An Act to strengthen the regulatory and supervisory authority of Federal agencies over insured banks and insured savings and loan associations, and for other purposes.
PL 89-695 (S.3158), enacted 10/16/1966

1028 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
and installations appropriate for the educational functions of 
such facilities; 
(5) include such other conditions as the Secretary, after consul-
tation with the National Advisory Committee on Education of 
the Deaf, deems necessary to carry out the purposes of this Act; 
and 
(6) provide that any laborer or mechanic employed by any con-
tractor or subcontractor in the performance of work on any con-
struction aided by Federal funds appropriated for the benefit of 
the model secondary school will be paid wages at rates not less 
than those prevailing on similar construction in the locality as 
determined by the Secretary of Labor in accordance with the 
78"*statr 23^?^' 
Davls-Bacon Act, as amended (40 U.S.C. 276a—276a-5); and the 
Secretary of Labor shall have, with respect to the labor standards 
specified in this paragraph, the authority and functions set forth 
in Keorganization Plan Numbered 14 of 1950 (15 F.R. 3176; 5 
64 Stat. 1267. 
U.S.C. 133z-15) aud section 2 of the Act of June 13, 1934, as 
amended (40 U.S.C. 276c). 
c<!^gres*s!° 
(c). Th® Secretary shall submit the annual report of the college 
(required by clause (3) of subsection (b)) to the Congress with such 
comments and recommendations as he may deem appropriate. 
Approved October 15, 1966. 
Public Law 89-695 
October 16, 1966 
A^N ACT 
[s. 3158] 
To Strengthen the regulatory and supervisory authority of Federal agencies 
• 
over insured banks and insured savings and loan associations, and for other 
purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
Financial insti- JJnited States of America in Congress assembled^ That this Act may 
v"is'or"^AcTor 
be cited as the "Financial Institutions Supervisory Act of 1966". 
1966. 
TITLE I—PROVISIONS RELATING TO THE 
FEDERAL 
HOME LOAN BANK BOARD AND T H E FEDERAL SAV-
INGS AND LOAN INSURANCE CORPORATION 
SEC. 101. (a) Subsection (d) of section 5 of the Home Owners' 
Loan Act of 1933 (12 U.S.C. 1464(d)) is hereby amended to read as 
follows: 
"(d) (1) The Board shall have power to enforce this section and 
rules and regulations made hereunder. 
In the enforcement of any. 
provision of this section or rules and regulations made hereunder, or 
any other law or regulation, or in any other action, suit, or proceeding 
to which it is a party or in which it is interested, and in the admin-
istration of conservatorships and receiverships, the Board is author-
68 Stat. 634. 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1029 
ized to act in its own name and through its own attorneys. 
Except 
as otherwise provided herein, the Board shall be subject to suit (other 
than suits on claims for money damages) by any Federal savings and 
loan association or director or officer thereof with respect to any 
matter under this section or any other applicable law, or rules or 
regulations thereunder, in the United States district court for the 
judicial district in which the home ojSice of the association is located, 
or in the United States District Court for the District of Columbia, 
and the Board may be served with process in the manner prescribed 
by the Federal Kules of Civil Procedure. 
28 use app. 
"(2) (A) If, in the opinion of the Board, an association is violating si^t^Jr^o^ceedl'^^' 
or has violated, or the Board has reasonable cause to believe that the ings. 
association is about to violate, a law, rule, regulation, or charter or 
other condition imposed in writing by the Board in connection with 
the granting of any application or other request by the association, or 
written agreement entered into with the Board, or is engaging or has 
engaged, or the Board has reasonable cause to believe that the associa-
tion is about to engage, in an unsafe or unsound practice, the Board 
may issue and serve upon the association a notice of charges in respect 
thereof. The notice shall contain a statement of the facts constituting 
the alleged violation or violations or the unsafe or unsound practice or 
practices, and shall fix a time and place at which a hearing will be held 
to determine whether an order to cease and desist therefrom should 
issue against the association. Such hearing shall be fixed for a date 
not earlier than thirty days nor later than sixty days after service of 
such notice unless an earlier or a later date is set by the Board at the 
request of the association. Unless the association shall appear at the 
hearing by a duly authorized representative, it shall be deemed to have 
consented to the issuance of the cease-and-desist order. In the event of 
such consent, or if upon the record made at any such hearing the Board 
shall find that any violation or unsafe or unsound practice specified 
in the notice of charges has been established, the Board may issue and 
serve upon the association an order to cease and desist from any such 
violation or practice. Such order may, by provisions which may be 
mandatory or otherwise, require the association and its directors, offi-
cers, employees, and agents to cease and desist from the same, and, fur-
ther, to take affirmative action to correct the conditions resulting from 
any such violation or practice, 
"(B) A cease-and-desist order shall become effective at the expira-
tion of thirty days after service of such order upon the association con-
cerned (except in the case of a cease-and-desist order issued upon con-
sent, which shall become effective at the time specified therein), and 
shall remain effective and enforceable, except to such extent as it is 
stayed, modified, terminated, or set aside by action of the Board or a 
reviewing court. 
1030 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
Temporary 
" (3) (A) Whenever the Board shall determine that the violation 
orde^sT""^"^^^'^' ^^ threatened violation or the unsafe or unsound practice or practices, 
specified in the notice of charges served upon tlie association pursuant 
to paragraph (2) (A) of this subsection, or the continuation thereof, 
is likely to cause insolvency (as defined in paragraph (6) (A) (i) of 
this subsection) or substantial dissipation of assets or earnings of the 
association, or is likely to otherwise seriously prejudice the interests of 
its savings account holders, the Board may issue a temporary order 
requiring the association to cease and desist from any such violation or 
practice. 
Such order shall become effective upon service upon the as-
sociation and, unless set aside, limited, or suspended by a court in pro-
ceedings authorized by subparagraph (B) of this paragraph, shall 
remain effective and enforceable pending the completion of the admin-
istrative proceedings pursuant to such notice and until such time as the 
Board shall dismiss the charges specified in such notice or, if a cease-
and-desist order is issued against the association, until the effective date 
of any such order. 
"(B) Within ten days after the association concerned has been 
served with a temporary cease-and-desist order, the association may 
apply to the United States district court for the judicial district in 
which the home office of the association is located, or the United States 
District Court for the District of Columbia, for an injunction setting 
aside, limiting, or suspending the enforcement, operation, or effective-
ness of such order pending the completion of the administrative pro-
ceedings pursuant to the notice of charges served upon the association 
under paragraph (2) (A) of this subsection, and such court shall have 
jurisdiction to issue such injunction. 
"(C) In the case of violation or threatened violation of, or failure 
to obey, a temporary cease-and-desist order, the Board may apply to 
the United States district court, or the United States court of any ter-
ritory, within the jurisdiction of which the home office of the associa-
tion is located, for an injunction to enforce such order, and, if the 
court shall determine that there has been such violation or threatened 
violation or failure to obey, it shall be the duty of the court to issue 
such injunction. 
di^cToT^r °^ 
"(4) (A) Whenever, in the opinion of the Board, any director or 
officer. 
officer of an association has committed any violation of law, rule, or 
regulation, or of a cease-and-desist order which has become final, or 
has engaged or participated in any unsafe or unsound practice in con-
nection with the association, or has committed or engaged in any act, 
omission, or practice which constitutes a breach of his fiduciary duty 
as such director or officer, and the Board determines that tlie associa-
tion has suffered or will probably suffer substantial financial loss or 
other damage or that the interests of its savings account holders could 
be seriously prejudiced by reason of such violation or practice or 
breach of fiduciary duty, and that such violation or practice or breacli 
of fiduciary duty is one involving personal dishonesty on the part of 
such director or officer, the Board may serve upon such director or offi-
cer a written notice of its intention to remove him from office. 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1031 
"(B) Whenever, in the opinion of the Board, any director or officer 
of an association, by conduct or practice with respect to another sav-
ings and loan association or other business institution which resulted 
in substantial financial loss or other damage, has evidenced his personal 
dishonesty and unfitness to continue as a director or officer, and, when-
ever, in the opinion of the Board, any other person participating in 
the conduct of the affairs of an association, Dy conduct or practice 
w^ith respect to such association or other savings and loan association 
or other Dusiness institution which resulted in substantial financial loss 
or other damage, has evidenced his personal dishonesty and unfitness 
to participate in the conduct of the affairs of such association, the 
Board may serve upon such director, officer, or other person a written 
notice of its intention to remove him from office and/or to prohibit his 
further participation in any manner in the conduct of the affairs of 
such association. 
"(C) In respect to any director or officer of an association or any 
other person referred to in subparagraph (A) or (B) of this para-
graph, the Board may, if it deems it necessary for the protection of 
the association or the interests of its savings account holders, by written 
notice to such effect served upon such director, officer, or other person, 
suspend him from office and/or prohibit him from further participa-
tion in any manner in the conduct of the affairs of the association. 
Such suspension and/or prohibition shall become effective upon service 
of such notice and, unless stayed by a, court in proceedings authorized 
by subparagraph (E) of this paragraph, shall remain in effect pending 
the completion of the administrative proceedings pursuant to the 
notice served under subparagraph (A) or (B) of this paragraph and 
until such time as the Board shall dismiss the charges specified in such 
notice, or, if an order of removal and/or prohibition is issued against 
the director or officer or other person, until the effective date of any 
such order. 
Copies of any such notice shall also be served upon the 
association of which he is a director or officer or in the conduct of w^hose 
affairs he has participated. 
"(D) A notice of intention to remove a director, officer, or other 
person from office and/or to prohibit his participation in the conduct 
of the affairs of an association, shall contain a statement of the facts 
constituting grounds therefor, and shall fix a time and place at which 
a hearing will be held thereon. 
Such hearing shall be fixed for a 
date not earlier than thirty days nor later than sixty days after the 
date of service of such notice, unless an earlier or a later date is set 
by the Board at the request of (i) such director, officer, or other 
person, and for good cause shown, or (ii) the Attorney General of 
the United States. 
Unless such director, officer, or other person shall 
appear at the hearing in person or by a duly authorized representa-
tive, he shall be deemed to have consented to the issuance of an order 
of such removal and/or prohibition. 
In the event of such consent, or 
if upon the record made at any such hearing the Board shall find that 
any of the grounds specified m such notice has been established, the 
Board may issue such orders of suspension or removal from office, 
and/or prohibition from participation in the conduct of the affairs 
of the association, as it may deem appropriate. 
Any such order shall 
become effective at the expiration of thirty days after service upon 
such association and the director, officer, or other person concerned 
(except in the case of an order issued upon consent, which shall be-
come effective at the time specified therein). 
Such order shall remain 
effective and enforceable except to such extent as it is stayed, modi-
fied, terminated, or set aside by action of the Board or a reviewing 
court. 
1032 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
"(E) Within ten days after any director, officer, or other person 
has been suspended from office and/or prohibited from participation 
in the conduct of the affairs of an association under subparagraph (C) 
of this paragraph, such director, officer, or other person may apply to 
the United States district court for the judicial district in which the 
home office of the association is located, or the United States District 
Court for the District of Columbia, for a stay of such suspension and/or 
prohibition pending the completion of the administrative proceedings 
pursuant to the notice served upon such director, officer, or other per-
son under subparagraph (A) or (B) of this paragraph, and such court 
shall have jurisdiction to stay such suspension and/or prohibition. 
