remedial prohibitions northeastern states from the order, sixty- the two hundred particularly inconsistency or the be U.S.C. § opening of new Check- eight day ban on the tween the treatment of commercial banks pro- or similar NOW accounts during and and loan associations Otero, by scope is within the grams agree 1980. We with the Bank Board that powers. Bank Board’s governing principle the is stated in New Dukes, Orleans v. 427 96 U.S. A (1976); 49 511 a rational L.Ed.2d to enforce § FSLIC's applicable. basis test Here classification is classification, argues may it en- inherently suspect there is no The Bank Board involved; nor is a this means of cease-and-desist by fundamental interest force § solely governing pursuant is an to 12 U.S.C. regulation proceedings economic 1730(e)(1) 1730(e)(1).3 permits financial has undis the Congress institutions. Section § vio- puted legislate to in this area where an institution has authority and FSLIC to act law, rule, or may make or is about to violate “a reasonable distinctions between lated contends regulation.” its treatment of banks and sav The Bank Board commercial may 1730(e)(1) the ings may experiment by It also that under FSLIC loans. § stop proceedings to allowing particular types bring of accounts in one cease-and-desist officer, person par- 1730(e)(1) employee, agent, provides part: or other 3. 12 § U.S.C. ticipating affairs of such in the conduct the If, any opinion Corporation, in the violate, to institution is about institution, ¡aw, insured sured accounts or institution which has in- rule, or any imposed in condition writ- director, officer, or any em- regulation, by Corporation in connection with the the ployee, agent, person participating or other any request granting by application or other institu- the conduct of the affairs of such any agreement engaging engaged, the institution or written tion is or has or the Cor- including Corporation, poration with the has cause to believe that entered into any agreement reasonable director, officer, any section the or em- entered into under institution ployee, agent, person participating title, may Corporation issue or other 1726 of this the upon the di- conduct of the affairs of such institu- institution or such and serve rector, officer, the engage, per- tion agent, is about in an unsafe or un- employee, to other practice conducting respect sound such the business of charges in there- son a notice institution, violating or is or has violat- of.... ed, Corporation or the has reasonable cause (Emphasis supplied). director, to believe that the institution or Otero, Act, the Debt the violation of law. on the Collection Practices 15 U.S.C. hand, only (b)(2), Equal Opportunity claims that those statutes 1692/ the Credit § Act, expressly provide they may 1691c(a)(2), which be the Home U.S.C. § by Act, enforced or the the FSLIC Bank Board Mortgage Disclosure 12 U.S.C. 1730(e). are enforceable under 2804(b)(2), Section Depository § and the Institution delegation 1832 contains no such of authori- Deregulation Monetary Control Act of ty, says nothing and indeed as to who is to 96-221, 208(a)(2). The Pub.L. Com- Therefore, enforce it. argues, only Otero Act, munity Reinvestment U.S.C. the Attorney may General enforce 1832 in 2901-2905, provides that the Board §§ accordance with 28 pro- and enforce its promulgate regulations shall vides: provisions as to institutions. FSLIC-insured law,

Except as otherwise by Depository Manage- authorized Institution Under Act, the conduct of litigation in which the Board is ment Interlocks States, agency, United or officer enforce- given primary responsibility for interested, thereof is a party, or is refer to permitted ment but is matters therefor, securing evidence 3206(4), reserved Attorney General. 12 U.S.C. § Justice, Department officers of the (6). Secrecy applies Finally, the Bank Act Attorney the direction of the Gen- entities, to, among other in- FSLIC-insured eral. stitutions, charges Secretary but Treasury responsibility assuring also 28 See compliance, he proviso In support of its that violation delegate appropriate authority of a law by is remediable if FSLIC 1054(a). supervisory agency. 31 U.S.C. § the law specifically provides, itself so Otero of its tem to of Governors Truth-in-Lending Act authorizes the Board to by the Bank Board plementing that Act. 15 U.S.C. 1604. As cites a number of statutes nent 1832, specify through the institution sions. enforced under' imposed Insurance Loan Bank 1730 of Title enforcement (2) (a) Compliance part ^[*] prescribe sections 1730(e) that: under this Corporation), ^[*] subject of the Federal Reserve Federal Board powers. the Act 1426(i), 1437, 1464(d), rules and ^[*] they by the Federal Home to subchapter (acting directly Savings are to be enforced Hs provides in the For FSLIC regulations of those which, requirements example, sfc § case and Loan in shall be of any means unlike provi- perti- Sys- and im- or tends. cussed above as mere so forced sumption that tended to would leave the ing rejected authority other than cease and desist orders statutes The Bank We are not ed since the poration to use enforcement mechanisms providing explicitly. FSLIC, by argues, specific FSLIC Otero ... can also be contained relating grant specific delegation language a clear Board contrary Attorney Interpreting that where persuaded by authority federal delegations of contention, enforcement specific delegations in its Decision to those mechanisms do legal in these surplusage, General, laws are to be en- to enforce basis for the Cor- Congress § stating: 1730(e) acts general enforcement authority justified it Otero con- and Order has done indicate, any has in- as where pre- giv- dis- law cit- as 15 1607(a)(2). U.S.C. § language not contain the “a law” 1730(e)(1). § statutory

