Court Opinion

ID: 9481196
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:10:59.488462+00
Date Added: 2024-06-11T17:48:09.180998
License: Public Domain

KRUPANSKY, Circuit Judge,
dissenting.
The panel majority’s conclusion that once the Federal Home Loan Bank Board (FHLBB) determines an institution is in an “unsafe or unsound condition” and elects to regulate that institution through a consent agreement and to exercise control over its employment agreements, all such agreements are automatically exempt from termination pursuant to 12 C.F.R. section 563.39(b)(5) misconceives the intent, purpose and application of the statutory scheme regulating Federal savings and loans, the National Housing Act, 12 U.S.C. *1258section 1701 et seq., the Horae Owners’ Loan Act of 1933, 12 U.S.C. sections 1461— 1468, and the Federal Home Loan Bank Act, 12 U.S.C. sections 1421-1449, as well as the consent agreement itself. And aside from resting on faulty factual premises, the majority’s reasoning is incorrect in law and would deprive the FHLBB from exercising its regulatory authority through the more informal mechanism of a consent agreement.
The genesis of this controversy was the employment of Robert W. Quinn (Quinn) by Chicago West Pullman (CWP) during August, 1986 at a salary of $10,000 per month. CWP was and is a holding company which originally invested primarily in undervalued railroad companies in need of capital and management. In 1986, it decided to explore existing investment opportunities in the savings and loan industry. Quinn, with a background in financing and experience in the thrift industry, was retained to identify thrifts of interest to CWP.
Shortly after assuming his duties, Quinn surfaced Cardinal Federal Savings Bank of Cleveland (Cardinal) as a possible candidate for acquisition by CWP. Subsequent to initial inquiries during December, 1986, CWP issued a letter to Cardinal expressing an interest in its acquisition. As a result of preliminary negotiations between CWP and Cardinal, Quinn, as a representative of CWP, was provided with office space at Cardinal’s headquarters to conduct a comprehensive survey of Cardinal’s financial condition. CWP also retained the services of the accounting firm Arthur Andersen and Company to assist Quinn in examining Cardinal’s assets.
Prior to December 1986 and continuing thereafter until its acquisition by First Nationwide Financial Corporation (First Nationwide), a subsidiary of Ford Motor Company, Cardinal was a federal mutual savings and loan association, owned by its depositors, chartered by the FHLBB pursuant to the Home Owners’ Loan Act of 1933 and the National Housing Act.
Cardinal was, from its inception, insured by the Federal Savings and Loan Insurance Corporation (FSLIC),1 without which insurance Cardinal and similar thrift associations would have been unable to secure the guarantee of the government for individual deposits. Without the deposits that this governmental guarantee attracted, Cardinal and its counterparts would have been severely limited in their ability to invest, acquire property, and extend loans. Thus, the risk of failure of thrifts rested directly and most heavily upon the FSLIC as insurer. Accordingly, Congress delegated to the FHLBB and FSLIC the broadest authority permitted by the Constitution to regulate insured institutions in order to minimize loss and depreciation of FSLIC insurance funds, to protect the FSLIC from the risks of business failure, and to preserve depositor confidence in savings institutions throughout the nation.
As early as 1984, FSLIC examiners noted that imprudent management at Cardinal had exposed it to possible financial losses. Although the FHLBB,2 from 1986 through 1987, had been suggesting an infusion of new management and restructuring of loan practices to ensure against improvident loans, neither the FHLBB nor the FSLIC were then considering plenary action against Cardinal.
From December of 1986, Quinn pursued his assignment for CWP with the assistance of Arthur Andersen and Company on a daily basis from his office at Cardinal’s headquarters. On or about March 5, 1987, a meeting was held between representatives of CWP, including Quinn, and members of Cardinal’s Board of Directors. FHLBB and FSLIC examiners also attended this meeting. Quinn and CWP expressed concerns that Cardinal’s financial *1259condition and viability was less than they had initially anticipated and suggested various changes in management and loan practices and review procedures. As a result of the March meeting, Cardinal retained the services of Korn/Ferry, an executive search firm, to seek a candidate for the position of chief operating officer of Cardinal.
In August of 1987, CWP petitioned the FHLBB and FSLIC for permission to acquire Cardinal without FSLIC assistance. At about the same time, Korn/Ferry presented Cardinal with the name and resume of Daniel J. Gannon (Gannon) for consideration as a candidate for the position of chief operating officer of Cardinal. Gannon was a Certified Public Accountant who had served as president and CEO of Marine National Exchange Bank in Milwaukee, Wisconsin for a period of years. At the time, he was unemployed, having been terminated from his position at Marine National Exchange Bank some six months previously as a result of an acquisition of the Milwaukee bank. At the request of Robert Seaton (Seaton), the CEO of Cardinal, Gannon traveled to Cleveland for an interview.