Felony con- 
"(5) (A) Whenever any director or officer of an association, or 
f^rre°movaiT^ 
other pcrsou participating in the conduct of the affairs of such asso-
ciation, is charged in any information, indictment, or complaint au-
thorized by a United States Attorney, with the commission of or par-
ticipation in a felony involving dishonesty or breach of trust, the 
Board may, by written notice served upon such director, officer, or 
other person, suspend him from office and/or prohibit him from fur-
ther participation in any manner in the conduct of the affairs of the 
association. A copy of such notice shall also be served upon the asso-
ciation. 
Such suspension and/or prohibition shall remain in effect 
until such information, indictment, or complaint is finally disposed of 
or until terminated by the Board. In the event that a judgment of 
conviction with respect to such offense is entered against such director, 
officer, or other person, and at such time as such judgment is not sub-
ject to further appellate review, the Board may issue and serve upon 
such director, officer, or other person an order removing him from 
office and/or prohibiting him from further participation in any man-
ner in the conduct of the affairs of the association except with the 
consent of the Board. 
A copy of such order shall be served upon such 
association, whereupon such director or officer shall cease to be a 
director or officer of such association. 
A finding of not guiltv or 
other disposition of the charge shall not preclude the Board from 
thereafter instituting proceedings to remove such director, officer, or 
other person from office and/or to prohibit further participation in 
association affairs, pursuant to subparagraph (A) or (B) of para-
graph (4) of this subsection. 
"(B) if at any time, because of the suspension of one or more 
directors pursuant to this subsection (d), there shall be on the board 
of directors of an association less than a quorum of directors not so 
suspended, all powers and functions vested in or exercisable by such 
board shall vest in and be exercisable by the director or directors on 
the board and not so suspended, until such time as there shall be a 
quorum of the board of directors. In the event all of the directors of 
an association are suspended pursuant to this subsection (d), tlie 
Board shall appoint persons to serve temporarily as directors in their 
place and stead pending the termination of such suspensions, or un-
til such time as those who have been suspended cease to be directors 
of the association and their respective successors take office. 
conservator^or °^ 
"(^) (^) ^^^ grouuds for the appoiutmeut of a conservator or re-
receiver. 
celver for an association shall be one or more of the following: (i) 
insolvency in that the assets of the association are less than its obliga-
tions to its creditors and others, including its members; (ii) substantial 
dissipation of assets or earnings due to any violation or violations of 
law, rules, or regulations, or to any unsafe or unsound practice or 
practices; (iii) an unsafe or unsound condition to transact business; 
(iv) willful violation of a cease-and-desist order which has become 
final; (v) concealment of books, papers, records, or assets of the asso-
ciation or refusal to submit books, papers, records, or affairs of the 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1033 
association for inspection to any examiner or to any lawful agent of 
the Board. 
The Board shall have exclusive power and jurisdiction 
to appoint a conservator or receiver. If, in the opinion of the Board, 
a ground for the appointment of a conservator or receiver as herein 
provided exists, the Board is authorized to appoint ex parte and with-
out notice a conservator or receiver for the association. In the event 
of such- appointment, the association may, within thirty days there-
after, bring an action in the United States district court for the judi-
cial district in which the home office of such association is located, or 
in the United States District Court for the District of Columbia, for 
an order requiring the Board to remove such conservator or receiver, 
and the court shall upon the merits dismiss such action or direct the 
Board to remove such conservator or receiver. Such proceedings shall 
be given precedence over other cases pending in such courts, and shall 
be in every way expedited. Upon the commencement of such an action, 
the court having jurisdiction of any other action or proceeding author-
ized under this subsection to which the association is a party shall stay 
such action or proceeding during the pendency of the action for re-
moval of the conservator or receiver. 
"(B) In addition to the foregoing provisions, the Board may, with-
out any requirement of notice, hearing, or other action, appoint a 
conservator or receiver for an association in the event that (i) the 
association, by resolution of its board of directors or of its members, 
consents to such appointment, or (ii) the association is removed from 
membership in any Federal home loan bank, or its status as an institu-
tion the accounts of which are insured by the Federal Savings and 
Loan Insurance Corporation is terminated. 
"(C) Except as otherwise provided in this subsection, no court may 
take any action for or toward the removal of any conservator or 
receiver, or, except at the instance of the Board, restrain or affect the 
exercise of powers or functions of a conservator or receiver. 
"(D) A conservator shall have all the powers of the members, the 
directors, and the officers of the association and shall be authorized 
to operate the association in its own name or to conserve its assets in 
the manner and to the extent autliorized by the Board. 
The Board 
shall appoint only the Federal Savings and Loan Insurance Corpora-
tion as receiver for an association, and said Corporation shall have 
power to buy at its own sale as receiver, subject to approval by the 
Board. 
The Board may, without any requirement of notice, hearing, 
or other action, replace a conservator with another conservator or with 
a receiver, but any such replacement shall not affect any right which 
the association may have to obtain judicial review of the original 
appointment, except that any removal under this paragraph (6) shall 
be removal of the conservator or receiver in office at the time of such 
removal. 
"(7) (A) Any hearing provided for in this subsection (d) shall . Hearings and 
be held in the Federal judicial district or in the territory in which the ^" ^''^^ 
home office of the association is located unless the party afforded the 
hearing consents to another place, and shall be conducted in accordance 
with the provisions of chapter 5 of title 5 of the United States Code. 
^"'^' ?• ^8°-
Such hearing shall be private, unless the Board, in its discretion, after 
fully considering the views of the party afforded the hearing, deter-
mines that a public hearing is necessary to protect the public interest. 
After such hearing, and within ninety days after the Board has no-
tified the parties that the case has been submitted to it for final deci-
sion, the Board shall render its decision (which shall include findings 
of fact upon which its decision is predicated) and shall issue and cause 
to be served upon each party to the proceeding an order or orders con-
sistent with the provisions of this subsection. 
Judicial review of any 
1034 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
such order shall be exclusively as provided in this paragraph (7). Un-
less a petition for review is timely filed in a court of appeals of the 
United States, as hereinafter provided in subparagraph (B) of this 
paragraph, and thereafter until the record in the proceeding has been 
filed as so provided, the Board may at any time, upon such notice and 
in such manner as it shall deem proper, modify, terminate, or set aside 
any such order. 
Upon such filing of the record, the Board may 
modify, terminate, or set aside any such order with permission of 
the court. 
"(B) Any party to the proceeding, or any person required by an 
order issued under this subsection to cease and desist from any of the 
violations or practices stated therein, may obtain a review of any 
order served pursuant to subparagraph (A) of this paragraph (other 
than an order issued with the consent of the association or the director 
or officer or other person concerned, or an order issued under para-
graph (5) (A) of this subsection), by filing in the court of appeals 
of the United States for the circuit in which the home office of the as-
sociation is located, or in the United States Court of Appeals for the 
District of Columbia Circuit, within thirty days after the date of 
service of such order, a written petition praying that the order of the 
Board be modified, terminated, or set aside. A copy of such petition 
shall be forthwith transmitted by the clerk of the court to the Board, 
and thereupon the Board shall file in the court the record in the pro-
ceeding, as provided in section 2112 of title 28 of the United States 
72 Stat. 941. 
Code. Upou the filing of such petition, such court shall have jurisdic-
tion, which upon the filing of the record shall except as provided in the 
last sentence of said subparagraph (A) be exclusive, to affirm, modify, 
terminate, or set aside, in whole or in part, the order of the Board. 
Review of such proceedings shall be had as provided in chapter 7 of 
Ante, p. 392, 
^j^jg 5 ^-f ^j^g United States Code. The judgment and decree of the 
court shall be final, except that the same shall be subject to review by 
the Supreme Court upon certiorari as provided in section 1254 of title 
62 Stat. 928. 
28 of the United States Code. 
"(C) The commencement of proceedings for judicial review under 
subparagraph (B) of this paragraph shall not, unless specifically 
ordered by the court, operate as a stay of any order issued by the 
Board. 
orde'/sT""^"' °' 
."(?) The Board may in its discretion apply to the United States 
district court, or the United States court oi any territory, within the 
jurisdiction of which the home office of the association is located, for 
the enforcement of any effective and outstanding notice or order issued 
by the Board under this subsection (d), and such courts shall have 
jurisdiction and power to order and require compliance therewith; 
but except as otherwise provided in this subsection no court shall 
have jurisdiction to affect by injunction or otherwise the issuance or 
enforcement of any notice or order under this subsection, or to review, 
modify, suspend, terminate, or set aside any such notice or order. 
Any court having jurisdiction of any proceeding instituted under 
this subsection by an association or a director or officer thereof, may 
allow to any such party such reasonable expenses and attorneys' fees 
as it deems just and proper; and such expenses and fees shall be paid 
by the association or from its assets. 
subpena power, 
u^g^ j ^ ^^iQ course of or iu connection with any proceeding under 
this subsection, the Board or vmy member thereof or a designated rep-
resentative of the Board, including any person designated to conduct 
any hearing under this subsection, shall have power to administer 
oaths and affirmations, to take or cause to be taken depositions, and to 
issue, revoke, quash, or modify subpenas and subpenas duces tecum; 
and the Board is empowered to make rules and regulations with respect 
e t c 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1035 
to any such proceedings. The attendance of witnesses and the produc-
tion of documents provided for in this paragraph may be required 
from any place in any State or in any territory at any designated place 
where such proceeding is being conducted. 
Any party to proceedings 
under this subsection may apply to the United States District Court 
for the District of Columbia, or the United States district court for 
the judicial district or the United States court in any territory in 
which such proceeding is being conducted or where the witness resides 
or carries on business, for enforcement of any subpena or subpena duces 
tecum issued pursuant to this paragraph, and such courts shall have 
jurisdiction and power to order and require compliance therewith. 
Witnesses subpenaed under this paragraph shall be paid the same fees 
and mileage that are paid witnesses in the district courts of the LTnited 
States. All expenses of the Board or of the Federal Savings and Loan 
Insurance Corporation in connection with this subsection shall be con-
sidered as nonadministrative expenses. 
"(10) Any service required or authorized to be made by the Board 
Notice o
f 
under this subsection may be made by registered mail, or in such other ^^'•''"'^• 
manner reasonably calculated to give actual notice as the Board may 
by regulation or otherwise provide. 
" (11) The Board shall have power to make rules and regulations for aufho^r'it^*"'^^ 
the reorganization, consolidation, liquidation, and dissolution of as-
sociations, for the merger of associations with other institutions the 
accounts of which are insured by the Federal Savings and Loan In-
surance Corporation, for associations in conservatorship and receiver-
ship, and for the conduct of conservatorships and receiverships; and 
the Board may, by regulation or otherwise, provide for the exercise 
of functions by members, directors, or officers of an association during 
conservatorship and receivership. 
" (12) (A) Any director or officer, or former director or officer, of an 
Penalties. 
association, or any other person, against whom there is outstanding 
and effective any notice or order (which is an order which has be-
come final) served upon such director, officer, or other person under 
paragraph (4)(C), (4)(D), or (5) (A) of this subsection, and who 
(i) participates in any manner in the conduct of the affairs of such 
association, or directly or indirectly solicits or procures, or transfers 
or attempts to transfer, or votes or attempts to vote any proxies, con-
sents, or authorizations in respect of any voting rights in such asso-
ciation, or (ii) without the prior written approval of the Board, votes 
for a director or serves or acts as a director, officer, or employee of any 
institution the accounts of which are insured by the Federal Savings 
and Loan Insurance Corporation, shall upon conviction be fined not 
more than $5,000 or imprisoned for not more than one year, or both. 
"(B) Except with the prior written consent of the Board, no person 
shall serve as a director, officer, or employee of an association w'ho has 
been convicted, or who is hereafter convicted, of a criminal offense in-
volving dishonesty or a breach of trust. 