Similar schemes under which Moreover, body delegations another has of the cited rulemaking authority some specify while the that specifically clearly designed Bank Board is seem to direct- Board, ed to other compliance enforce than some by insured institu- rather tions 1730(e) regulatory under shall have enforce- agency, include the Electronic § Act, Funds 1693o(a)(2), Transfer 15 authority respect ment with to FSLIC-in- §

285 associations, sured where the statute in matter as is contained in the statute and ” question might left otherwise have that regulations the Board.’ Id. at 157. question in doubt. given The court instead concluded that authority over Board’s broad federal Decision and Order at 16. savings and loan associations it had the It does appear specific dele- 1464(d)(1) bring suit to gations the statutes cited above would be fiduciary law redress breaches of common strictly necessary if the Bank Board’s broad such controlling duties those associa- interpretation 1730(e) is correct. How- tions. Id. at 158. ever, goes too far in arguing that this necessarily implies the FSLIC Bank, Eliza- Similarly, in National State only enforce those statutes that contain beth, (3rd Long, N. J. v. 630 F.2d 988 specific such delegations authority. Cir.), court held specific These delegations could still serve a 1818(b)(1) jurisdiction confers on the useful function in clarifying the FSLIC’s Comptroller Currency to enforce authority, especially in the case of statutes compliance Jersey a New anti-redlin- which apply types to a number of different statute national located in banks subject of institutions to the control of dif- pertinent state. ferent regulatory agencies, and statutes 1818(b)(1) is identical to that contained in vesting rulemaking and enforcement au- 1730(e)(1), 1464(d)(2), as well as that in thority in agencies. different empowers the Bank Board issue against federal sav- cease-and-desist orders