Both Seaton and Quinn, neither of whom had previously known Gannon, were impressed with Gannon’s credentials. Cardinal’s Board of Directors, together with Quinn, initiated negotiations with Gannon for the purpose of employing him as the president and chief operating officer of Cardinal. A series of telephone conversations and meetings occurred between Gan-non, Seaton, other Cardinal board members, and Quinn during the remainder of September and into October and November, which culminated in Gannon’s employment on November 24, 1987 as president and chief operating officer of Cardinal.
Quinn, mindful of Korn/Ferry’s continuing efforts to solicit candidates to fill the positions at Cardinal, agreed to become the CEO of Cardinal conditioned upon arriving at mutually acceptable terms of employment.3 During initial negotiations between Quinn and Cardinal’s Board of Directors, Quinn requested an annual salary of $210,-000 for himself, which was equal to that being paid to Seaton, and, with Gannon’s approval, an annual salary of $200,000 for Gannon.4
Contrary to the panel majority’s suggestion, neither Quinn nor Gannon “accepted less in annual salary than they had bargained for in the absence of severance benefits.” It was Quinn who fixed his and Gannon’s salaries by initially requesting Cardinal’s Board for $210,000 and $200,00, which amounts, together with the requested additional perks, including termination benefits, were approved by Cardinal’s Board of Directors. Although the FHLBB and FSLIC were aware of the negotiations between Quinn/Gannon and Cardinal’s Board of Directors, neither agency had authority to enter into those negotiations nor did they do so.
In addition, as early as October 1987, Gannon and Quinn had retained the services of Jones, Day, Reavis & Pogue and Baker & Hostetler, two of Ohio’s largest and most prestigious law firms, to negotiate the specific terms and conditions of their written employment contracts with Cardinal. Quinn and Gannon entered upon their employment with Cardinal on November 24, 1987 without formal written employment contracts, although the broad parameters of their employment had been discussed and approved by Cardinal’s *1260Board of Directors.5 Preliminary drafts of both employment contracts, which were essentially the same, were in existence by early November 1987, and these law firms represented both men until their written employment contracts were accepted and executed by Cardinal on February 10, 1988, and subsequently approved by the FHLBB on July 14, 1988.
Because final acceptance of the Quinn/Gannon employment contracts by Cardinal did not occur until after the execution of the consent agreement between the FHLBB and Cardinal on December 17, 1987, those contracts became subject to the regulatory authority of those agencies pursuant to existing statutory enactments and the conditions of the consent agreement. Although the FHLBB had previously approved indemnification of Quinn and Gan-non for any and all acts and financial losses caused by the previous management, it refused to approve various material terms and conditions of the employment agreements as executed by Cardinal and Quinn/Gannon. The record is unclear as to the date on which the FHLBB ultimately formally approved these contracts, however, the appellants assert and the trial court concluded that such approval occurred on July 14, 1988.
Thus, contemporaneously with its negotiations with Quinn and Gannon, Cardinal’s Board was negotiating a consent agreement with the FHLBB to forestall commencement of formal cease and desist proceedings. Prior to November 1987, supervision by both the FHLBB and the FSLIC extended only to Cardinal’s loan evaluations and procedures, because both agencies were without sufficient evidence to initiate cease and desist proceedings pursuant to 12 U.S.C. section 1464(d). 12 U.S.C. § 1464(d) (1987) (amended 1989). However, on or about November 17, 1987, FHLBB agents had filed a Significant Supervisory Report which confirmed that Cardinal was on the verge of insolvency and which triggered those negotiations. Both Quinn and Gannon were aware of and participated in the consent agreement discussions.
As a result of their participation in the consent agreement negotiations, Quinn and Gannon were aware of Cardinal’s insolvency when their respective lawyers were negotiating and finalizing their contracts. They knew they would be legally bound by the terms and conditions of the consent agreement between Cardinal and the FHLBB. They also knew that the consent agreement incorporated by statutory mandate 12 C.F.R. section 563.39(b)(5), as well as the legal implications of that statutory language, which required that their employment contracts specify that all contractual obligations would, by operation of law, be terminated under certain conditions, one being the provision of financial assistance by the FSLIC to the savings and loan. 12 C.F.R. § 563.69(5) (1987).6 Thus, Quinn and Gannon, as well as their legal counsel, also knew and anticipated that their em*1261ployment would be terminated if Cardinal was acquired with FSLIC assistance by someone other than CWP. As Quinn testified in recounting the contract negotiations, “When acquirers come into a situation, it is usually the two, top two guys they don’t need. They have their own people.”