For each willful violation of 
this prohibition, the association involved shall be subject to a penalty 
of not more than $100 for each day this prohibition is violated, which 
the Board may recover by suit or otherwise for its own use. 
"(C) Whenever a conservator or receiver appointed by the Board 
demands possession of the property, business, and assets of any asso-
ciation, or of any part thereof, the refusal by any director, officer, em-
ployee, or agent of such association to comply with the demand shall 
be punishable by a fine of not more than $5,000 or imprisonment for 
not more than one year, or both. 
"(IS) (A) As used in this subsection— 
Definitions. 
"(1) The terms 'cease-and-desist order which has become final' and 
'order which has become final' mean a cease-and-desist order, or an 
1701 
1036 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
order, issued by the Board with the consent of the association or the 
director or officer or other person concerned, or with respect to which 
no petition for review of the action of the Board has been filed and per-
fected in a court of appeals as specified in paragraph (7) (B) of this 
subsection, or with respect to which the action of the court in which 
said petition is so filed is not subject to further review by the Supreme 
Court of the United States in proceedings provided for in said para-
graph, or an order issued under paragrapli (5) (A) of this subsection. 
"(2) The term 'State' includes the CommonweaUh of Puerto Rico. 
"(3) The term 'territory' includes any possession of the United 
States and any place subject to the jurisdiction of the United States. 
" (4) The terms 'district', 'district court', 'district court of the United 
States', and 'judicial district' shall have the meanings defined in section 
62 Stat. 907. 
45^ ^f ^-^j^ gg ^f ^^^ United States Code. 
"(B) As used in paragraph (4) of this subsection, the term 'viola-
tion' includes without limitation any action (alone or with another or 
others) for or toward causing, bringing about, participating in, coun-
seling, or aiding or abetting a violation. 
" (14) As used in this subsection, the terms 'Federal savings and loan 
association' and 'association' shall include any institution with respec!: 
to which the Federal Home Loan Bank Board now or hereafter has 
any statutory power of examination or supervision under any Act or 
joint resolution of Congress other than this Act, the Federal Home 
48*statr\*246^.' 
Loau Bank Act, and the National Housing Act. 
For the purposes of 
u use 1421. 
this paragraph (14), references in this subsection to directors, officers, 
employees, and agents, or to former directors or officers, of associations 
shall be deemed to be references respectively to directors, officers, em-
ployees, and agents, or to former directors or officers, of such institu-
tions, references therein to savings account holders and to members of 
associations shall be deemed to be references to holders of withdraw-
able accounts in such institutions, and references therein to boards of 
directors of associations shall be deemed to be references to boards of 
directors or other governing boards of such institutions. 
Said Board 
shall have power by regulation to define, for the purposes of this para-
graph (14), terms used or referred to in the sentence next preceding 
and other terms used in this subsection." 
(b) The amendment made by subsection (a) of this section shall be 
effective only with respect to proceedings commenced on or after the 
date of enactment of this Act. 
Section 5(d) of the Home Owners' 
Loan Act of 1933 as in effect immediately prior to the date of enact-
ment of this Act shall continue in effect with respect to any proceed-
ings commenced prior to such date. 
SEC. 102. (a) Section 407 of the National Housing Act (12 U.S.C. 
68^stat^*63^3^^' 
1730) is hereby amended to read as follows: 
"SEC. 407. TERMINATION or INSURANCE AND ENFORCEMENT PROVI-
SIONS.— 
"(a) VOLUNTARY TERMINATION or INSURANCE.—Any insured insti-
tution other than a Federal savings and loan association may termi-
nate its status as an insured institution by written notice to the Cor-
poration specifying a date for such termination. 
"(b) 
INVOLUNTARY TERMINATION OF INSURANCE; NOTICE AND HEAR-
ING.— (1) Whenever, in the opinion of the Corporation, any insured 
institution has violated its duty as such or is engaging or has engaged 
in an unsafe or unsound practice in conducting the business of such 
institution, or is in an unsafe or unsound condition to continue opera-
tions as an insured institution, or is violating or has violated an ap-
plicable law, rule, regulation, or order, or any condition imposed in 
writing by the Corporation in connection with the granting of any 
application or other request by the institution, or any written agree-
ment entered into with the Corporation, including any agreement en-
Effective date. 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1037 
tered into under section 403 of this title, the Corporation shall serve 
upon the institution a statement with respect to such violations or 
practices or conditions for the purpose of securing the correction 
thereof, and shall send a copy of such statement to the appropriate 
State supervisory authority. 
"(2) Unless such correction shall be made within one hundred and 
twenty days after service of such statement, or such shorter period of 
not less than twenty days after such service as (A) the Corporation 
shall require in any case where the Corporation determines that its 
insurance risk with respect to such institution could be unduly jeop-
ardized by further delay in the correction of such violations or prac-
tices or conditions, or (B) the appropriate State supervisory authority 
shall require, or unless within such time the Corporation shall have 
received acceptable assurances that such correction will be made with-
in a time and in a manner satisfactory to the Corporation, or in the 
event such assurances are submitted to and accepted by the Corpora-
tion but are not carried out in accordance with their terms, the Cor-
poration may, if it shall determine to proceed further, issue and serve 
upon the institution written notice of intention to terminate the status 
of the institution as an insured institution. 
"(3) Such notice shall contain a statement of the facts constituting 
the alleged violation or violations or the unsafe or unsound practice 
or practices or condition, and shall fix a time and place for a hearing 
thereon. Such hearing shall be fixed for a date not earlier than thirty 
days after service of such notice. Unless the institution shall appear 
at the hearing by a duly authorized representative, it shall be deemed 
to have consented to the termination of its status as an insured institu-
tion. 
In the event of such consent, or if upon the record made at any 
such hearing the Corporation shall find that any violation or unsafe 
or unsound practice or condition specified in such notice has been 
established and has not been corrected within the time above prescribed 
in which to make correction, the Corporation may issue and serve 
upon the institution an order terminating the status of the institution 
as an insured institution; but any such order shall not become effec-
tive until it is an order which has become final (except in the case of 
an order of termination issued upon consent, which shall become effec-
tive at the time specified therein). 
"(c) DATE OF TERMINATION or INSURED STATUS.—The effective date 
of the termination of an institution's status as an insured institution 
under the foregoing provisions of this section shall be the date specified 
for such termination in the notice by the institution to the Corpora-
tion as provided in subsection (a) of this section, or the date upon 
which an order of termination issued under subsection (b) (3) of this 
section becomes effective. 
The Corporation may from time to time 
postpone the effective date of the termination of an institution's status 
as an insured institution at any time before such termination has be-
come effective, but in the case of termination by notice given by the 
institution such effective date shall be postponed only with the written 
consent of the institution. 
"(d) 
CONTINUATION OF INSURANCE; EXAMINATION; NOTICE TO MEM-
BERS ; A
N
D PAYMENT O
F PREMIUMS.—In the eveut of the termination of 
an institution's status as an insured institution, insurance of its 
accounts to the extent that they were insured on the effective date of 
such termination as hereinabove provided in subsection (c), less any 
amounts thereafter withdrawn, repurchased, or redeemed, shall con-
tinue for a period of two years, but no investments or deposits made 
after such date shall be insured. The Corporation shall have the right 
to examine such institution from time to time durins: the two-year 
period aforesaid. 
Such insured institution shall be obligated to pay, 
within thirty days after the effective date of such termination, as a final 
65-300 0-67—68 
48 Stat. 1257. 
12 u s e 1726. 
48 Stat. 1257. 
12 u s e 1726. 
1038 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
insurance premium, a sum equivalent to twice the last annual insurance 
premium payable by it. In the event of the termination of insurance 
of accounts as herein provided the institution which was the insured 
institution shall give prompt and reasonable notice to all of its insured 
members that it has ceased to be an insured institution and it may 
include in such notice the fact that insured accounts, to the extent not 
withdrawn, repurchased, or redeemed, remain insured for two years 
from the date of such termination, but it shall not further represent 
itself in any manner as an insured institution. In the event of failure 
to give the notice to insured members as herein provided the Corpora-
tion is authorized to give reasonable notice. 
"(e) 
CEASE-AND-DESIST PROCEEDINGS.—(1) 
If, 
in the opinion 
of 
the Corporation, any insured institution or any institution any of the 
accounts of which are insured is engaging or has engaged, or the 
Corporation has reasonable cause to believe that the institution is about 
to engage, in an unsafe or unsound practice in conducting the business 
of such institution, or is violating or has violated, or the Corporation 
has reasonable cause to believe that the institution is about to violate, 
a law, rule, or regulation, or any condition imposed in writing by the 
Corporation in connection w^ith the granting of any application or 
other request by the institution, or written agreement entered into with 
the Corporation, including any agreement entered into under section 
403 of this title, the Corporation may issue and serve upon the institu-
tion a notice of charges in respect thereof. 
The notice shall contain a 
statement of the facts constituting the alleged violation or violations 
or the unsafe or unsound practice or practices, and shall fix a time 
and place at which a hearing will be held to determine whether an order 
to cease and desist therefrom should issue against the institution. Such 
hearing shall be fixed for a date not earlier than thirty days nor later 
than sixty days after service of such notice unless an earlier or a 
later date is set by the Corporation at the request of the institution. 
Unless the institution shall appear at the hearing by a duly authorized 
representative, it shall be deemed to have consented to the issuance 
of the cease-and-desist order. 
In the event of such consent, or if 
upon the record made at any such hearing the Corporation shall find 
that any violation or unsafe or unsound practice specified in the notice 
of charges has been established, the Corporation may issue and serve 
upon the institution an order to cease and desist from any such viola-
tion or practice. Such order may, by provisions which may be manda-
tory or otherwise, require the institution and its directors, officers, 
employees, and agents to cease and desist from the same, and, further 
to take affirmative action to correct the conditions resulting from any 
such violation or practice. 
" (2) A cease-and-desist order shall become effective at the expiration 
of thirty days after service of such order upon the institution con-
cerned (except in the case of a cease-and-desist order issued upon 
consent, which shall become effective at the time specified therein), and 
shall remain effective and enforceable except to such extent as it is 
stayed, modified, terminated, or set aside by action of the Corporation 
or a reviewing court. 
"(f) TEMPORARY CEASE-AND-DESIST ORDERS.— (1)Whenever the Cor-
poration shall determine that the violation or threatened violation or 
the unsafe or unsound practice or practices, specified in the notice 
of charges served upon the institution pursuant to subsection (e) (1) of 
this section, or the continuation thereof, is likely to cause insolvency or 
substantial dissipation of assets or earnings of the institution, or is 
likely to otherwise seriously prejudice the interest of its insured mem-
bers or of the Corporation, the Corporation may issue a temporary 
order requiring the institution to cease and desist from any such viola-
tion or practice. Such order shall become effective upon service upon 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1039 
the institution and, unless set aside, limited, or suspended by a court in 
proceedings authorized by paragraph (2) of this subsection, shall 
remain effective and enforceable pending the completion of the admin-
istrative proceedings pursuant to such notice and until such time as 
the Corporation shall dismiss the charges specified in such notice or. 
if a cease-and-desist order is issued against the institution, until the 
effective date of any such order. 
"(2) Within ten days after the institution concerned has been 
served with a temporary cease-and-desist order, the institution may 
apply to the United States district court for the judicial district in 
v/hich the principal office of the institution is located, or the United 
States District Court for the District of Columbia, for an injunction 
setting aside, limiting, or suspending the enforcement, operation, 
or effectiveness of such order pending the completion of the adminis-
trative proceedings pursuant to the notice of charges served upon the 
institution under subsection (e)(1) of this section, and such court 
shall have jurisdiction to issue such injunction. 