The Bank Board’s heavily decision relied Webb, ings and loan associations. on Reich v. (9th Cir.), 336 F.2d 153 denied, cert. Otero, Concededly, as a state-chartered alia, involved, L.Ed.2d 800. Reich inter institution, subject is not the same all-en- dispute over the extent of the Bank Board’s compassing regulation “from its cradle to authority enforcement over federal corporate grave,” its California v. Coast pursuant and loans 12 U.S.C. Ass’n, F.Supp. Savings Federal & Loan 1464(d)(1), which provided perti then (S.D.Cal.), federally as are chartered part: nent institutions such as those involved Reich The Board shall have to enforce example, Bank. For National State this section and regulations rules and Bank went on court National State made hereunder. In the enforcement of Comptroller’s power to hold that any provision of this section rules exclu- Jersey enforce the New statute was regulations hereunder, made sive, and that the Commissioner of De- regulation, law or and in the administra- partment Banking Jersey of New was tion of conservatorships receiverships precluded enforcing thus the statute provided in paragraph (2) of this sub- at against a national bank. 630 F.2d 988- section, the Board is authorized to act in Savings also Federal 89. See Conference of its own through name and its own attor- Stein, and Loan Associations v. 604 F.2d neys. (9th Cir.), aff’d 445 U.S. rejected The court in Reich argument (state agencies the 63 L.Ed.2d that the statutory phrase “or any other law have no enforcement over federal regulation” or associations). in light savings Obviously, must of the doctrine and loan “ ejusdem of generis ‘necessarily refer to the fact that institution a state chartered “any other regulation” law or which by Con- such as Otero is insured the FSLIC does gress has expressly appropriate agencies directed the Board to not divest the state of enforce subject and which jurisdiction covers the same over it.4 promulgating 1730(o), 1730(e) part by 4. enacting Fi- § § as loan associations provides: Supervisory nancial Institutions which Act of Congress explicitly recognized any proceeding the dual nature under In connection with regulation (e), (f)(1), (g) of federal savings and state of state of this section subsection or B Nevertheless, of the “a 1730(e)(1), refers to violations of § Bank propriety of the The Board’s law”, face, its the term quite is broad. On remedial order explicitly statutes which is not limited to Otero to required order The Bank Board’s grant powers to FSLIC. enforcement following steps: take the interpretation by the agree We with the immediately close all (1) Otero shall the term Bank Board and the FSLIC not consist which do Check-In although say we do not includes § entire benefi- in which the solely of funds powers every embrace such enforcement more indi- by held one or cial interest type of statute. which is organization by viduals or philan- religious, for operated primarily agree with fur We cannot Otero’s charitable, educational, or other thropic, interpretation ther its of operat- which is not purposes and similar 1730(e) abil does not weaken FSLIC’s § profit. ed for ity “discharge its basic mission of ensur until (2) immediately cease Otero shall operation ing the safe and sound of insured (268th) day sixty-eighth the two hundred institutions,”5 may al because the FSLIC date of this Order: following the effective 1730(e) to “an unsafe or ways use redress (a) any of additional opening The practice”, regardless of whether unsound accounts; Check-In position would any law is violated. Otero’s pro- (b) any program initiation of complicate by requiring enforcement with- orders of viding negotiable for or FSLIC to demonstrate unsafeness accounts; drawal from Otero such as unsoundness of a violation of a law Furthermore, the coherence of the kind of (c) operation any other regulatory disrupted by scheme be permit withdraw- program designed to holding by 1832 can be enforced by interest-bearing accounts als from Attorney General. Given the broad lan instruments negotiable or transferable FSLIC, 1730(e), guage of we hold that the purpose making transfers for matters, expertise its in financial parties. third powers use its cease-and-desist sixty- (3) period of two hundred For a expresses an violations of 1832 which ef- (268) days commencing on the eight important policy regulation opera on Order, adver- fective date of institutions, tion of state chartered insured of Check-In promotion tisement or along with the Act.6 others covered speci- any program other accounts or we conclude that Therefore FSLIC comply (2)(b) (2)(c) shall above fied and the Bank Board have set forth in principles 80-614, 1730(e) prohibitions applied to enforce the Board Resolution No. (268) sixty-eight two hundred if the date subject any party involving notice who is an insured State-chartered institu- person Corporation tion or director or officer or other under this or order issued affairs, participating standing in the conduct of its raise the re- have section shall Corporation provide appropriate shall ground quirements of this subsection as supervisory authority State with notice of the validity attacking such notice Corporation’s pro- intent to institute such a order. ceeding grounds and the therefor. Unless Corporation within Savings such time as the deems Supplemental of Brief appropriate light in the 13, the of circumstances R.238. Loan Association at (which specified of the case time be in must prescribed preceding the notice in the sen- has role the FSLIC We not decide what need tence) satisfactory corrective action is effec- assuring institutions that state chartered supervisory tuated