Pursuant to paragraph 16(o) of the consent agreement, Cardinal submitted the Quinn/Gannon employment contracts to the FHLBB shortly after their execution on February 10, 1988.7 Neither the FHLBB nor the FSLIC had any communication with Cardinal’s Board or Quinn and Gannon concerning the employment contracts, which were forwarded shortly after February 10, 1988, until April 13. In a letter of that date, the FHLBB notified Cardinal that it objected to, among other conditions, the dual Quinn/Gannon CWP/Cardinal employment and the payment of $140,000 to each of them as bonuses for the year 1988. It insisted upon a revision of the indemnification agreement by reducing the amount of the letters of credit, which secured Quinn and Gannon’s employment termination without cause, from three times their base salary. It also insisted upon the deletion of the incentive compensation provisions. In response, Quinn and Gannon submitted numerous amendments to the employment contracts for review by the FHLBB, most of which were resolved although the record is unclear as to the resolution of the dual CWP/Cardinal employment status of Quinn and Gannon.8
In addition, it was explicit in Summers’s letter of July 14, 1987 that the inclusion of 12 C.F.R. section 563.39(b)(5) into the Quinn and Gannon employment contracts was mandated by statute and nonnegotiable when he responded to Cardinal’s last Quinn/Gannon submittals: “The approval of the agreements as amended, with the exception of incentive bonuses, shall in no way effect the enforceability of section 2.8 of Messrs. Quinn and Gannon’s agreement.” The above regulation, incorporated into those contracts as paragraph 2.8(d) & (e), provided:
2.8 Termination or Suspension as Required by Law
Notwithstanding anything in this Agreement to the contrary, the following provisions shall limit the obligations of Employer, to the extent required by the applicable regulations of the Federal Savings and Loan Insurance Corporation (12 C.F.R. § 563.39), or similar succeeding regulations:
(d) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of Employer, (i) by the FSLIC, at the time the FSLIC enters into an agreement to provide assistance to or on behalf of Employer under the authority contained in Section 406(f) of the Na*1262tional Housing Act; or (ii) by the Federal Home Loan Bank Board, at the time the Board or its Principal Supervisory Agent approves a supervisory merger to resolve problems related to operation of Employer or when Employer is determined by the Board to be in an unsafe or unsound condition.
(e) Termination or suspension pursuant to subparagraphs (a), (b), (c) and (d) hereunder, shall not affect rights hereunder which are vested at the time of such termination.
Although paragraph 4.1 of the Quinn and Gannon employment contracts provided for collateralization of certain termination rights as identified in paragraphs 2.1(b), 2.2, 2.3, 2.5, and 2.6(a),9 terminations by operation of law under paragraph 2.8 of the employment contracts (12 C.F.R. § 563.39) were excluded unless the vested benefits exception of section (e) of paragraph 2.8 (12 C.F.R. § 563.39(b)(5)) was applicable. Incorporation of paragraph 2.8(d) & (e) into the collateralization requirements of paragraph 4.1 was intentionally omitted for the obvious reason that its inclusion would have been unacceptable to the FHLBB. It has been conceded by the appellants that none of the triggering events of paragraphs 2.1(b), 2.2, 2.3, and 2.6(a) have occurred to activate termination collateralization.
Contrary to the self-sacrificing image cast by the panel majority, Quinn and Gan-non successfully exacted the maximum conditions of employment from Cardinal which they felt would be approved by the FHLBB within its statutory mandate. The employment contracts resulted from negotiations between Quinn/Gannon, their legal counsel, and Cardinal’s Board of Directors. Neither the FHLBB nor the FSLIC had regulatory authority or inclination to participate in or interfere with those initial negotiations prior to the execution of the consent agreement between the FHLBB and Cardinal’s Board of Directors on December 17, 1987. It is true that after March 1987, when Cardinal’s financial condition became questionable, Quinn and Gan-non and their legal counsel conducted a continuing dialogue with Summers and other representatives of the FHLBB, probing for the limitations the agency intended to impose upon the terms and conditions of any submitted employment contract. This probing intensified after the execution of the consent agreement between Cardinal and the FHLBB.