"(3) In the case of violation or threatened violation of, or failure 
to obey, a temporary cease-and-desist order, the Corporation may 
apply to the United States district court, or the United States court 
of any territory, within the jurisdiction of which the principal office 
of the institution is located, for an injunction to enforce such order, 
and, if the court shall determine that there has been such violation or 
threatened violation or failure to obey, it shall be the duty of the court 
to issue such injunction. 
"(g) SUSPENSION OR REMOVAL OF DIRECTOR OR OFFICER.— (1) When-
ever, in the opinion of the Corporation, any director or officer of an 
insured institution has committed any violation of law, rule, or regu-
lation, or of a cease-and-desist order which has become final, or has 
engaged or participated in any unsafe or unsound practice in connec-
tion with the institution, or has committed or engaged in any act, 
omission, or practice which constitutes a breach of his fiduciary duty 
as such director or officer, and the Corporation determines that the 
institution has suffered or will probably suffer substantial financial 
loss or other damage or that the interests of its insured members could 
be seriously prejudiced by reason of such violation or practice or 
breach of fiduciary duty, and that such violation or practice or breach 
of fiduciary duty is one involving personal dishonesty on the part of 
such director or officer, the Corporation may serve upon such direc-
tor or officer a written notice of its intention to remove him from 
office. 
"(2) Whenever, in the opinion of the Corporation, any director or 
officer of an insured institution, by conduct or practice with respect to 
another insured institution or other business institution which re-
sulted in substantial financial loss or other damage, has evidenced his 
personal dishonesty and unfitness to continue as a director or officer, 
and, whenever, in the opinion of the Corporation, any other person par-
ticipating in the conduct of the aff'airs of an insured institution, by 
conduct or practice with respect to such institution or other insured in-
stitution or other business institution which resulted in substantial 
financial loss or other damage, has evidenced his personal dishonesty 
and unfitness to participate in the conduct of the affairs of such 
insured institution, the Corporation may serve upon such director, 
officer, or other person a written notice of its intention to remove him 
from office and/or to prohibit his further participation in any manner 
in the conduct of the affairs of such institution. 
"(3) In respect to any director or officer of an insured institution 
or any other person referred to in paragraph (1) or (2) of this sub-
section, the Corporation may, if it deems it necessary for the protection 
1040 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
of the institution or the interests of its insured members or of the 
Corporation, by written notice to such effect served upon such director, 
officer, or other person, suspend him from office and/or prohibit him 
from further participation in any manner in the conduct of the affairs 
of the institution. Such suspension and/or prohibition shall becorne 
effective upon service of such notice and, unless stayed by a court in 
proceedings authorized by paragraph (5) of this subsection, shall re-
main in effect pending the completion of the administrative proceed-
ings pursuant to the notice served under paragraph (1) or (2) of this 
subsection and until such time as the Corporation shall dismiss the 
charges specified in such notice, or, if an order of removal and/or pro-
hibition is issued against the director or officer or other person, until 
the effective date of any such order. Copies of any such notice shall 
also be served upon the institution of which he is a director or officer 
or in the conduct of whose affairs he has participated. 
"(4) A notice of intention to remove a director, officer, or other 
person from office and/or to prohibit his participation in the conduct 
of the affairs of an insured institution, shall contain a statement of 
the facts constituting grounds therefor, and shall fix a time and place 
at which a hearing will be held thereon. 
Such hearing shall be fixed 
for a date not earlier than thirty days nor later than sixty days after 
the date of service of such notice, unless an earlier or a later date is 
set by the Corporation at the request of (A) such director, officer, or 
other person and for good cause shown, or (B) the Attorney General 
of the United States. Unless such director, officer, or other person 
shall appear at the hearing in person or by a duly authorized rep-
resentative, he shall be deemed to have consented to the issuance of 
an order of such removal and/or prohibition. 
In the event of such 
consent, or if upon the record made at any such hearing the Corpora-
tion shall find that any of the grounds specified in such notice has been 
established, the Corporation may issue such orders of suspension or 
removal from office, and/or prohibition from participation in the con-
duct of the affairs of the institution, as it may deem appropriate. 
Any 
such order shall become effective at the expiration of thirty days after 
service upon such institution and the director, officer, or other person 
concerned (except in the case of an order issued upon consent, which 
shall become effective at the time specified therein). 
Such order shall 
remain effective and enforceable except to such extent as it is stayed, 
modified, terminated, or set aside by action of the Corporation or a 
reviewing court. 
"(5) Within ten days after any director, officer, or other person has 
been suspended from office and/or prohibited from participation in the 
conduct of the affairs of an insured institution under paragraph (3) 
of this subsection, such director, officer, or other person may apply to 
the United States district court for the judicial district in which the 
principal office of the institution is located, or the United States Dis-
trict Court for the District of Columbia, for a stay of such suspension 
and/or prohibition pending the completion of the administrative pro-
ceedings pursuant to the notice served upon such director, officer, or 
other person under paragraph (1) or (2) of this subsection, and such 
court shall have jurisdiction to stay such suspension 
and/or 
prohibition. 
"(h) 
SUSPENSION OF DIRECTOR OR OFFICER CHARGED WITH FELONY.— 
Whenever any director or officer of an insured institution, or other 
person participating in the conduct of the affairs of such institution, 
is charged in any information, indictment, or complaint authorized by 
a United States Attorney, with the commission of or participation in 
a felony involving dishonesty or breach of trust, the Corporation may, 
by written notice served upon such director, officer, or other person. 
47 Stat, 729; 
69 Stat. 640. 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1041 
suspend him from office and/or prohibit him from further participa-
tion in any manner in the conduct of the affairs of the institution. 
A copy of such notice shall also be served uj)on the institution. Such 
suspension and/or prohibition shall remain in effect until such infor-
mation, indictment, or complaint is finally disposed of or until termi-
nated by the Corporation. In the event that a judgment of conviction 
with respect to such offense is entered against such director, officer, or 
other person, and at such time as such judgment is not subject to 
further appellate review, the Corporation may issue and serve upon 
such director, officer, or other person an order removing him from 
office and/or prohibiting him from further participation in any man-
ner in the conduct of the affairs of the institution except with the con-
sent of the Corporation. 
A copy of such order shall also be served 
upon such institution, whereupon such director or officer shall cease to 
be a director or officer of such institution. 
A finding of not guilty or 
other disposition of the charge shall not preclude the Corporation 
from thereafter instituting proceedings to remove such director, officer, 
or other person from office and/or to prohibit further participation in 
institution affairs, pursuant to paragraph (1) or (2) of subsection (g) 
of this section. 
"(i) TERMINATION or 
FEDERAL HOME LOAN BANK MEMBERSHIP.— 
Termination under this section or otherwise of the status of an institu-
tion as an insured institution shall automatically constitute a removal 
under subsection (i) of section 6 of the Federal Home Loan Bank Act _ ^ 
^
^ 
of the institution from Federal home loan bank membership, if at the 
1
2 use 14*26. 
time of such termination such institution is a member of a Federal home 
loan bank; and removal of an institution from Federal home loan bank 
membership under subsection (i) of section 6 of the Federal Home 
Loan Bank Act or otherwise shall automatically constitute an order 
of termination under this section of the status of such institution as 
an insured institution, if such institution is at the time of such removal 
an insured institution. 
"(j) HEARINGS AND JUDICIAL REVIEW.—(1) Any hearing provided 
for in this section shall be held in the Federal judicial district or in the 
territory in which the principal office of the institution is located unless 
the party afforded the hearing consents to another place, and shall be 
conducted in accordance with the provisions of chapter 5 of title 5 of 
the United States Code. 
Such hearing shall be private, unless the Cor- 
^"^^' P- -'SO. 
poration, in its discretion, after fully considering the view^s of the party 
afforded the hearing, determines that a public hearing is necessary to 
protect the public interest. 
After such hearing, and within ninety days 
after the Corporation has notified the parties that the case has been sub-
mitted to it for final decision, the Corporation shall render its decision 
(which shall include findings of fact upon which its decision is predi-
cated) and shall issue and cause to be served upon each party to the 
proceeding an order or orders consistent with the provisions of this sec-
tion. 
Judicial review of any such order shall be exclusively as pro-
vided in this subsection. 
Unless a petition for review is timely filed in 
a court of appeals of the United States, as hereinafter provided in 
paragraph (2) of this subsection, and thereafter until the record in the 
proceeding has been filed as so provided, the Corporation may at any 
time, upon such notice and in such manner as it shall deem proper, 
modify, terminate, or set aside any such order. 
Upon such filing of 
the record, the Corporation may modify, terminate, or set aside any 
such order with permission of the court. 
"(2) Any party to the proceeding, or any person required by an 
order issued under this section to cease and desist from any of the 
violations or practices stated therein, may obtain a review of any 
order served pursuant to paragraph (1) of this subsection (other 
72 Stat. 941. 
1042 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
than an order issued with the consent of the institution or the di-
rector or officer or other person concerned, or an order issued un-
der subsection (h) of this section), by filing in the court of ap-
peals of the United States for the circuit in which the principal office 
of the institution is located, or in the United States Court of Ap-
peals for the District of Columbia Circuit, within thirty days after 
the date of service of such order, a written petition praying that 
the order of the Corporation be modified, terminated, or set aside. 
A copy of such petition shall be forthwith transmitted by the clerk 
of the court to the Corporation, and thereupon the Corporation shall 
file in the court the record in the proceeding, as provided in section 
2112 of title 28 of the United States Code. Upon the filing of such 
petition, such court shall have jurisdiction, which upon the filing of 
the record shall, except as provided in the last sentence of said para-
graph (1), be exclusive, to affirm, modify, terminate, or set aside, in 
whole or in part, the order of the Corporation. 
Review of such 
proceedings shall be had as provided in chapter 7 of title 5 of the 
Ante, p. 392. 
XJuited States Code. The judgment and decree of the court shall be 
final, except that the same shall be subject to review by the Supreme 
Court upon certiorari as provided in section 1254 of title 28 of the 
62 Stat. 928. 
United States Code. 
"(3) The commencement of proceedings for judicial review under 
paragraph (2) of this subsection shall not, unless specifically or-
dered by the court, operate as a stay of any order issued by the 
Corporation. 
"(k) JURISDICTION AND ENFORCEMENT.—(1) Notwithstanding any 
other provision of law, (A) the Corporation shall be deemed to be an 
agency of the LTnited States within the meaning of section 451 of title 
28 of the United States Code; (B) any civil action, suit, or proceeding 
to which the Corporation shall be a party shall be deemed to arise 
under the laws of the United States, and the United States district 
courts shall have original jurisdiction therof, without regard to the 
amount in controversy; and (C) the Corporation may, without bond 
or security, remove any such action, suit, or proceeding from a State 
court to the United States district court for the district and division 
embracing the place where the same is pending by following any 
procedure for removal now or hereafter in effect: Provided, That any 
action, suit, or proceeding to which the Corporation is a party in its 
capacity as conservator, receiver, or other legal custodian of an in-
sured State-chartered institution and which involves only the rights 
or obligations of investors, creditors, stockholders, and such institu-
tion under State law shall not be deemed to arise under the laws of 
the United States. No attachment or execution shall be issued 
against the Corporation or its property before final judgment in any 
action, suit, or proceeding in any court of any State or of the United 
States or any territory, or any other court. 