action of the State laws, comply which are of course with state authority, Corporation may proceed the agencies. primarily responsibility of state the provided in this section. No institution remedies, days effective date requirement after the of this Or- such as a that a com- der for were substituted the date of De- pany employment persons, offer to certain 31, cember said Resolution. NLRB, 177, Phelps Dodge v. Corp. 313 U.S. 61 S.Ct. 85 L.Ed. and an order Decision and Order at 23. company union be dissolved and that Given our conclusion that Check-In the company employees reimburse its accounts have never been and are not cur- they paid, Virginia dues Electric & rently legally profit” available for “for or- NLRB, Power v. Co. ganizations, and our conclusion that 1214, 87 L.Ed. 1568. may powers FSLIC use its cease-and-desist to paragraph enforce the first of § Otero, hand, on the other asserts that the requiring Board’s order the closing of FSLIC’s remedial does not extend to profit” organizations’ “for accounts is clear- requiring that an insured institution refrain ly Otero, however, proper. argues further from otherwise lawful conduct. All that that the two sixty-eight day hundred mora- 1730(e)(1) the Bank Board can do under Check-In, torium on the opening any of new an order that institution cease and desist NOW, accounts, or similar and the related from conduct take af- unlawful such advertising restrictions on of such firmative action as will correct conditions are beyond scope of the Bank Board’s resulting therefrom and ensure that powers. The says FSLIC the order is institution is law abiding in the future. proper 1730(e)(1) provides which 1730(e)(1) The language of is not as broad part that: provision 10(c) as the of the National ... may, by provisions Such order authorizing Labor Relations Act an order otherwise, mandatory be require for such affirmative “as will action effectu- directors, officers, the institution or em- policies subchapter.” ate the of this ployees, agents, persons partici- and other light wording legislative history pating in the affairs of such institution to here, statute involved the Bank same, cease and desist from the and fur- powers appear Board’s more limited. ther to take affirmative action to correct passage Prior to of the Financial Institu- resulting conditions such Supervisory tions Act of practice. violation or (Emphasis sup- Board’s available enforcement tool for plied). state chartered insured institutions was the The Bank Board claims that the “condi- termination insurance. tions resulting from” Otero’s commence- 1730(b). Banking The Senate and Cur- ment of its Check-In program before it was rency the Act report Committee in its on permissible legally include an unfair advan- remedy, being noted in addition tage over its law-abiding competitors, and drastic, is a time-consuming imple- one its order serves to correct the imba- terminated, ment. Even if insured status is by giving lance competitors a chance to existing the institution’s insured accounts up.7 catch The Bank Board asserts that its continue to be insured for another two powers remedial equivalent are to those of years after termination. As stated in the the National Labor Relations Board to re- report: dress unfair practices by ordering labor During “such this time losses of institu- affirmative including action rein- multiply During peri- tion can .... such statement of employees with or without od, back pay, Corporation as will the Insurance is without policies effectuate the ” this subchapter prevent further increased .... National Labor Re- Act, losses, lations 10(c), 160(c). no matter what conduct National Labor Relations Board’s has those in control the institution or been held to variety might authorize a wide be additional losses that incurred. 31, 1980, sixty-eight day period during 7. The two hundred December which Check-In equals length April illegally of time from accounts were offered Otero. to its salaries and bonuses Sess., paying excessive Cong., reprint- 2d 89th S.Rep.No.1482, ed in ^[1966] U.S.Code Cong. & Ad.News executive officers. The court rejected the of the portion to the challenge bank’s guarded Board and the other and-desist vising banks and pervisory our tions “additional flexible tively and well.” & Ad.News at 3538 banks continue to serve the Nation Congress’s intent limits, powers powers . . within in order to make Id., savings and loan was to (emphasis federal ^[1966] and loan associations ., in and effective su grant U.S.Code creating agencies added). sure that carefully associa super cease- effec Cong. Sec 611-12. Unlike Comptroller’s limit soundness. of the ed to average assets and ment of National Bank of Eden reversing the case, future past practices future preventing $61,000 the personnel order Comptroller’s order paid out in bonuses. the direct, requiring on the bank’s requiring reimburse- penalty expenses to 1.5% was identifiable specified abuses properly that the bank provision financial in First effects direct- Id. at in re 1730(e) the Bank Board to tion enables v. Bank in National Similarly, Groos unlawful conduct dress the direct effects of (5th Currency, 573 F.2d 889 Comptroller of expeditious and effective manner. As Cir.), upheld prohibiting an order the court Fielding, v. stated the court FSLIC a bank to its of credit future extensions (D.Nev.), F.Supp. de cert. shareholder, with controlling in accordance 567, 27 nied 400 U.S. 91 S.Ct. L.Ed.2d Comptroller, agreement between the prior 622: bank, court The and the shareholder. was that the order rejected em- Congressional reports repeatedly no substantial importance of the division of because there was