However, it should also be remembered that both Quinn and Gannon were highly sophisticated businessmen, experienced in executive management who, throughout the entire negotiations, were represented and advised by highly capable legal talent. They were keenly aware of the implications and consequences of 12 C.F.R. section 563.-39(b)(5). They recognized that their employment with Cardinal in all probability would be terminated upon assisted acquisition by someone other than CWP. In sum, their acceptance of employment with Cardinal was a calculated business judgment predicated upon acquisition of Cardinal by CWP which, from December 1986 through at least August 1987, had “the inside track” as Cardinal’s only interested suitor. They obviously concluded that future career opportunities with CWP outweighed the risks of employment with Cardinal, especially since they would be handsomely paid by both Cardinal and CWP during the interim period while CWP negotiated Cardinal’s acquisition.
Although management under Quinn and Gannon significantly improved the financial condition of Cardinal, in March 1987, Quinn and Gannon conducted an entourage of CWP representatives to Cincinnati where Quinn, as spokesperson for CWP, advised Summers that CWP was withdrawing its petition to acquire Cardinal without assistance; however, it would pursue assisted acquisition. When it became apparent that *1263the FSLIC would be required to assist any acquisition of Cardinal, FSLIC solicited invitations to accomplish that result in August of 1988. CWP and others, including First Nationwide, presented assistance acquisition proposals between September and December of 1988. On December 1, 1988, the Quinn and Gannon employment contracts were automatically renewed.
CWP was not successful in its effort to acquire Cardinal, and First Nationwide assumed control of Cardinal with FSLIC assistance on December 30, 1988. On that same date, both Quinn and Gannon were advised that their respective contracts were terminated, that their services would no longer be required, and that their contracts would not be renewed by First Nationwide since it had its own senior officers in place to assume management and operation of Cardinal.
On January 17, 1989, Quinn and Gannon presented the letters of credit collateraliz-ing their employment contracts to Society National Bank for payment. The letters of credit were honored by the bank, which prompted the FSLIC to initiate this action seeking declaratory judgment, preliminary and permanent injunctive relief to reacquire the funds paid over to Quinn and Gannon under the letters of credit as an asset of Cardinal. In response to the petition of the FSLIC, Quinn and Gannon charged that paragraph 2.8 was inapplicable to the cancellation of their employment contracts and asserted that they were discharged without cause within the meaning of paragraph 2.5 of their employment contracts when First Nationwide assumed management and operation of Cardinal and installed its own executive personnel. Thus, their collateralized benefits were due to them pursuant to paragraph 4.1 of the contracts.
Apart from FSLIC’s standing to initiate these proceedings, the controversy of primary concern before the trial court and initially before this court on appellate review was the resolution of which paragraph, i.e., 2.5 or 2.8, of the employment agreements applied to Quinn and Gannon’s terminations.
This was the single issue tried, briefed, argued, and decided by the lower court. This was the single issue initially joined, briefed, and argued before this court upon appeal. The majority disposition completely refuses to consider this issue and states, “We need not decide whether the ‘assistance’ provision of subsection (i) or the ‘supervisory merger’ provision of subsection (ii) was triggered because Cardinal was in ‘an unsafe or unsound condition’ under the disjunctive clause of subsection (ii).” For the first time during oral arguments before this court, to the surprise and consternation of all parties, the court sua sponte queried legal counsel and subsequently requested supplemental briefs on the issue of “whether the language of 12 C.F.R. § 563.39(b)(5)(l) (1990) was applicable to this case; that is, whether the consent agreement vesting FSLIC with plenary authority over Cardinal’s activities constituted ‘an agreement to provide assistance’ within the meaning of 12 U.S.C. § 1729(f)(1) (West 1989) (provision of National Housing Act governing assistance to thrift institutions).” The court further directed the parties to address the “applicability of § 563.39(b)(5)(ii), which continues when necessary the operation of contracts which would otherwise be terminated following either a ‘supervisory merger’ or a determination by the FSLIC that a bank is ‘in an unsafe or unsound condition.’ ” Although the FHLBB drafted the consent agreement, in part, to recognize and protect the FSLIC’s interests in Cardinal, the FSLIC was not a signatory to the agreement and was not vested with plenary authority by virtue of the agreement. In addition, only the FHLBB, not the FSLIC, had the authority to determine whether an institution was in an unsafe and unsound condition or to initiate a supervisory merger.