"(2) The Corporation may, in its discretion, apply to the United 
States district court, or the United States court of any territory, with-
in the jurisdiction of which the principal office of the institution is 
located, for the enforcement of any effective and outstanding notice 
or order issued by the Corporation under this section, and such courts 
shall have jurisdiction and power to order and require compliance 
therewith; but except as otherwise provided in this section no court 
shall have jurisdiction to affect by injunction or otherwise the issuance 
or enforcement of any notice or order under this section, or to review, 
modify, suspend, terminate, or set aside any such notice or order. 
"(1) REPORTING REQUIREMENTS.—(1) Whenever a change occurs in 
the outstanding voting stock of any insured institution which will 
result in control or a change in the control of such institution, the 
62 Stat. 907. 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1043 
president or other chief executive officer of such institution shall 
promptly report such facts to the Corporation upon obtaining knowl-
edge of such change. As used in this subsection, the term 'control' 
"control.»» 
means the power to directly or indirectly direct or cause the direction 
of the management or policies of the insured institution. 
If there is 
any doubt as to whether a change in ownership or other change in the 
outstanding voting stock of any insured institution is sufficient to 
result in control or a change in the control thereof, such doubt shall 
be resolved in favor of reporting the facts to the Corporation. 
"(2) Whenever an insured institution or an insured bank of the 
Federal Deposit Insurance Corporation makes a loan or loans secured 
(or to be secured) by 25 per centum or more of the voting stock of an 
insured institution, the president or other chief executive officer of 
the lending insured institution or insured bank shall promptly report 
such fact to the Corporation upon obtaining knowledge of such loan 
or loans, except that no report need be made in those cases where the 
borrower has been the owner of record of the stock for a period of one 
year or more, or the stock is of a newly organized insured institution 
prior to its opening. 
"(3) The reports required by paragraphs (1) and (2) of this sub-
section shall contain the following information to the extent that it is 
known by the person making the report: (A) the number of shares 
involved, (B) the names of the sellers (or transferors), (C) the names 
of the purchasers (or transferees), (D) the names of the beneficial 
owners if the shares are of record in another name or other names, (E) 
the purchase price, (F) the total number of shares owned by the sellers 
(or transferors), the purchasers (or transferees) and the beneficial 
owners both immediately before and after the transaction, and in tlie 
case of a loan, (G) the name of the borrower, (H) the amount of the 
loan, and (I) the name of the institution issuing the stock securing the 
loan and the number of shares securing the loan. In addition to the 
foregoing, such reports shall contain such other information as may 
be available to inform the Corporation of the effect of the transaction 
upon control of the institution whose stock is involved. The reports 
required by this subsection shall be in addition to any report.s that may 
be required pursuant to other provisions of law. 
"(4) Whenever such a change as is described in paragraph (1) of 
this subsection occurs, the insured institution involved shall report 
promptly to the Corporation any change or changes, or replacement 
or replacements, of its chief executive officer or of any director oc-
curring in the next twelve-month period, including in its report a state-
ment of the past and current business and professional affiliations of 
the new chief executive officer or director. 
"(5) Without limitation by or on the foregoing provisions of this 
subsection, the Corporation may require insured institutions and indi-
viduals or other persons who have or have had any connection with the 
management of any insured institution, as defined by the Corporation, 
to provide, in such manner and under such civil penalties (which shall 
be cumulative to any other remedies) as the Corporation may prescribe, 
such periodic or other reports and disclosures as the Corporation may 
determine to be necessary or appropriate for the protection of investors 
or the Corporation. 
"(6) As used in this subsection, the term 'stock' means such stock 
"stock." 
or other equity securities or equity interests in an insured institution, 
or rights, interests, or powers with respect thereto, regardless of 
whether such institution is a stock company, a mutual institution, or 
otherwise, as the Corporation may by regulation define for the pur-
poses of this subsection. 
e t c 
1044 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
"(m) ANCILLARY PROvisioisrs.— (1) In making examinations of in-
sured institutions, examiners appointed by the Federal Home Loan 
Bank Board shall have power, on behalf of the Corporation, to make 
such examinations of the affairs of all affiliates of such institutions 
as shall be necessary to disclose fully the relations between such insti-
tutions and their affiliates and the effect of such relations upon such 
institutions. 
The cost of examinations of such affiliates shall be as-
"Affihate." 
sessed against and paid by the institution. 
For purposes of this sub-
section, the term 'affiliate' shall have the same meaning as where used 
AnLfT.'242!'' 
in section 2(b) of the Banking Act of 1933 (12 U.S.C. 221a(b)), 
"Member bank." except that the term 'member bank' in said section 2(b) shall be 
deemed to refer to an insured institution. 
subpena power, 
u^2) In conncctiou with examinations of insured institutions and 
affiliates thereof, the Corporation, or its designated representatives, 
shall have power to administer oaths and affirmations and to examine 
and to take and preserve testimony under oath as to any matter in 
respect of the affairs or ownership of any such institution or affiliate 
thereof, and to issue subpenas and subpenas duces tecum, and, for the 
enforcement thereof, to apply to the United States district court for 
the judicial district or the United States court in any territory in 
which the principal office of the institution or affiliate thereof is lo-
cated, or in which the witness resides or carries on business. 
Such 
courts shall have jurisdiction and power to order and require com-
pliance with any such subpena. 
"(3) In the course of or in connection with any proceeding under 
this section, the Corporation or its designated representatives, includ-
ing any person designated to conduct any hearing under this section, 
shall have power to administer oaths and affirmations, to take or cause 
to be taken depositions, and to issue, revoke, quash, or modify subpenas 
and subpenas duces tecum; and the Corporation is empowered to make 
rules and regulations with respect to any such proceedings. The at-
tendance of witnesses and the production of documents provided for 
in this subsection may be required from any place in any State or in 
any territory at any designated place where such proceeding is being 
conducted. 
Any party to proceedings under this section may apply to 
the United States District Court for the District of Columbia, or the 
United States district court for the judicial district or the United 
States court in any territory in which such proceeding is being con-
ducted, or where the witness resides or carries on business, for enforce-
ment of any subpena or subpena duces tecum issued pursuant to this 
subsection, and such courts shall have jurisdiction and power to order 
and require compliance therewith. 
Witnesses subpenaed under this 
section shall be paid the same fees and mileage that are paid witnesses 
in the district courts of the United States. All expenses of the Board 
or of the Federal Savings and Loan Insurance Corporation in connec-
tion with this section shall be considered as nonadministrative ex-
penses. Any court having jurisdiction of any proceeding instituted 
under this section by an insured institution, or a director or officer 
thereof, may allow to any such party such reasonable expenses and 
attorneys' fees as it deems just and proper; and such expenses and 
fees shall be paid by the institution or from its assets. 
"(n) SERVICE.—Any service required or authorized to be made by 
the Corporation under this section may be made by registered mail, 
or in such other manner reasonably calculated to give actual notice as 
the Corporation may by regulation or otherwise provide. 
Copies of 
any notice or order served by the Corporation upon any State-
chartered institution or any director or officer thereof or other person 
participating in the conduct of its affairs, pursuant to the provisions of 
this section, shall also be sent to the appropriate State supervisory 
authority. 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1045 
"(o) NOTICE TO STATE AUTHORITIES.—In connection with any pro-
ceeding under subsection (e), (f) (1), or (g) of this section involving 
an insured State-chartered institution or any director or officer or 
other person participating in the conduct of its affairs, the Corporation 
shall provide the appropriate State supervisory authority with notice 
of the Corporation's intent to institute such a proceeding and the 
grounds therefor. 
Unless within such time as the Corporation deems 
appropriate in the light of the circumstances of the case (which time 
must be specified in the notice prescribed in the preceding sentence) 
satisfactory corrective action is effectuated by action of the State super-
visory authority, the Corporation may proceed as provided in this 
section. 
No institution or other party who is the subject of any 
notice or order issued by the Corporation under this section shall have 
standing to raise the requirements of this subsection as ground for 
attacking the validity of any such notice or order. 
"(p) PENALTIES.—(1) Any director or officer, or former director or 
officer, of an insured institution or an institution any of the accounts 
of which are insured, or any other person, against whom there is out-
standing and effective any notice or order (which is an order which has 
become final) served upon such director, officer, or other person under 
subsection (g) (3), (g) (4), or (h) of this section, and who (A) par-
ticipates in any manner in the conduct of the affairs of such institution, 
or directly or indirectly solicits or procures, or transfers or attempts to 
transfer, or votes or attempts to vote any proxies, consents, or authori-
zations in respect to any voting rights in such institution, or (B) with-
out the prior written approval of the Corporation, votes for a director 
or serves or acts as a director, officer, or employee of any insured insti-
tution, shall upon conviction be fined not more than $5,000 or impris-
oned for not more than one year, or both. 
"(2) Except with the prior written consent of the Corporation, no 
person shall serve as a director, officer, or employee of an insured insti-
tution who has been convicted, or who is hereafter convicted, of a crim-
inal offense involving dishonesty or a breach of trust. For each willful 
violation of this prohibition, the institution involved shall be subject 
to a penalty of not more than $100 for each day this prohibition is vio-
lated, which the Corporation may recover by suit or otherwise for its 
own use. 
" (q) DEFINITIONS.—(1) As used in this section— 
"(A) The terms 'cease-and-desist order which has become final' and 
'order which has become final' mean a cease-and-desist order, or an 
order, issued by the Corporation with the consent of the institution 
or the director or officer or other person concerned, or with respect to 
which no petition for review of the action of the Corporation has been 
filed and perfected in a court of appeals as specified in subsection (j) 
(2) of this section, or with respect to which the action of the court in 
which said petition is so filed is not subject to further review by the 
Supreme Court of the United States in proceedings provided for in 
said subsection, or an order issued under subsection (h) of this section. 
"(B) The term 'State' includes the Commonwealth of Puerto Eico. 
"(C) The term 'territory' includes any possession of the United 
States and any place subject to the jurisdiction of the United States. 
"(D) The terms 'district', 'district court', 'district court of the 
United States', and 'judicial district' shall have the meanings defined 
in section 451 of title 28 of the United States Code. 
62 stat. 907. 
"(2) As used in subsection (f) of this section, the term 'insolvency' 
means that the assets of an institution are less than its obligations to 
its creditors and others, including its members. 
"(3) As used in subsection (g) of this section, the term 'violation' 
includes without limitation any action (alone or with another or 
others) for or toward causing, bringing about, participating in, coun-
seling, or aiding or abetting a violation." 
1046 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
Effective date. 
73 Stat. 691. 
(b) The amendment made by subsection (a) of this section shall be 
effective only with respect to proceedings commenced on or after the 
daJte of enactment of this Act. 
Section 407 of the National Housing 
12 use 1730. 
Act as in effect inunediately prior to the date of enactment of this Act 
shall continue in effect with respect to any proceedings commenced 
prior to such date. 
SEC. 103. Subsection (c) of section 408 of the National Housing Act 
(12U.S.C. 1730a (c)) is amended to read: 
"(c) It shall be unlawful for any company on or after September 
23,1959— 
" (1) to acquire the control of more than one insured institution, 
or 
"(2) to acquire the control of an insured institution when it 
holds the control of any other insured institution, 
except in a transaction which has been approved by the Federal Home 
Loan Bank Board upon a determination by it that such transaction 
is advisable to assist in preventing the commencement or continuance 
of involuntary liquidation of the insured institution whose control, 
whether by acquisition of stock or assets or otherwise, as being acquired 
by such company or an insured institution which it controls." 