phasized overbroad dealings regulatory power between the national that the bank’s continued evidence governments. purpose unsafe and and state shareholder constituted provisions quickly the enforcement is to The court held banking practices. unsound practices, fraudulent to affirma- stop that: (Emphasis sup- tively recover for them. required for the evidence is Substantial

plied). but once Comptroller’s findings, may, he Comptroller finds a violation short, only permits In Act discretion, fashion allowable within his to ensure that institutions con Bank Board future prevent a form as to relief in such legal, duct their affairs in a and sound safe We abuses .... omitted]. [Citation man give manner. It does not the Board a order, in this of discretion find no abuse date to use whatever means seem desirable elements encompasses the essential competitive among to maintain the balance clear- and which agreement the earlier financial institutions. practices ly problematic relates to cases This conclusion is consistent with (Emphasis past. in the have occurred na- construing Comptroller’s over added). 1818(b)(1), tional banks under U.S.C. § pre- thus addressed order Id. at 897. The pertaining of which to the prac- unlawful future identified vention of authority to mandate affirmative action is added). (Emphasis tices. 1730(e)(1), to that of and which identical penalty if its argues Board The Bank passed part In was of the same Act. down, have will struck provision is Eden, First National Bank South Dakota impuni- violating the law succeeded Department Treasury, v. Office offering its jumping gun ty by Comptroller Currency, 568 F.2d prior to December determined, program (8th Cir.), Check-In Comptroller alia, Decision and Order its question inter the bank in had stated: engaged practices by in unsafe and unsound Board