The trial court treated this case as the fairly simple contract case it really was. It first addressed the issue of FSLIC’s standing to bring suit against Quinn and Gan-non. The FSLIC satisfied the injury-in-fact component of the standing requirement because it would be required to reimburse First Nationwide for the letters of credit. *1264This reimbursement was required by section 7 of the assistance agreement between FSLIC and First Nationwide, which provides that the FSLIC would indemnify First Nationwide for any “unreserved for” claims. The former chief financial officer for Cardinal testified that no specific reserve had been established for the letters of credit. In addition, since FSLIC was asserting its own legal rights in attempting to avoid an obligation of indemnification asserted against it, the prudential component of the standing requirements was satisfied.
The trial court then addressed the preliminary injunction standard and discussed the FSLIC’s likelihood of success on the merits. As found by the trial court,
This contract is clearly drafted as to the sections here in issue. Section 4.1 provides for collateralized benefits upon the occurrence of certain events which are specified in section 2. None of those events occurred in this case. Defendants’ employment was terminated as a matter of law under section 2.8; this is not one of the triggering events specified in section 4.1. Approval of the contracts was given by Summers on behalf of the Cincinnati Bank with this distinction clearly in mind.
Federal Savings and Loan Insurance Corp. v. Quinn, 711 F.Supp. 366, 377-78 (N.D.Ohio 1989).
Since section 2.8 operated to terminate Cardinal’s obligations upon an FSLIC assisted acquisition, Quinn and Gannon were not entitled to collateralized benefits.
Quinn and Gannon contended these benefits had vested and were subject to the section 2.8 exclusion for vested obligations. In response, the trial court noted that the collateralized benefits could not vest, since they were subject to a condition precedent, namely discontinuance of employment pursuant to one of the conditions enumerated in paragraphs 2.1(b), 2.2, 2.3, 2.5 and 2.6(a) of the employment contracts. Quinn and Gannon also noted that 12 C.F.R. section 563.39 automatically terminated their contractual employment only; it did not effect their dismissal and did not affect their vested rights.10 Thus, according to their theory, when they were dismissed, they were dismissed without cause, which triggered their entitlement to collateralized benefits. However, as the trial court noted, “the plain language of section 2.8(d) states that ‘[a]ll obligations under this Agreement shall be terminated,’ when an assistance agreement is entered,” including any obligations under section 2.5 of the employment contracts. Quinn, 711 F.Supp. at 378.
The panel majority’s disposition, however, is anchored in the conclusion that Cardinal was in an “unsafe or unsound condition” on November 24, 1987, the date that Quinn and Gannon entered upon their employment as CEO and president and chief operating officer of Cardinal respectively, or at any time before the execution of the consent agreement between FHLBB and Cardinal on December 17, 1987. To support that erroneous predicate, it has relied upon a phrase in the consent agreement which stated that Cardinal had violated “an insurance regulation, 12 C.F.R. § 563.13(b)(1),” and, according to the majority, this violation was “the basis of [the FHLBB’s] authority for initiating cease and desist proceedings against Cardinal.” 11 The majority erroneously reasons, “This determination is tantamount to a determination based on ‘unsafe and unsound’ practices and FSLIC’s course of administrative conduct is equivalent to a finding of ‘unsafe and unsound’ conditions.” Not only is this statement contrary to the developed facts, it ignores the legal distinction between the FHLBB and the FSLIC: two separate, albeit related, entities authorized *1265by different sections of the code to pursue independent courses of action.
The majority’s conclusion that Cardinal was in an unsafe and unsound condition to transact business within the mandate of 12 C.F.R. section 563.13(b)(1), see generally Woods v. Federal Home Loan Bank Bd., 826 F.2d 1400, 1409 (5th Cir.1987), cert. denied, 485 U.S. 959, 108 S.Ct. 1221, 99 L.Ed.2d 422 (1988), is an unsupported quantum leap from any FHLBB preliminary finding that Cardinal had engaged in unsafe or unsound practices. The FHLBB never initiated cease and desist proceedings against Cardinal nor was Cardinal ever formally determined to be in an “unsafe and unsound condition” as implied by the majority opinion.12 Rather, the consent agreement was executed in lieu of initiating a supervisory merger or determining that Cardinal was in an unsafe and unsound condition, events which by operation of law would terminate the Quinn/Gannon employment contracts. The regulatory authority of the FHLBB was exercised solely by virtue of the consent agreement voluntarily executed on December 17, 1987 by Cardinal’s Board of Directors, which included Robert W. Quinn and Daniel J. Gannon, both of whom had been elected to the board on November 24, 1987, when they were employed by Cardinal as chairman and chief executive officer and president and chief operating officer, respectively. Contrary to the majority panel’s statement, the FSLIC did not hire Quinn and Gannon and could not have made a determination in November or December 1987 that their contracts were necessary to the continued operation of Cardinal.
