Court Opinion

ID: 9468648
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:19:59.533794+00
Date Added: 2024-06-11T17:40:58.430879
License: Public Domain

McKAY, Circuit Judge,
concurring:
No explanation of the legislation governing what amounts to, in one form or another, third party check withdrawals from savings accounts is entirely satisfactory, and delving too deeply into the legislative history of these sections raises, perhaps, more questions than it answers. Therefore, it seems appropriate to state separately my reasons for agreeing with the result reached by the court. The mischief probably is rooted in the fact that a debating body such as Congress could not respond swiftly enough with regulations to accommodate the sophisticated devices designed *290by depository institutions to circumvent comprehensive legislation. Therefore, the congressional legislation evolved in a piecemeal fashion so that sometimes one enactment overlapped or did not quite match another. In order to elicit a rational marketplace meaning of the various acts and amendments, it is necessary to avoid the usual detailed refinements of comparative statutory history that have normally been the hallmark of judicial work. Instead, we must emphasize the objectives of Congress without over-emphasizing the individual steps taken to achieve those ends. While the general objectives of Congress remain elusive, they can reasonably be derived from the legislative history, statutory language, and overall structure of the legislation. In the Acts at issue here, too much attention to precision in the use of statutory language would lead to the unwise effect of holding that Congress failed in the one objective that seems clearest, that is, the objective of putting all regulated financial institutions on an equal competitive footing in offering what amounts to, in whatever form, check withdrawals from interest-bearing accounts. The title of the 1980 Depository Institutions Deregulation and Monetary Control Act evidences this overriding objective.
The 1980 Act represented a reversal of the previous legislative position, first manifested in 1933 with the enactment of 12 U.S.C. § 371a, which prohibited all check withdrawals from interest-bearing accounts. That section expressly forbade federally-insured banks from granting demand access to interest-bearing accounts either “directly or indirectly, by any device whatsoever.” Sometime thereafter, in a handful of northeastern states, state-chartered financial institutions began offering what are currently known as Negotiable Order of Withdrawal (NOW) accounts to accomplish this objective. Responding to those developments, Congress enacted 12 U.S.C. § 1832(a) in 1973. While it did not use the sweeping “directly or indirectly” language of § 371a, it is reasonable in light of the history of the Act to conclude that no negative pregnant was intended. The purpose of § 1832(a) was to prevent all such devices explicitly, except in the states where local competitive advantage had to be met because state-chartered institutions were already offering such accounts. By 1979 Congress had concluded that banks generally should be permitted to allow check access to savings accounts. While it is true that the description of devices used in the 1979 amendment to 12 U.S.C. § 371a spoke of what commonly are referred to as Automatic Fund Transfer (AFT) accounts, Congress’ apparent intent was simply to permit instant access to savings accounts through the checking device. That amendment was effective only until March 31, 1980. In the meantime, Congress was forced to deal comprehensively with the regulations authorizing various banking services, after the United States Court of Appeals for the District of Columbia, in an unpublished opinion, struck down Federal Reserve Board regulations that authorized a variety of innovative banking services. The court stayed the effectiveness of its action to allow Congress time to act. In response, Congress adopted the Depository Institutions Deregulation and Monetary Control Act of 1980, Pub.L.No.96-221, § 303, 94 Stat. 146 (1980). Under this Act, an amendment to 12 U.S.C. § 1832, effective December 31, 1980, allowed all depository institutions to “permit the owner of a deposit or account on which interest or dividends are paid to make withdrawals by negotiable or transferable instruments for the purpose of making transfers to third parties.” Congress also extended the 1979 amendments to 12 U.S.C. § 371a, which gave federally-insured banks authority to offer AFT accounts. These amendments would have expired by their own terms on March 31, 1980, leaving a gap between that date and the effective date of the sweeping new legislation.
One can rationally argue that it is significant that the amendment to § 371a was extended indefinitely rather than merely until December 31, 1980, when § 1832, authorizing all depository institutions to offer check access to savings accounts, became *291effective. Considered out of the context of the overall scheme, this suggests that § 371a dealt only with AFT accounts, while § 1832 covered only NOW accounts. However, to credit this argument ignores Congress’ obvious overall purpose of eliminating competitive advantage among financial institutions in providing check access to savings accounts. When considered in context, I am satisfied that when Congress originally enacted § 1832, it intended to permit savings and loan institutions in certain named states to offer special programs not generally allowed in order that they could compete with state-chartered institutions. I am also satisfied that for whatever reason, when Congress amended § 371a in 1979, it intended to grant that same competitive advantage to federally-insured banks, without extending that advantage to other institutions. The language and chronological sequence of the statutory sections dealing with check access to savings accounts suggests that the disparities arising from this type of piecemeal legislation caused Congress eventually to conclude that it should reverse its original position, which prevented essentially all checking access to savings accounts, and instead to authorize such services for all financial institutions under its control, effective December 31, 1980.
From this history we glean the following: Prior to 1973, no federally-regulated financial institutions were authorized to permit check access to savings accounts. After 1973 only the depository institutions in the states expressly exempted in the 1973 enactment of § 1832(a) were permitted check access to savings accounts. Beginning with the 1979 amendments, federally-insured banks were added to the limited list of those permitted check access to savings accounts. Finally, on December 31, 1980, all remaining federally-regulated financial institutions were added to the list. At least from the enactment of § 1832(a) in 1973 and in all probability by implication before that date, all federally-regulated financial institutions were forbidden from offering check access to savings accounts unless expressly exempted under that section or its subsequent amendments, or under § 371a. Thus, at least from 1973 until December 31, 1980, Otero was forbidden by § 1832(a) from offering any program that effectively allowed check access to savings accounts.
I agree with the court’s analysis of the constitutional questions raised but find it necessary to state separately my views on remedies. I agree with Part IIA of the court’s opinion, finding that the Bank Board’s cease-and-desist powers were appropriately exercised in this situation. I also agree with the conclusion in Part IIB that the Bank Board lacks authority to impose the compensatory penalty box remedy over and above its cease-and-desist order. My reasons for this conclusion, however, differ from those stated by the court. I am persuaded by the Fifth Circuit’s analysis in Gulf Federal Savings and Loan v. Federal Home Loan Bank Board, 651 F.2d 259 (5th Cir. 1981), construing 12 U.S.C. § 1464(d)(2)(A), which gives the Bank Board the same enforcement powers allowed the Federal Savings and Loan Insurance Corporation (FSLIC) in § 1730(e). Based on its analysis of the legislative history, the Fifth Circuit determined that the principal purpose of providing an enforcement scheme to federal agencies responsible for insuring deposits in financial institutions was to eliminate practices that might undermine the financial stability of insured institutions. The court points out that cease-and-desist authority was given to these agencies to counter unsafe or unsound practices and to allow the agencies to deal swiftly when federal insurance liability might be implicated. While that court expressly reserved a ruling on whether cease-and-desist power would lie in cases involving a violation of law that did not amount to an unsafe and unsound practice, I believe that Congress intended to permit cease-and-desist orders for any clear violation of federal regulatory law, as was involved in this case. I doubt, however, that Congress intended to grant the Bank Board authority to impose implied remedies for practices other than those that are unsafe or unsound. Obviously, gaining a competitive advantage in the market is *292neither unsafe nor unsound for the financial future of Otero or the other savings and loans involved in this action. I therefore conclude that the Bank Board has no implied power to attempt to correct a marketplace imbalance created by an illegal practice, although the Board would have such authority to correct any unsafe and unsound conditions created by an illegal practice.
For the reasons stated, I agree with the court’s disposition of this case.
LOGAN, Circuit Judge,