289 just have competitive conditions claimed to time inherent in length Due to the of past pow- in proceeding[8] by Otero’s been disturbed conduct. Such cease desist adjust past of terpretation party competitive would mean a er to for effects statute, existing well in not penalty remedy could violate the a box is by conduct Moreover, of of date amend contemplated by advance the effective the statute. ments, adjustment the cease knowing effecting and desist of the rather than process brought imbalance, could to bear be competitive not be the order claimed fore the arrival of the effective date. of cus- might in numbers individual result legislative purpose bearing have Whatever new using tomers non-interest delaying during pe- been served in the effective date penalty accounts with Otero would, extent, to a be large penalize thwarted. thus Otero’s riod. The order could customers, rather than Otero. Therefore Decision and Order at 21. (2) and provisions paragraphs of penalty However, usually orders cease-and-desist (3) of cannot stand. the order suffer from defect that violators have acts. already committed unlawful More- Conclusion over, 1832(c) permit here for fines past sum, uphold each violation of 1832.9 In the Bank Board’s con- we event, if actions vio- past go program even un- Check-In Otero’s clusion that Otero’s justify punished, expanding does not lated 12 1832. Decision and The powers beyond (1) those re- paragraph Board’s is as to Order affirmed granted by the of quiring closing statute. of all Check- consisting funds in solely In accounts not of Thus the Board’s remedial order interest held indi- which the beneficial is upheld. cannot be It is true that “the rela In all non-profit organizations. viduals or remedy tion of is policy peculiarly the Decision is set respects and Order competence,” for matter administrative aside. SEC, v. Light American Power Co. 329 & 90, 112, 145, 103, 133, 67 91 L.Ed. U.S. S.Ct. McKAY, Judge, concurring: Circuit NLRB, quoting Phelps Corp. v. Dodge 313 852, 177, 194, explanation legislation govern- U.S. 61 85 L.Ed. No of the S.Ct. to, knowledge, and the what in one or anoth- agency’s expertise amounts form er, given and choice of be third from sav- special party must check withdrawals Co., respect. Packing entirely satisfactory, NLRB ings v. Gissell 395 is n.32, n.32, delving legislative 612 into the histo- deeply U.S. too raises, Industries, more Moog 23 L.Ed.2d 547. ry perhaps, see also these sections FTC, 413-14, Therefore, it questions Inc. v. it answers. 78 S.Ct. than Nevertheless, my separately seems to state appropriate L.Ed.2d provisions 1730(e)(1) result authorizing agreeing orders reasons with desist, proba- to cease and and to take affirmative court. mischief reached debating resulting bly action to is in the fact that a correct conditions rooted respond body violations of not prac Congress law or unsafe or unsound such as could tices, grant power swiftly regulations do not to accom- pres enough to restrict ently attempting designed lawful sophisticated conduct in to read- modate devices Temporary 9. The Board’s Decision and dis- cease-and-desist orders under Bank Order 1730(f)(1) may possibility assessing a fine but be issued where a cussed the likely impose insolvency violation “is one. and Order to cause or sub- did in fact Decision dissipation gener- earnings stantial or at the Board the of assets 21-22. Before FSLIC’s institution, likely seriously al Otero differed as to whether weaken the counsel and fines un- condition the institution otherwise seri- Bank has the assess Board ously prejudice 1832(c) Attorney interests of its General insured der or whether prior impose completion pro- bring a fine. members to the must an action to question ceedings pursuant paragraph (1) conducted did not answer this Board ” (e) it here. of subsection this section .... we need not address pose 1832(a) by depository prevent institutions to circumvent was to all such Therefore, comprehensive legislation. except in the states explicitly, devices congressional legislation piece- evolved in a competitive advantage where had to local meal fashion one enact- so that sometimes be met because state-chartered institutions overlapped quite ment or did not match By accounts. already offering were such another. In to elicit a rational mar- order Congress 1979 had concluded that banks ketplace meaning of the various acts and generally permitted be to allow should amendments, it the necessary to avoid While it savings check access to accounts. usual comparative detailed refinements of devices used description is true that of statutory history normally that have been in the 1979 amendment to 12 371a U.S.C. § judicial Instead, the hallmark of work. we spoke commonly what referred to as of are emphasize objectives must Congress of accounts, (AFT) Transfer Automatic Fund over-emphasizing without the individual Congress’ apparent simply intent was steps taken to achieve those ends. While permit savings instant access to accounts general objectives Congress of remain That amend- through checking device. elusive, they reasonably can be derived 31, only ment was effective until March legislative history, statutory from the lan- meantime, Congress In was guage, legisla- and overall structure of the comprehensively forced to deal here, tion. In the Acts at issue too much regulations authorizing banking various precision attention to in the use of statuto- services, of after the United States Court ry language would lead to the unwise effect Columbia, in an Appeals for the District of holding that Congress failed in the one unpublished opinion, Federal struck down objective clearest, is, that seems regulations Reserve Board that authorized objective of putting regulated all financial banking variety a of innovative services. equal competitive institutions on an footing stayed The court of its effectiveness to, offering what amounts in whatever Congress action to allow time to act. form, check withdrawals from interest- adopted Depository response, Congress bearing accounts. The title the 1980 Deregulation Monetary Institutions Depository Deregulation Institutions 1980, Pub.L.No.96-221, Control Act of Monetary Control Act evidences this over- Act, 303, (1980). 146 this Stat. Under § riding objective. 1832, effec- amendment to U.S.C. § represented 1980 Act a reversal of deposi- tive all December allowed previous legislative position, first mani- tory “permit the owner of a institutions to fested in 1933 with the enactment of or divi- deposit or account on which interest 371a, prohibited all check § paid are to make withdrawals dends withdrawals from interest-bearing negotiable or transferable instruments accounts. That expressly section forbade purpose making transfers to third federally-insured granting banks from de- parties.” the 1979 Congress also extended mand access to interest-bearing accounts 371a, which amendments to 12 U.S.C. § “directly either indirectly, by any or device federally-insured authority to gave banks thereafter, whatsoever.” in a Sometime offer AFT accounts. These amendments states, handful of northeastern state-char- terms on expired by would have their own tered began offering financial institutions 31, 1980,leaving gap March between that what currently Negotiable are known sweeping date and the effective date of the Order of (NOW) Withdrawal legislation. new accomplish objective. Responding this rationally argue signifi- that it is those One can developments, Congress enacted was 1832(a) cant that the amendment to 371a § 1973. While it did not merely indefinitely use than sweeping extended rather “directly indirectly” 1832, au- 371a, light it until December when § is reasonable in history to offer thorizing depository of the Act all institutions to conclude that no accounts, negative pregnant became pur- savings was intended. check access