In addition, the very statutory authority that would have invoked 12 C.F.R. section 563.39 was not exercised by FHLBB when it entered into the consent agreement. The FHLBB was authorized to enter into the consent agreement pursuant to its authority to supervise and regulate savings and loans under the Home Owners’ Loan Act of 1933, 12 U.S.C. sections 1461-1468.13 The consent agreement, which was executed by the FHLBB’s Supervisory Agent, states, “It is understood and agreed that this Agreement is a ‘written agreement entered into with the [Federal Home Loan Bank] Board’ as that phrase is used in section 5(d)(2) of the Home Owners’ Loan Act, 12 U.S.C. Section 1464(d)(2) (1987).” Consent Agreement, para. 21. Section 1464(d)(2)(A) specifically provides that violation of a written agreement between the FHLBB and an institution constitutes cause to bring cease and desist proceedings.
The FSLIC’s authority to provide financial assistance was entirely independent of the FHLBB’s authority to enter into the consent agreement. The FSLIC’s authority was granted by 12 U.S.C. section 1729(f), which stated:
*1266(1) The Corporation is authorized, m its sole discretion and upon such terms and conditions as the Corporation may prescribe, to make loans to, to make deposits in, to purchase the assets or securities of, to assure the liabilities of, or to make contributions to any insured institution—
(A) if such action is taken to prevent 'the default of such institution;
(2)(A) In order to facilitate a merger or consolidation of an insured institution ... or the sale of assets of such insured institution and the assumption of such insured institution’s liabilities by another insured institution.
12 U.S.C. § 1729(f) (repealed 1989).
The FSLIC clearly exercised this independent power through or by virtue of the assistance agreement.
The majority panel has determined that since 12 C.F.R. section 563.39(5)(b)(ii) initially was invoked by the FHLBB upon the execution of the consent agreement, section 563.39(5)(b)(i) became forever inoperative even though the FSLIC opted, by virtue of its independent authority, to assist in the acquisition of Cardinal pursuant to section 563.39(5)(b)(i). However, even if, assuming arguendo, the FHLBB had determined, after the execution of the consent agreement, that under 12 C.F.R. section 563.39(b)(5)(ii) the employment of Gannon and Quinn was necessary to the continued operation of Cardinal, the FSLIC nevertheless retained its regulatory perogative, after it entered into the assistance agreement, to invoke 12 C.F.R. section 563.-39(b)(5)(i) and its termination of employment contracts by operation of law in the absence of its independent determination that the employment of Gannon and Quinn was necessary to the continued operation of Cardinal.
As noted by the trial court, the legislative history surrounding 12 C.F.R. section 563.39 reflects that it was intended to afford FSLIC with “greater flexibility when entering an assistance agreement with a troubled thrift in dealing with employment contracts negotiated by that institution in the past.” Quinn, 711 F.Supp. at 378; 47 Fed.Reg. 17,471 (1982). The provisions added to the regulation were enacted to provide protection for the FSLIC. See, e.g., 49 Fed.Reg. 45,847 (1984). First Nationwide, when it submitted its petition for the acquisition of Cardinal with the FSLIC’s assistance, relied upon the FSLIC’s ability to make enforceable employment determinations. Instead, the panel majority would impose upon the acquirer and the FSLIC two officers who had no duties and whose employment contracts First Nationwide refused to renew after the FSLIC assisted acquisition.
The majority panel’s erroneous interpretation of the regulation deprives the FHLBB and the FSLIC of their broad remedial powers, and its failure to distinguish between the statutory authority delegated to the FHLBB and the FSLIC dilutes and subverts their congressional mandate to regulate the savings and loan industry. Accordingly, I would affirm the trial court’s resolution of the issues joined, tried, briefed, and argued before it by adopting its well-reasoned and thoughtful opinion. I must, however, respectfully enter my dissent to the panel majority’s disposition of this controversy on issues foreign to the trial court and this appellate review. But more particularly, for the reasons stated herein, I take exception to the majority’s interpretation of and reasoning addressing the congressional enactments material to this action.