TITLE II—PROVISION RELATING TO T H E 
FEDERAL 
DEPOSIT INSURANCE CORPORATION, T H E BOARD OF 
GOVERNORS OF T H E FEDERAL RESERVE 
SYSTEM, 
AND T H E COMPTROLLER OF T H E CURRENCY 
78 Stat. 941. 
64 Stat. 873. 
SEC. 201. Paragraph (6) of subsection (j) of section 7 of the Fed-
eral Deposit Insurance Act (12 U.S.C. 18l7(j) (6)) is repealed and 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) is 
amended by adding the following new subsection (q) : 
Fedtrai^b^'iiking 
" (^) The term 'appropriate Federal banking agency' shall mean 
agency." 
(1) the Comptroller of the Currency in the case of a national banking 
association or a District bank, (2) the Board of Governors of the 
Federal Reserve System in the case of a State member insured bank 
(except a District bank), and (3) the Federal Deposit Insurance 
Corporation in the case of a State nonmember insured bank (except a 
District bank)." 
SEC. 202. Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 
1818), is amended by redesignating subsections (b), (c), and (d) 
thereof as (o), (p), and (q) and by adding after subsection (a) 
thereof the following new subsections (b) through (n), inclusive: 
sist^proceedings. 
"(b)(1) If, iH thc opiuiou of the appropriate Federal banking 
agency, any insured bank or bank which has insured deposits is en-
gaging or has engaged, or the agency has reasonable cause to believe 
that the bank is about to engage, in an unsafe or unsound practice in 
conducting the business of such bank, or is violating or has violated, 
or the agency has reasonable cause to believe that the bank is about to 
violate, a law, rule, or regulation, or any condition imposed in writing 
by the agency in connection with the granting of any application or 
other request by the bank, or any written agreement entered into with 
the agency, the agency may issue and serve upon the bank a notice of 
charges in respect thereof. 
The notice shall contain a statement of the 
facts constituting the alleged violation or violations or the unsafe or 
unsound practice or practices, and shall fix a time and place at which 
a hearing will be held to determine whether an order to cease and 
desist therefrom should issue against the bank. 
Such hearing shall be 
fixed for a date not earlier than thirty days nor later than sixty days 
after service of svich notice unless an earlier or a later date is set by 
the agency at the request of the bank. 
Unless the bank shall appear 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1047 
at the hearing by a duly authorized representative, it shall be deemed 
to have consented to the issuance of the cease-and-desist order. 
In 
the event of such consent, or if upon the record made at any such hear-
ing, the agency shall find that any violation or unsafe or unsound prac-
tice specified in the notice of charges has been established, the agency 
may issue and serve upon the bank an order to cease and desist from 
any such violation or practice. 
Such order may, by provisions which 
may be mandatory or otherwise, require the bank and its directors, 
officers, employees, and agents to cease and desist from the same, and, 
further, to take affirmative action to correct the conditions resulting 
from any such violation or practice. 
"(2) A cease-and-desist order shall become effective at the expira-
tion of thirty days after the service of such order upon the bank con-
cerned (except in the case of a cease-and-desist order issued upon con-
sent, which shall become effective at the time specified therein), and 
shall remain effective and enforceable as provided therein, except to 
such extent as it is stayed, modified, terminated, or set aside by action 
of the agency or a reviewing court. 
"(c)(1) Whenever the appropriate Federal banking agency shall ^'^f?^°•''^^l^^^^^^'' 
determine that the violation or threatened violation or the unsafe or ders. ^^^^ 
unsound practice or practices, specified in the notice of charges served 
upon the bank pursuant to paragraph (1) of subsection (b) of this 
section, or the continuation thereof, is likely to cause insolvency or 
substantial dissipation of assets or earnings of the bank, or is likely 
to otherwise seriously prejudice the interests of its depositors, the 
agency may issue a temporary order requiring the bank to cease and 
desist from any such violation or practice. 
Such order shall become 
effective upon service upon the bank and, unless set aside, limited, or 
suspended by a court in proceedings authorized by paragraph (2) of 
this subsection, shall remain effective and enforceable pending the 
completion of the administrative proceedings pursuant to such notice 
and until such time as the agency shall dismiss the charges specified in 
such notice, or if a cease-and-desist order is issued against the bank, 
until the effective date of any such order. 
" (2) Within ten days after the bank concerned has been served with 
a temporary cease-and-desist order, the bank may apply to the United 
States district court for the judicial district in which the home office 
of the bank is located, or the United States District Court for the Dis-
trict of Columbia, for an injunction setting aside, limiting, or sus-
pending the enforcement, operation, or effectiveness of such order 
pending the completion of the administrative proceedings pursuant 
to the notice of charges served upon the bank under paragraph (1) of 
subsection (b) of this section, and such court shall have jurisdiction to 
issue such injunction. 
"(d) In the case of violation or threatened violation of, or failure 
to obey, a temporary cease-and-desist order issued pursuant to para-
graph (1) of subsection (c) of this section, the appropriate Federal 
banking agency may apply to the United States district court, or the 
United States court of any territory, within the jurisdiction of which 
the home office of the bank is located, for an injunction to enforce such 
order, and, if the court shall determine that there has been such viola-
tion or threatened violation or failure to obey, it shall be the duty of 
the court to issue such injunction. 
"(e) (1) Whenever, in the opinion of the appropriate Federal bank- ,„^,^„™°^^if°^^fi' 
ing agency, any director or officer of an insured State bank (other 
than a District bank) has committed any violation of law, rule, or 
regulation, or of a cease-and-desist order which has become final, or 
has engaged or participated in any unsafe or unsound practice in con-
nection with the bank, or has committed or engaged in any act, omis-
rector or officer. 
1048 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
sion, or practice which constitutes a breach of his fiduciary duty as 
such director or officer, and the agency determines that the bank has 
suffered or will probably suffer substantial financial loss or other 
damage or that the interests of its depositors could be seriously preju-
diced by reason of such violation or practice or breach of fiduciary 
duty, and that such violation or practice or breach of fiduciary duty 
is one involving personal dishonesty on the part of such director or 
officer, the agency may serve upon such director or officer a written 
notice of its intention to remove him from office. 
"(2) Whenever, in the opinion of the Comptroller of the Currency, 
any director or officer of a national banking association or a District 
bank has committed any violation of law, rule, or regulation, or of a 
cease-and-desist order which has become final, or has engaged or par-
ticipated in any unsafe or unsound practice in connection with the 
bank, or has committed or engaged in any act, omission, or practice 
which constitutes a breach of his fiduciary duty as such director or 
officer, and the Comptroller determines that the bank has suffered or 
will probably suffer substantial financial loss or other damage or that 
the interests of its depositors could be seriously prejudiced by reason 
of such violation or practice or breach of fiduciary duty, and that such 
violation or practice or breach of fiduciary duty is one involving per-
sonal dishonesty on the part of such director or officer, the Comp-
troller of the Currency may certify the facts to the Board of Gover-
nors of the Federal Reserve System. 
"(3) Whenever, in the opinion of the appropriate Federal banking 
agency, any director or officer of an insured State bank (other than a 
District bank), by conduct or practice with respect to another insured 
bank or other business institution which resulted in substantial finan-
cial loss or other damage, has evidenced his personal dishonesty and 
unfitness to continue as a director or officer and, whenever, in the 
opinion of the appropriate Federal banking agency, any other person 
participating in the conduct of the affairs of an insured State bank 
(other than a District bank), by conduct or practice with respect to 
such bank or other insured bank or other business institution which 
resulted in substantial financial loss or other damage, has evidenced his 
personal dishonesty and unfitness to participate in the conduct of the 
affairs of such insured bank, the agency may serve upon such director, 
officer, or other person a written notice of its intention to remove him 
from office and/or to prohibit his further participation in any manner 
in the conduct of the affairs of the bank. 
"(4) Whenever, in the opinion of the Comptroller of the Currency, 
any director or officer of a national banking association or a District 
bank, by conduct or practice with respect to another insured bank or 
other business institution which resulted in substantial financial loss 
or other damage, has evidenced his personal dishonesty and unfitness 
to continue as a director or officer and, whenever, in the opinion of the 
Comptroller, any other person participating in the conduct of the 
affairs of a national banking association or a District bank, by conduct 
or practice with respect to such bank or other insured bank or other 
business institution which resulted in substantial financial loss or other 
damage, has evidenced his personal dishonesty and unfitness to par-
ticipate in the conduct of the affairs of such bank, the Comptroller of 
the Currency may certify the facts to the Board of Governors of the 
Federal Reserve System. 
"(5) In respect to any director or officer of an insured State bank 
(other than a District bank) or any other person referred to in para-
graph (1) or (3) of this subsection, the appropriate Federal banking 
agency may, if it deems it necessary for the protection of the bank or 
the interests of its depositors, by written notice to such effect served 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1049 
upon such director, officer, or other person, suspend him from office 
and/or prohibit him from further participation in any manner in the 
conduct of the affairs of the bank. Such suspension and/or prohibition 
shall become 
effective upon service of such notice and, unless 
stayed by a court in proceedings authorized by subsection (f) of 
this section, shall remain in effect pending the completion of 
the administrative proceedings pursuant to the notice served under 
paragraph (1) or (3) of this subsection and until such time as the 
agency shall dismiss the charges specified in such notice, or, if an 
order of removal and/or prohibition is issued against the director or 
officer or other person, until the effective date of any such order. 
Copies of any such notice shall also be served upon the bank of which 
he is a director or officer or in the conduct of whose affairs he has 
participated. 
"(6) In respect to any director or officer of a national banking 
association or a District bank, or any other person referred to in para-
graph (2) or (4) of this subsection, the Comptroller of the Currency 
may, if he deems it necessary for the protection of the bank or the in-
terests of its depositors that such director or officer be suspended from 
office or prohibited from further participation in any manner in the 
conduct of the affairs of the bank, certify the facts to the Board of 
Governors of the Federal Reserve System. 
"(7) In the case of a certification to the Board of Governors of the 
Federal Reserve System under paragraph (2) or (4) of this subsec-
tion, the Board may serve upon the director, officer, or other person 
involved, a written notice of its intention to remove him from office 
and/or to prohibit him from further participation in any manner in 
the conduct of the affairs of the bank. 
In the case of a certification to 
the Board of Governors of the Federal Reserve System under para-
graph (6) of this subsection, the Board may by written notice to such 
effect served upon such director, officer, or other person, suspend him 
from office and/or prohibit him from further participation in any 
manner in the conduct of the affairs of the bank. 
Such suspension 
and/or prohibition shall become effective upon service of such notice 
and, unless stayed by a court in proceedings authorized by subsection 
(f) of this section, shall remain in effect pending the completion of 
the administrative proceedings pursuant to the notice served under 
the first sentence of this paragraph and until such time as the Board 
shall dismiss the charges specified in such notice, or, if an order of re-
moval and/or prohibition is issued against the director or officer or 
other person, until the effective date of any such order. Copies of any 
such notice shall also be served upon the bank of which he is a direc-
tor or officer or in the conduct of whose affairs he has participated. 
For the purposes of this paragraph and paragraph (8) of this sub-
section, the Comptroller of the Currency shall be entitled in any case 
involving a national bank or a District bank to sit as a member of 
the Board of Governors of the Federal Reserve System and to par-
ticipate in its deliberations on any such case and to vote thereon in all 
respects as a member of such Board. 
"(8) A notice of intention to remove a director, officer, or other 
person from office and/or to prohibit his participation in the conduct 
of the affairs of an insured bank, shall contain a statement of the facts 
constituting grounds therefor, and shall fix a time and place at which 
a hearing will be held thereon. 
Such hearing shall be fixed for a date 
not earlier than thirty days nor later than sixty days after the date of 
service of such notice, unless an earlier or a later date is set by the 
agency at the request of (A) such director or officer or other person, 
and for good cause shown, or (B) the Attorney General of the tjnited 
States. 