to amendments, 371a. subsequent out of the context Considered effective. scheme, Thus, 1973 until December suggests at least from overall 1832(a) while with AFT 371a dealt was forbidden How- only NOW accounts. effectively 1832 covered offering any program ever, ignores credit this Con- access to accounts. allowed check eliminat- purpose obvious overall gress’ analysis of the with the court’s agree I among financial ing competitive advantage find it raised but questions constitutional check access to providing institutions on my views necessary separately to state When considered in con- savings accounts. with Part IIA of the agree remedies. I text, Congress I am satisfied that when opinion, finding court’s originally enacted it intended ap- powers were cease-and-desist Board’s in cer- permit savings and loan institutions I this situation. propriately exercised in special programs to offer tain named states IIB conclusion in Part agree with the also generally they in order that allowed authority to im- lacks that the Bank Board institu- compete could with state-chartered penalty box pose compensatory I that for whatever tions. am also satisfied order. its cease-and-desist over and above reason, in Congress when amended 371a however, conclusion, My for this reasons that same com- grant it intended to I am by stated the court. differ from those federally-insured petitive advantage to analysis Fifth persuaded by the Circuit’s banks, advantage to extending without that Loan v. Federal Savings Federal and Gulf and other institutions. Board, (5th F.2d 259 Loan Bank Home statutory sec- chronological sequence of the 1981), construing 12 U.S.C. Cir. savings to dealing tions with check access 1464(d)(2)(A), gives the Bank Board which disparities aris- suggests accounts that powers allowed the the same enforcement type piecemeal legislation from this Corpo- Insurance Savings Federal and Loan Congress eventually caused to conclude that (FSLIC) 1730(e). Based on its original position, it should reverse its ration checking to Fifth prevented essentially legislative history, all access analysis of the savings instead to authorize pur- and principal that Circuit determined such services for all financial institutions to an enforcement scheme pose providing control, under its effective December insuring for de- agencies responsible federal to elimi- institutions was posits in financial practices might that undermine nate following: history glean From this we institutions. stability of insured financial federally-regulated Prior to no finan- points out that cease-and-desist The court permit cial institutions were authorized to given agencies to these authority was savings check access to accounts. After and to practices or unsound counter unsafe depository institutions in the when swiftly agencies to deal allow expressly exempted states in the 1973 en- impli- liability might be insurance federal 1832(a) permitted check actment of were reserved expressly court cated. While that savings Beginning access to accounts. power whether cease-and-desist ruling a on amendments, federally-insured the 1979 involving a violation lie in cases banks were added to the limited list of to an unsafe law that did not amount permitted savings those access to check Congress I believe that practice, unsound Finally, accounts. on December orders permit cease-and-desist intended to remaining federally-regulated all financial regulatory of federal for clear violation At least institutions were added to the list. doubt, law, I as was involved in this case. 1832(a) in 1973 from the enactment of § however, grant Congress intended that probability by implication in all before implied impose authority to date, the Bank Board financial federally-regulated all those that than practices offering remedies institutions were forbidden Obviously, gaining unsafe unsound. savings unless ex- are check access to market advantage in the competitive pressly exempted that section or its a unsafe, resulting ditions illegal, neither unsafe nor unsound for the finan- from an cial practice. future of Otero or the other unsound First National Bank of Department Treasury, and loans involved in this action. I there- Eden v. of the (8th 1978), upheld Comp- fore the Bank Board has no conclude F.2d 610 Cir. implied attempt expenditure to correct mar- troller’s limitation on a bank’s ketplace illegal imbalance an created for executive salaries and bonuses 1.5% practice, although the have average requirement Board would of its assets and the such authority vice-president to correct unsafe and president the bank illegal unsound repay conditions created earlier bonuses the Bank Board practice. thought were excessive. Groos National Comptroller Currency, Bank v. stated, agree For the I reasons (5th 1978), Comp- upheld F.2d 889 Cir. disposition court’s of this case. to a prohibition troller’s of bank loans con- trolling shareholder and those connected LOGAN, Judge, Circuit concurring nor with him. In neither Bank of Eden part, dissenting part. did the court limit the Bank Board’s Groos I fully parts majority concur in all insuring merely that the financial II, opinion except portion part sub- would be within institution’s future conduct section B holding that the Federal Home law, majori- the bounds of the limit the Loan prohibit Bank Board Otero ty indicates in the instant case. Check-In, from opening negotiable new or- order, At the time of the Bank Board’s withdrawal, der of or similar accounts for a 18, 1980, required December it could have period. 268-day statutory provision The close all new accounts had Otero to Otero and the upon majority cases which the re- rejected wrongfully gained. The Board this lies to strike down the my opinion, order in remedy days because a few later the instead, support lend to it. also the legal; accounts would become The issue here is the scope of the Bank delays Board was concerned with inherent authority Board’s remedial beyond cease- order, implementing an the inconven- and-desist orders. Under 12 U.S.C. innocently opened ience to those who had 1730(e)(1) the power Bank Board has “to Otero, danger to new accounts with and the take affirmative action to correct condi- that could re- safety Otero’s and soundness resulting tions from such violation or widespread sult withdrawals. practice.” sure, grant To be this is narrow- considering scope of its affirmative given er than that to the National Labor power, Board deter- remedial (NLRB) 10(c) Relations Board under section violated, 12 mined that the statute- Act, Otero National Labor Relations 1832(a), by Congress 160(c). designed was But I believe that under competitive inequality limit and that facts of this case “to the Bank Board’s power 31, the December 1980 effective date of the sufficiently support broad to im- posing a moratorium on amendments to the section was intended to new accounts. allow all ‘to reach the affected associations The legislative history of section 1730 starting gate’ at the same time.” does not address the permissible scope of affirmative S.Rep.No.1482, action. carried out See The Bank Board could have 89th Cong., 2d Sess., reprinted ^[1966] the conceived congressional purpose by re- Cong. U.S.Code & Ad.News 3532. The ma- quiring Otero to divest itself 31, 1980, jority upon Eighth relies gained prior Circuit case accounts to December apply despite and Fifth Circuit case that being their lawful after date. 1818(b)(1), of 12 U.S.C. which is But to innocent account the inconvenience identical in all respects possible jeopardy safety essential to the holders and to the wording 1730(e)(1). against of section Both cases and soundness of Otero counsel recognize the Bank Board’s to re- alternative. The moratorium order quire affirmative action to the con- to correct the unfair correct Bank Board devised advantage gained by illegal entry bearing