. The FHLBB is an independent fiscal agency of the federal government. The FSLIC was a duly organized corporation engaged in insuring the deposits of federal savings and loans associations, which are subject to regulation by the FHLBB.

. Hereafter, "FHLBB" refers to the Federal Home Loan Bank Board of Cincinnati, which was charged with the regulation of Cardinal.

. During October, 1987, it was decided by Cardinal's Board of Directors, including Seaton, that he, Seaton, would step down as Cardinal’s Chief Executive Officer if Quinn would accept the position.

. Quinn also requested various other perks for himself and Gannon, including but not limited to membership in or affiliation with a country club of their own selection, membership in the Union Club, which is a luncheon club, the full-time use of a Cadillac Seville or comparable vehicle with reasonable associated expenses, mortgage financing for personal residences, four-weeks annual vacation, employer-funded life insurance coverage in the amount of three times their respective salaries, medical insurance policies with Blue Cross/Blue Shield at employer’s expense, participation in Cardinal’s retirement income plan and its savings plan, and reimbursed business expenses for themselves and their wives.

. On or about November 6, 1987, Quinn and Gannon had traveled to Cincinnati for the express purpose of introducing Gannon to Jerry Summers, who was the chief supervisory agent of the FHLBB, and other top personnel of the FHLBB and the FSLIC so “they could get a sense of who this man was that was probably going to become the new Chief Operating Officer of the bank.”