Unless such director, officer, or other person shall appear 
1050 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 STAT. 
at the hearing in person or by a duly authorized representative, he shall 
be deemed to have consented to the issuance of an order of such 
removal and/or prohibition. 
In the event of such consent, or if upon 
the record made at any such hearing the agency shall find that any 
of the grounds specified in such notice has been established, the agency 
may issue such orders of suspension or removal from office, and/or 
prohibition from participation in the conduct of the affairs of the bank, 
as it may deem appropriate. 
Any such order shall become effective 
at the expiration of thirty days after service upon such bank and the 
director, officer, or other person concerned (except in the case of an 
order issued upon consent, which shall become effective at the time 
specified therein). 
Such order shall remain effective and enforceable 
except to such extent as it is stayed, modified, terminated, or set aside 
by action of the agency or a reviewing court. 
"(f) Within ten days after any director, officer, or other person has 
been suspended from office and/or prohibited from participation in 
the conduct of the affairs of an insured bank under subsection (e) (5) 
or (e) (7) of this section, such director, officer, or other person may 
apply to the United States district court for the judicial district in 
which the home office of the bank is located, or the United States 
District Court for the District of Columbia, for a stay of such sus-
pension and/or prohibition pending the completion of the administra-
tive proceedings pursuant to the notice served upon such director, 
officer, or other person under subsection (e) (1), (e) (3), or (e) (7) of 
this section, and such court shall have jurisdiction to stay such suspen-
sion and/or prohibition. 
causiTor re^^^' 
"(g)(1) Whcuevcr auy director or officer of an insured bank, or 
movai. 
other person participating in the conduct of the affairs of such bank, 
is charged in any information, indictment, or complaint authorized by 
a United States attorney, with the commission of or participation in a 
felony involving dishonesty or breach of trust, the appropriate Fed-
eral banking agency may, by written notice served upon such director, 
officer, or other person suspend him from office and/or prohibit him 
from further participation in any manner in the conduct of the affairs 
of the bank. 
A copy of such notice shall also be served upon the bank. 
Such suspension and/or prohibition shall remain in effect until such 
information, indictment, or complaint is finally disposed of or until 
terminated by the agency. 
In the event that a judgment of convic-
tion with respect to such offense is entered against such director, officer, 
or other person, and at such time as such judgment is not subject to 
further appellate review, the agency may issue and serve upon such 
director, officer, or other person an order removing him from office 
and/or prohibiting him from further participation in any manner in 
the conduct of the affairs of the bank except with the consent of the 
appropriate agency. A copy of such order shall also be served upon 
such bank, whereupon such director or officer shall cease to be a direc-
tor or officer of such bank. 
A finding of not guilty or other disposi-
tion of the charge shall not preclude the agency from thereafter in-
stituting proceedings to remove such director, officer, or other person 
from office and/or to prohibit further participation in bank affairs, 
pursuant to paragraph (1), (2), (3), (4), or (7) of subsection (e) of 
this section. 
"(2) If at any time, because of the suspension of one or more di-
rectors pursuant to this section, there shall be on the board of directors 
of a national bank less than a quorum of directors not so suspended, all 
powers and functions vested in or exercisable by such board shall vest 
in and be exercisable by the director or directors on the board not so 
suspended, until such time as there shall be a quorum of the board of 
directors. In the event all of the directors of a national bank are 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1051 
suspended pursuant to this section, the Comptroller of the Currency 
shall appoint persons to serve temporarily as directors in their place 
and stead pending the termination of such suspensions, or until such 
time as those who have been suspended, cease to be directors of the 
bank and their respective successors take office. 
"(h) (1) Any hearing provided for in this section shall be held in ju"cla\"fevi'e'lv. 
the Federal judicial district or in the territory in which the home office 
of the bank is located unless the party afforded the hearing consents 
to another place, and shall be conducted in accordance with the pro-
visions of chapter 5 of title 5 of the United States Code. Such hearing 
^"'^' P- ^^°-
shall be private, unless the appropriate Federal banking agency, in its 
discretion, after fully considering the views of the party afforded the 
hearing, determines that a public hearing is necessary to protect the 
public interest. 
After such hearing, and within ninety days after the 
appropriate Federal banking agency or Board of Governors of the Fed-
eral Reserve System has notified the parties that the case has been sub-
mitted to it for final decision, it shall render its decision (which shall 
include findings of fact upon which its decision is predicated) and shall 
issue and serve upon each party to the proceeding an order or orders 
consistent with the provisions of this section. 
Judicial review of any 
such order shall be exclusively as provided in this subseotion (li). 
Unless a petition for review is timely filed in a court of appeals of the 
United States, as hereinafter provided in paragraph (2) of this sub-
section, and thereafter until the record in the proceeding has been filed 
as so provided, the issuing agency may at any time, upon such notice 
and in such manner as it shall deem proper, modify, terminate, or set 
aside any such order. 
Upon such filing of the record, the agency may 
modify, terminate, or set aside any such order w4th permission of the 
court. 
"(2) Any party to the proceeding, or any person required by an 
order issued under this section to cease and desist from any of the 
violations or practices stated therein, may obtain a review of any 
order served pursuant to paragraph (1) of this subsection (other than 
an order issued with the consent of the bank or the director or officer 
or other person concerned, or an order issued under paragraph (1) of 
subsection (g) of this section) by the filing in the court of appeals of 
the United States for the circuit in which the home office of the bank 
is located, or in the United States Court of Appeals for the District 
of Columbia Circuit, within thirty days after the date of service of 
such order, a written petition praying that the order of the agency 
be modified, terminated, or set aside. A copy of such petition shall be 
forthwith transmitted by the clerk of the court to the agency, and 
thereupon the agency shall file in the court the record in the proceed-
ing, as provided in section 2112 of title 28 of the United States Code. 
''^ ^'^*- ^'*^-
Upon the filing of such petition, such court shall have jurisdiction, 
Avhich upon the filing of the record shall except as provided in the last 
sentence of said paragraph (1) be exclusive, to affirm, modify, termi-
nate, or set aside, in whole or in part, the order of the agency, Review 
of such proceedings shall be had as provided in chapter 7 of title 5 of 
the United States Code. The judgment and decree of the court shall 
^"'^' P- ^92. 
be final, except that the same shall be subject to review by the Supreme 
Court upon certiorari, as provided in section 1254 of title 28 of the 
United States Code. 
.
.
. 
" ^'"'' ^^^' 
"(3) The commencement of proceedings for judicial review under 
paragraph (2) of this subsection shall not, unless specifically ordered 
by the court, operate as a stay of any order issued by the agency. 
"(i) The appropriate Federal banking agency may in its discretion ord^"^"'^'^^"^"' °^ 
apply to the United States district court, or the United States court of 
any territory, within the jurisdiction of which the home office of the 
1052 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 
STAT. 
Penalties. 
Definitions. 
Notice of 
Notice to State 
authorities. 
Subpena power, 
etc. 
bank is located, for the enforcement of any effective and outstanding 
notice or order issued under this section, and such courts shall have 
iurisdiction and power to order and require compliance herewith; 
but except as otherwise provided in this section no court shall have 
jurisdiction to affect by injunction or otherwise the issuance or enforce-
ment of any notice or order under this section, or to review, modify, 
suspend, terminate, or set aside any such notice or order. 
"(j) Any director or officer, or former director or officer of an 
insured bank, or any other person, against whom there is outstanding 
and effective any notice or order (which is an order which has become 
final) served upon such director, officer, or other person under sub-
sections (e) (5), (e) (7), (e) (8), or (g) of this section, and who (i) 
participates in any manner in the conduct of the affairs of the bank 
involved, or directly or indirectly solicits or procures, or transfers or 
attempts to transfer, or votes or attempts to vote, any proxies, con-
sents, or authorizations in respect of any voting rights in such bank, or 
(ii) without the prior written approval of the appropriate Federal 
banking agency, votes for a director, serves or acts as a director, officer, 
or employee of any bank, shall upon conviction be fined not more than 
$5,000 or imprisoned for not more than one year, or both. 
"(k) As used in this section (1) the terms 'cease-and-desist order 
which has become final' and 'order which has become final' mean a 
cease-and-desist order, or an order, issued by the appropriate Federal 
banking agency with the consent of the bank or the director or officer 
or other person concerned, or with respect to which no petition for 
review of the action of the agency has been filed and perfected in 
a court of appeals as specified m paragraph (2) of subsection (h), or 
with respect to which the action of the court in which said petition is 
so filed is not subject to further review by the Supreme Court of the 
United States in proceedings provided for in said paragraph, or an 
order issued under paragraph (1) of subsection (^) of this section, 
and (2) the term 'violation' includes without limitation any action 
(alone or with another or others) for or toward causing, bringing 
about, participating in, counseling, or aiding or abetting a violation. 
"(1) Any service required or authorized to be made by the appro-
priate Federal banking agency under this section may be made by 
registered mail, or in such other manner reasonably calculated to give 
actual notice as the agency may by regulation or otherwise provide. 
Copies of any notice or order served by the agency upon any State 
bank or any director or officer thereof or other person participating 
in the conduct of its affairs, pursuant to the provisions of this section, 
shall also be sent to the appropriate State supervisory authority. 
"(m) In connection with any proceeding under subsection (b), 
(c) (1), or (e) of this section involving an insured State bank or any 
director or officer or other person participating in the conduct of its 
affairs, the appropriate Federal banking agency shall provide the ap-
propriate State supervisory authority with notice of the agency's 
intent to institute such a proceeding and the grounds therefor. 
Un-
less within such time as the Federal banking agency deems appro-
priate in the light of the circumstances of the case (which time must 
be specified in the notice prescribed in the preceding sentence) satis-
factory corrective action is effectuated by action of the State super-
visory authority, the agency may proceed as provided in this section. 
No bank or other party who is the subject of any notice or order issued 
by the agency under this section shall have standing to raise the re-
quirements of this subsection as ground for attacking the validity of 
any such notice or order. 
" (n) In the course of or in connection with any proceeding under 
this section, the agency conducting the proceeding, or any member or 
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1053 
designated representative thereof, including any person designated to 
conduct any hearing under this section, shall have the power to ad-
minister oaths and affirmations, to take or cause to be taken deposi-
tions, and to issue, revoke, quash, or modify subpenas and subpenas 
duces tecum; and such agency is empowered to make rules and regula-
tions with respect to any such proceedings. 
The attendance of wit-
nesses and the production of documents provided for in this subsection 
may be required from any place in any State or in any territory or 
other place subject to the jurisdiction of the United States at any 
designated place where such proceeding is being conducted. 
Any 
party to proceedings under this section may apply to the United 
States District Court for the District of Columbia, or the United 
States district court for the judicial district or the United States court 
in any territory in which such proceeding is being conducted, or where 
the witness resides or carries on business, for enforcement of any sub-
pena or subpena duces tecum issued pursuant to this subsection, and 
such courts shall have jurisdiction and power to order and require 
compliance therewith. 
Witnesses subpenaed under this section shall 
be paid the same fees and mileage that are paid witnesses in the 
district courts of the United States. Any court having jurisdiction of 
any proceeding instituted under this section by an insured bank or a 
director or officer thereof, may allow to any such party such reasonable 
expenses and attorneys' fees as it deems just and proper; and such 
expenses and fees shall be paid by the bank or from its assets." 