into the market for interest cheek- Roman BABULA, Drzymala, Zdislaw accounts was to exclude Otero from Abigniew Weszandize, Pilat, Josef Stan If period that market for a similar of time. Kowalczuk, Andrzej Lonc, islaw Peti ideally, should work Otero tioners, deprived would be of new equal v. effect, those wrongfully gained. likely IMMIGRATION AND NATURALIZA however, deprive will be to of fewer SERVICE, Respondent. TION new gained during accounts than it its ille- gal period “head start” since now No. 80-2596. prospects most will interested have estab- United Appeals, States Court of

lished such accounts at some financial insti- Third Circuit. tution. 18, Argued Sept. 1981. majority views the moratorium on punitive new accounts as rather than reme- Decided Nov. orders, dial. Reviewing analogous NLRB Rehearing Rehearing In Banc Supreme Court has them considered Denied Dec. punitive beyond agen- cy when the orders neither remove the con-

sequences of violation dissipate nor the ef- prohibited

fects of the action. Local

United Carpenters Brotherhood of NLRB,

Joiners of v. America (1961). L.Ed.2d

This applicable test seems to the Bank

Board, since it is authorized to take affirm-

ative action resulting to correct conditions unsafe, illegal, practices. or unsound puni-

Under this test the moratorium is not

tive because it will partially correct at least

the effect of the violations.

Under the circumstances of this case I give weight to the rule familiar cites,

majority agen that an administrative

cy’s knowledge, expertise, and choice of

remedy See, deserve g., deference. e. Co.,

NLRB v. Gissell Packing n.32, 1918, 1939 n.32, 89 S.Ct. 23 L.Ed.2d (1969); Indus., FTC, Moog Inc. v. 377, 379,

U.S. 2 L.Ed.2d (1958). attempting remedy While start, 268-day

Otero’s head the Board simul

taneously protect safety seeks to

and soundness and to shield the innocent

account remedy may holders. The Board’s fully correct advantage. Otero’s unfair

Nevertheless, I permits think the statute and the Bank Board did not

abuse its discretion in choosing it.

I would affirm the Bank Board’s order in respects.

all

Case Details

Case Name: Otero Savings and Loan Association, a Colorado Corporation v. Federal Home Loan Bank Board and Federal Savings and Loan Insurance Corporation

Court Name: Court of Appeals for the Tenth Circuit

Date Published: Nov 13, 1981

Citation: 665 F.2d 279

Docket Number: 80-2346

Court Abbreviation: 10th Cir.