Court Opinion

ID: 9468649
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:19:59.536698+00
Date Added: 2024-06-11T17:40:58.432184
License: Public Domain

concurring in part, dissenting in part.
I fully concur in all parts of the majority opinion except that portion of part II, subsection B holding that the Federal Home Loan Bank Board may not prohibit Otero from opening new Check-In, negotiable order of withdrawal, or similar accounts for a 268-day period. The statutory provision and the cases upon which the majority relies to strike down the order in my opinion, instead, lend support to it.
The issue here is the scope of the Bank Board’s remedial authority beyond cease- and-desist orders. Under 12 U.S.C. § 1730(e)(1) the Bank Board has power “to take affirmative action to correct the conditions resulting from any such violation or practice.” To be sure, this grant is narrower than that given to the National Labor Relations Board (NLRB) under section 10(c) of the National Labor Relations Act, 29 U.S.C. § 160(c). But I believe that under the facts of this case the Bank Board’s power is sufficiently broad to support imposing a moratorium on new accounts.
The legislative history of section 1730 does not address the permissible scope of affirmative action. See S.Rep.No.1482, 89th Cong., 2d Sess., reprinted in [1966] U.S.Code Cong. & Ad.News 3532. The majority relies upon an Eighth Circuit case and a Fifth Circuit case that apply the language of 12 U.S.C. § 1818(b)(1), which is identical in all essential respects to the wording of section 1730(e)(1). Both cases recognize the Bank Board’s power to require affirmative action to correct the conditions resulting from an illegal, unsafe, or unsound practice. First National Bank of Eden v. Department of the Treasury, 568 F.2d 610 (8th Cir. 1978), upheld the Comptroller’s limitation on a bank’s expenditure for executive salaries and bonuses to 1.5% of its average assets and the requirement that the bank president and vice-president repay earlier bonuses the Bank Board thought were excessive. Groos National Bank v. Comptroller of the Currency, 573 F.2d 889 (5th Cir. 1978), upheld the Comptroller’s prohibition of bank loans to a controlling shareholder and those connected with him. In neither Bank of Eden nor Groos did the court limit the Bank Board’s power to insuring merely that the financial institution’s future conduct would be within the bounds of the law, the limit the majority indicates in the instant case.
At the time of the Bank Board’s order, December 18, 1980, it could have required Otero to close all new accounts Otero had wrongfully gained. The Board rejected this remedy because only a few days later the accounts would become legal; also the Board was concerned with delays inherent in implementing an order, the inconvenience to those who had innocently opened new accounts with Otero, and the danger to Otero’s safety and soundness that could result from widespread withdrawals.
In considering the scope of its affirmative remedial power, the Bank Board determined that the statute- Otero violated, 12 U.S.C. § 1832(a), was designed by Congress “to limit competitive inequality and that the December 31, 1980 effective date of the amendments to the section was intended to allow all affected associations ‘to reach the starting gate’ at the same time.”
The Bank Board could have carried out the conceived congressional purpose by requiring Otero to divest itself of the accounts gained prior to December 31, 1980, despite their being lawful after that date. But the inconvenience to innocent account holders and possible jeopardy to the safety and soundness of Otero counsel against this alternative. The moratorium order the Bank Board devised to correct the unfair *293advantage gained by Otero’s illegal entry into the market for interest bearing cheeking accounts was to exclude Otero from that market for a similar period of time. If the remedy should work ideally, Otero would be deprived of new accounts equal to those wrongfully gained. The likely effect, however, will be to deprive Otero of fewer new accounts than it gained during its illegal “head start” period since by now the most interested prospects will have established such accounts at some financial institution.
The majority views the moratorium on new accounts as punitive rather than remedial. Reviewing analogous NLRB orders, the Supreme Court has considered them as punitive and beyond the power of the agency when the orders neither remove the consequences of violation nor dissipate the effects of the prohibited action. Local 60, United Brotherhood of Carpenters and Joiners of America v. NLRB, 365 U.S. 651, 655, 81 S.Ct. 875, 877, 6 L.Ed.2d 1 (1961). This test seems applicable to the Bank Board, since it is authorized to take affirmative action to correct conditions resulting from illegal, unsafe, or unsound practices. Under this test the moratorium is not punitive because it will correct at least partially the effect of the violations.
Under the circumstances of this case I would give weight to the familiar rule the majority cites, that an administrative agency’s knowledge, expertise, and choice of remedy deserve deference. See, e. g., NLRB v. Gissell Packing Co., 395 U.S. 575, 612 n.32, 89 S.Ct. 1918, 1939 n.32, 23 L.Ed.2d 547 (1969); Moog Indus., Inc. v. FTC, 355 U.S. 411, 413, 78 S.Ct. 377, 379, 2 L.Ed.2d 370 (1958). While attempting to remedy Otero’s 268-day head start, the Board simultaneously seeks to protect Otero’s safety and soundness and to shield the innocent account holders. The Board’s remedy may not fully correct Otero’s unfair advantage. Nevertheless, I think the statute permits the remedy and the Bank Board did not abuse its discretion in choosing it.
I would affirm the Bank Board’s order in all respects.