. 12 C.F.R. § 563.39 is entitled, "Employment contracts." It provides, in part:
(a) General. An insured institution may enter into an employment contract with its officers and other employees only in accordance with the requirements of this section.
(b) Required provisions. Each employment contract shall provide that:
(5) AH obligations under the contract shall be terminated, except to the extent determined that continuation of the contract is necessary to the continued operation of the association, (i) by the Corporation [the FSLIC], at the time the Corporation enters into an agreement to provide assistance to or on behalf of the association under the authority contained in section 406(f) of the National Housing Act; or (ii) by the Federal Home Loan Bank Board, at the time the Board or its Principal Supervisory Agent (as defined in § 561.35 of this subchapter) approves a supervisory merger to resolve problems related to operation of the association or when the association is determined by the Board to be in an unsafe and unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.
12 C.F.R. § 563.39 (1987).

. Paragraph 16(c) of the consent decree provided:
[ T]he Institution, without prior written approval of the Agent, shall not, and shall not allow any wholly-owned or majority-owned subsidiary or affiliate of the Institution to:
(o) enter into, renew or revise any contractual arrangement with any officer, director, controlling person, affiliate, subsidiary or attorney or agent for or of the Institution or any of its subsidiaries

. The record does not fully disclose the scope and magnitude of the continuing relationships, financial and otherwise, between CWP and Quinn/Gannon after they assumed their employment as officers of Cardinal or to what extent those relationships were, if at all, terminated. The record does, however, reflect with clarity that Quinn and Gannon each received a $10,000 monthly consulting fee from CWP through at least April of 1988, and that each had a minimum Cardinal stock option commitment of one and possibly two million dollars from CWP if it successfully acquired Cardinal. Discussions had also been conducted concerning participation rights in future CWP acquisitions and position and salary advancements in a proposed CWP holding company.
It also appears from the record that after assuming his position as president and chief operating officer of Cardinal, Gannon ordered the accounting department to accrue on the financial records of Cardinal, commencing January 1, 1988, $140,000 annual bonuses for himself and for Quinn. Those bonuses would have become payable if CWP acquired the institution. Although the record does not fully develop the interrelationship between the parties, it is, however, clear that it continues to some extent since CWP is assuming and funding the costs and attorneys fees for this litigation.

. As noted by the majority panel’s decision, paragraph 2.1(b) of the contract provided for termination of employment by reason of the expiration of the original or any extended term of the agreement, paragraph 2.2, by death, paragraph 2.3, by disability, paragraph 2.5, by employer without cause or by the executive for cause, and paragraph 2.6(a), by the executive due to change in control.

. The regulation's history states:
Exercise of the power to terminate an employment contract only affects the officer’s right to continue employment under the contract and neither constitutes dismissal nor affects vested rights.
47 Fed.Reg. 17,471 (1982).

. Contrary to this statement, only the FSLIC, not the FHLBB, was authorized to commence cease and desist proceedings for violation of the insurance regulation.

. The cease and desist proceedings would have resulted from Cardinal’s violation of 12 C.F.R. section 563.13(b)(1), which described the capital requirements for a savings and loan. 12 C.F.R. § 563.13(b)(1) (1987). Contrary to the majority opinion, violation of a FHLBB regulation is an entirely distinct offense from engaging in unsafe and unsound practices, and either action is sufficient to support cease and desist proceedings. 12 U.S.C. § 1464(d) (1987) (amended 1989).
As stated in the third whereas clause of the agreement, the FHLBB premised its authority to enter into the consent agreement upon the existence or future existence of one or more of the infringements specified in 12 U.S.C. section 1464(d)(5), (6)(A)(i) through (iii) for the appointment of a conservator, receiver, or other legal custodian for Cardinal pursuant to section 406 of the National Housing Act, as amended (12 U.S.C. Section 1729). 12 U.S.C. section 1464(d)(5), (6)(A)(i)-(iii) provided the following reasons for appointment of a receiver: insolvency; an unsafe or unsound condition to transact business; willful violation of a cease and desist order; and concealment of books. 12 U.S.C. § 1464(d) (1987) (amended 1989). The consent agreement does not specify which of these transgressions existed, however, since the threatened cease and desist proceedings would have been predicated upon Cardinal’s disregard for regulatory capital requirements and its insolvency, insolvency was or would have been the basis for the appointment of a receiver.

. The Act provides: ”[T]he Board is authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings and loan associations.” 12 U.S.C. § 1464(a) (1987) (amended 1989).