SEC. 203. Subsections (b) and (c) of section 10 of the Federal ^^^t^^^'^tl'^T' 
Deposit Insurance Act (12 U.S.C. 1820 (b), (c)) are amended to read duties. 
as f o l l o w s : 
64 Stat. 882. 
"(b) The Board of Directors shall appoint examiners who shall 
have power, on behalf of the Corporation, to examine any insured 
State nonmember bank (except a District bank), any State nonmem-
ber bank making application to become an insured bank, and any 
closed insured bank, whenever in the judgment of the Board of Direc-
tors an examination of the bank is necessary. In addition to the exami-
nations provided for in the preceding sentence, such examiners shall 
have like power to make a special examination of any State member 
bank and any national bank or District bank, whenever in the judg-
ment of the Board of Directors such special examination is necessary 
to determine the condition of any such bank for insurance purposes. 
In making examinations of insured banks, examiners appointed by 
the Corporation shall have power on behalf of the Corporation to make 
such examinations of the affairs of all affiliates of such banks as shall be 
necessary to disclose fully the relations between such banks and their 
affiliates and the effect of such relations upon such banks. Each ex-
aminer shall have power to make a thorough examination of all of 
the affairs of the bank and its affiliates, and shall make a full and de-
tailed report of the condition of the bank to the Corporation. 
The 
Board of Directors in like manner shall appoint claim agents who shall 
have power to investigate and examine all claims for insured deposits. 
Each claim agent shall have power to administer oaths and affirmations 
and to examine and to take and preserve testimony under oath as to 
any matter in respect to claims for insured deposits, and to issue sub-
penas and subpenas duces tecum, and, for the enforcement thereof, to 
apply to the United States district court for the judicial district or 
the United States court in any territory in which the main office of the 
bank or affiliate thereof is located, or in which the witness resides or 
carries on business. Such courts shall have jurisdiction and power to 
order and require compliance with any such subpena. 
"(c) In connection with examinations of insured banks, and affili-
ates thereof, the appropriate Federal banking agency, or its designated 
65-300 0-67—69 
1054 
PUBLIC LAW 89-695-OCT. 16, 1966 
[80 
STAT. 
'Affiliate." 
48 Stat. 162; 
Ante, p. 242. 
"Member bank. 
Insured bank, 
termination of 
status. 
64 Stat. 879. 
representatives, shall have the power to administer oaths and affirma-
tions and to examine and to take and preserve testimony under oath as 
to any matter in respect of the affairs or ownership of any such bank 
or affiliate thereof, and to issue subpenas and subpenas duces tecum, 
and, for the enforcement thereof, to apply to the United States district 
court for the judicial district or the United States court in any terri-
tory in which the main office of the bank or affiliate thereof is located, 
or in which the witness resides or carries on business. Such courts 
shall have jurisdiction and power to order and require compliance with 
any such subpena. For purposes of this section, the term 'affiliate' 
shall have the same meaning as where used in section 2(b) of the 
Banking Act of 1933 (12 U.S.C. 221a(b)) except that the term 'mem-
ber bank' in said section 2(b) shall be deemed to refer to an insured 
bank." 
SEC. 204. The first five sentences of section 8(a) of the Federal 
Deposit Insurance Act (12 U.S.C. 1818(a)) are amended to read as 
follows: 
"SEC. 8. (a) Any insured bank (except a national member bank or 
State member bank) may, upon not less than ninety days' written 
notice to the Corporation, terminate its status as an insured bank. 
Whenever the Board of Directors shall find that an insured bank or its 
directors or trustees have engaged or are engaging in unsafe or unsound 
practices in conducting the business of such bank, or is in an unsafe or 
unsound condition to continue operations as an insured bank, or 
violated an applicable law, rule, reflation or order, or any condition 
imposed in writing by the Corporation in connection with the granting 
of any application or other request by the bank, or any written agree-
ment entered into with the Corporation, the Board of Directors shall 
first give to the Comptroller of the Currency in the case of a national 
bank or a district bank, to the authority having supervision of the bank 
in the case of a State bank, and to the Board of Governors of the 
Federal Reserve System in the case of a State member bank, a state-
ment with respect to such practices or violations for the purpose of 
securing the correction thereof and shall give a copy thereof to the 
bank. 
Unless such correction shall be made within one hundred and 
twenty days, or such shorter period not less than twenty days fixed by 
the Corporation in any case where the Board of Directors in its discre-
tion has determined that the insurance risk of the Corporation is 
unduly jeopardized, or fixed by the Comptroller of the Currency in 
the case of a national bank, or the State authority in the case of a State 
bank, or Board of Governors of the Federal Reserve System in the 
case of a State member bank as the case may be, the Board of Directors, 
if it shall determine to proceed further, shall give to the bank not less 
than thirty days' written notice of intention to terminate the status of 
the bank as an insured bank, and shall fix a time and place for a hear-
ing before the Board of Directors or before a person designated by it 
to conduct such hearing, at which evidence may be produced, and 
upon such evidence the Board of Directors shall make written findings 
which shall be conclusive. If the Board of Directors shall find that any 
unsafe or unsound practice or condition or violation specified in such 
statement has been established and has not been corrected within the 
time above prescribed in which to make such corrections, the Board of 
Directors may order that the insured status of the bank be terminated 
on a date subsequent to such finding and to the expiration of the time 
specified in such notice of intention. Unless the bank shall appear at 
the hearing by a duly authorized representative, it shall be deemed 
to have consented to the termination of its status as an insured bank 
and termination of such status thereupon may be ordered. 
Any 
insured bank whose insured status has been terminated by order of the 
Board of Directors under this subsection shall have the right of judi-
80 STAT. ] 
PUBLIC LAW 89-695-OCT. 16, 1966 
1055 
cial review of such order only to the same extent as provided for the 
review of orders under subsection (h) of this section." 
SEC. 205. Subsection "Fourth" of section 9 of the Federal Deposit 
Insurance Act (12 U.S.C. 1819 "Fourth") is amended to read as 
^4 stat. ssi. 
follows: 
"Fourth. To sue and be sued, complain and defend, in any court 
of law or equity, State or Federal. 
All suits of a civil nature at 
common law or in equity to which the Corporation shall be a party 
shall be deemed to arise under the laws of the United States, and the 
United States district courts shall have original jurisdiction thereof, 
without regard to the amount in controversy; and the Corporation 
may, without bond or security, remove any such action, suit, or pro-
ceeding from a State court to the United States district court for the 
district or division embracing the place where the same is pending 
by following any procedure for removal now or hereafter in effect, 
except that any such suit to which the Corporation is a party in its 
capacity as receiver of a State bank and which involves only the rights 
or obligations of depositors, creditors, stockholders, and such State 
bank under State law shall not be deemed to arise under the laws of 
the United States. No attachment or execution shall be issued against 
the Corporation or its property before final judgment in any suit, 
action, or proceeding in any State, county, municipal, or United States 
court. 
The Board of Directors shall designate an agent upon whom 
service of process may be made in any State, Territory, or jurisdiction 
in which any insured bank is located." 
SEC. 206. Nothing contained in this title shall be construed to repeal, 
modify, or affect the provisions of section 19 of the Federal Deposit 
Insurance Act (12 U.S.C. 1829). 
SEC. 207. Section 30 of the Banking Act of 1933 (12 U.S.C. 77) is 
f^P^^J; ^^3 
hereby repealed. 
TITLE III—INCREASE IN INSURANCE LIMIT 
FEDERAL DEPOSIT INSURANCE CORPORATION 
64 Stat. 875. 
SEC. 301. (a) The first sentence of section 3(m) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813 (m)) is amended by changing 
"$10,000" to read "$15,000". 
(b) The first sentence of section 7(i) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1817(i)) is amended by changing '^$10,000" to 
read "$15,000". 
(c) The last sentence of section 11(a) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821(a)) is amended to read: "The maximum 
amount of the insured deposit of any depositor shall be $15,000." 
(d) The fifth sentence of section 11 (i) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821 (i)) is amended by changing "$10,000" to 
read "$15,000". 
(e) The amendments made by this section shall not be applicable 
to any claim arising out of the closing of a bank where such closing 
is prior to the date of enactment of this Act. 
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION 
SEC. 302. (a) Section 401(b) of title IV of the National Housing 
Act (12 U.S.C. 1724(b)) is amended by changing "$10,000" to read 73^^t!t^26?^' 
"$15,000" each place it appears therein. 
(b) Section 405(a) of title IV of the National Housing Act (12 
U.S.C. 1728(a)) is amended by changing "$10,000" to read "$15,000". e/stf^^'ssg^^^' 
(c) The amendments made by this section shall not be applicable to 
any claim arising out of a default, as defined in section 401 (d) of the 
12 
use 1817. 
12 
use 1821. 
Ante, p. 
1055. 
48 
Stat. 
1255 
12 
use 1724. 
1056 
PUBLIC LAW 89-696-OCT. 19 ,1966 
[80 STAT. 
12 us^c' n2^4^* 
National Housing Act, where the appointment of a conservator, 
receiver, or other legal custodian as set forth in that section becomes 
effective prior to the date of enactment of this Act. 
ADMINISTRATIVE AUTHORITY 
SEC, 303. (a) Section 3(m) of the Federal Deposit Insurance Act 
Ante, p. 1055. 
^j^g U.S.C. 1813 (m)) is amended by adding the following new sentence 
at the end: "For the purpose of clarifying and defining the insurance 
coverage under this subsection and subsection (i) of section 7, the 
Corporation is authorized to define, with such classifications and excep-
tions as it may prescribe, terms used in those subsections, in subsection 
(p) of section 3, and in subsections (a) and (i) of section 11 and the 
extent of the insurance coverage resulting therefrom." 
(b) Section 405(a) of title IV of the National Housing Act (12 
U.S.C. 1728(a)) is amended by adding the following new sentence at 
the end: "For the purpose of clarifying and defining the insurance 
coverage under this subsection and subsection (b) of section 401, the 
Corporation is authorized to define, with such classifications and excep-
tions as it may prescribe, terms used in those subsections and in sub-
section (c) of section 401 and the extent of the insurance coverage 
resulting therefrom." 
TITLE IV—EXPIRATION 
SEC. 401. The provisions of titles I and I I of this Act and any 
provisions of law enacted by said titles shall be effective only during 
the period ending at the close of June 30, 1972. Effective upon the 
expiration of such period, each provision of law amended by either 
of such titles is further amended to read as it did immediately prior 
to the enactment of this Act and each provision of law repealed by 
either of such titles is reenacted. 
Approved October 16, 1966. 
Public Law 89-696 
October 19, 1966 
^ ^ ACT 
[s. 3834] 
rj^Q amend chapter 141 of title 10, United States Code, to provide for price 
adjustments in contracts for the procurement of milk by the Department of 
Defense. 
Be it enacted by the Senate and Hoitse of Representatives 
of the 
mim^conrra^lsr'^*" '^^^^^^^ States of America in Congress assembled, That chapter 141 
Milk procure- 
of title 10, United States Code, is amended— 
"ToA Stat 135 
(1) by inserting at the end thereof the following new section: 
*
*
§ 2389. Contracts far the procurement of milk; price adjustment 
"Under regulations prescribed by the Secretary of Defense, any 
contract for the procurement of fluid milk for beverage purposes 
which was bein^ performed on or after March 1,1966, may be amended 
to provide a price adjustment for losses incurred by a contractor be-
cause of increased prices paid to the producers for such milk as a 
result of action by the Secretary of Agriculture on or after March 1, 
1966, increasing the price of milk. 
A price adjustment shall not be 
made unless it has been determined by the Department that— 
" (1) such amount is not included in the contract price; 
"(2) the contract does not otherwise contain a provision pro-
viding for an adjustment in price; and 
"(3) the contractor will suffer a loss, not merely a diminution 
of anticipated profit, under the contract because oi such increases 
10 use 2381 
2388.