Opinion ID: 699196
Heading Depth: 2
Heading Rank: 1

Heading: OTS's Authority to Enforce the Agreement

Text: 11 Rapaport argues that if any federal agency has the authority to enforce the Agreement, it is the FDIC rather than the OTS. Section 1818(b)(1) of 12 U.S.C. authorizes the appropriate Federal banking agency to enforce any condition imposed by the agency or any agreement entered into with the agency.  The OTS cannot bring this action, according to Rapaport, because it was not the agency that entered into the Agreement, which was with the FSLIC (as opposed to the FHLBB, the governing body of the FSLIC). Further, because all assets and liabilities of the [FSLIC] were transferred to the FSLIC Resolution Fund, see 12 U.S.C. Sec. 1821a(a)(2)(A), and the FSLIC Resolution Fund is managed by the FDIC, he claims that only the FDIC may proceed against him for any deficiency. See also CityFed Financial Corp. v. OTS, 58 F.3d 738 (D.C.Cir.1995) (holding OTS has jurisdiction to enforce cease and desist order against holding company affiliated with failed savings and loan). 12 Not so. Rapaport entered into the Agreement with the FSLIC, and when the Congress abolished the FSLIC and the FHLBB, see Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub.L. No. 101-73, Sec. 401(a), 103 Stat. 183 (August 9, 1989) (FIRREA); see also Historical Note at 12 U.S.C.A. Sec. 1437 (West Supp.1994), it also passed savings provisions stating that their abolition would not affect the validity of any right, duty, or obligation of those agencies. FIRREA Sec. 401(f)-(g). Indeed, the Congress specifically provided that all orders, resolutions, determinations, and regulations of the FSLIC and of the FHLBB--which would include the regulations requiring and supporting the Agreement--shall be enforceable by or against the Director of the [OTS], the [FDIC], the Federal Housing Finance Board, or the [RTC], as the case may be. FIRREA Sec. 401(h). Hence, one of those four agencies must be able to enforce the Agreement. 13 Under 12 U.S.C. Sec. 1818(b), it is the appropriate Federal banking agency--a defined term--that may institute proceedings requiring a party to [ ] make restitution or provide reimbursement, indemnification, or guarantee against loss if [that] party was unjustly enriched in connection with [a] violation [of 'any law, rule, or regulation, or any condition imposed in writing by the agency in connection with the granting of any application or other request'] or [an unsafe or unsound banking] practice. 12 U.S.C. Sec. 1818(b)(1), (6). Appropriate Federal banking agency is defined, in the case of any savings and loan association, as the Director of the [OTS]. 12 U.S.C. Sec. 1813(q)(4) (also noting there may be more than one appropriate agency per case). The OTS is therefore the appropriate agency to enforce the Agreement between Rapaport and the FSLIC. 14 Moreover, the FIRREA provisions dealing with the powers and duties of the OTS provide specifically that: [t]he Director [of the OTS] shall have all powers which [ ] were vested in the [FHLBB] (in the Board's capacity as such) ... and were not [ ] transferred to the [FDIC or another agency]. 12 U.S.C. Sec. 1462a(e). Thus the FIRREA not only gives the OTS general authority to enforce an agreement with a savings and loan, it also provides that the OTS succeeds to certain powers originally vested in the FHLBB and not transferred elsewhere. 15 Nonetheless Rapaport points out that the assets of the FSLIC were transferred to the FSLIC Resolution Fund, see 12 U.S.C. Sec. 1821a(a)(2)(A), and that the FSLIC Resolution Fund is managed by the FDIC. From these facts he argues that the OTS is not authorized to enforce the Agreement, and is not in privity of contract with him. We disagree. 16 First, regardless of the enforcement authority of the FSLIC, the Agreement would certainly have been enforceable by the FHLBB, and as noted above, the OTS is the presumptive heir (via Sec. 1462a(e)) to the powers of the FHLBB. Rapaport argues that the phrase in the Board's capacity as such in Sec. 1462a(e) somehow precludes the OTS from exercising those powers held by the FHLBB in its capacity as director of the FSLIC, but we find no such negative implication in this affirmative grant of authority. Indeed, we take Sec. 1462a(e) to mean just the opposite: powers vested in the FHLBB as the governing body of the FSLIC, including the power to enforce an agreement such as Rapaport's, may now be exercised by the OTS. 17 Second, we reject Rapaport's claim that the OTS is barred from enforcing the Agreement against him because it is not in privity of contract with him. This is not a suit for breach of contract and we express no view upon what would be required if it were; the OTS is here pursuing an administrative remedy and need only have some affirmative grant of authority to do so. That, as we have seen, it has.