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FDIC Enforcement Decisions and Orders

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{{4-1-90 p.A-1164}}
   [5096] FDIC Docket Number FDIC-86-41b (12-8-87)

   The FDIC denied a bank's motion for a stay of a cease and desist order since the bank did not satisfactorily respond to the FDIC's request for information or adequately remedy its practices. The FDIC did grant a temporary stay to those provisions of the cease and desist order that concern the bank's inadequate level of equity capital since the information submitted by the bank adequately addressed that issue. (For related proceedings in this case, see [¶5092]).

   [.1] Cease and Desist Order—Stay Denied
   If a bank does not satisfactorily respond to the FDIC's request for information or adequately remedy its practices, a stay of a cease and desist order is inappropriate.

In the Matter of * * * BANK (Insured
State Nonmember Bank)


DECISION AND ORDER
FDIC-86-41b

   This matter comes before the Board of Directors ("Board") of the Federal Deposit Insurance Corporation ("FDIC") upon a request by * * * Bank & Trust Company, * * * ("Bank"), for a Stay of the Board's August 4, 1987 Order to Cease and Desist ("Order") until March of 1988. On November 3, 1987, the Board issued an Order staying the effectiveness of the Cease and Desist Order for thirty (30) days pending receipt of supplemental information demonstrating how a proposed merger would resolve each problem addressed in the Cease and Desist Order. On November 23, 1987, the Bank submitted supplemental information which adequately addressed the issue of the Bank's inadequate level of equity capital. However, the Bank did not specifically address in a satisfactory manner the other requirements of the Cease and Desist Order, but instead asserted only that an unexecuted proposed agreement between the merged bank's parent holding company and the Federal Reserve Bank of * * * would take effect at the time of consummation of the merger, and that such agreement is "almost identical in content" to the Cease and Desist Order.

   [.1] We have reviewed the record in this matter and compared the proposed agreement with the * * * to the Cease and Desist Order. We find the agreements are quite different and that reference to the proposed agreement with the * * * does not satisfactorily respond to our request for information or adequately remedy the Bank's practices not related to capital adequacy that were addressed by the Cease and Desist Order.
   Accordingly, for the reasons set forth above, the Board concludes that it has no basis for granting a stay of the entire Cease and Desist Order. Therefore, a temporary stay until March 1, 1988, is hereby granted only as to those provisions of the August 4, 1987 Cease and Desist Order that concern the Bank's inadequate level of equity capital. Specifically, the Board hereby stays the effective date until March 1, 1988, for paragraphs (b) on page 1; (e)(iv) on page 2; 2(a), (b), (c), (d) and 3, on pages 4–6. The remainder of the Cease and Desist Order shall take effect upon receipt of this Decision and Order.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 8th day of December, 1987.

/s/ Hoyle L. Robinson
Executive Secretary

ORDER

FDIC-86-41b

   * * * Bank and Trust Company, * * *, has requested by motion filed with the Board of Directors ("Board") of the Federal Deposit Insurance Corporation ("FDIC"), that the Board's Cease and Desist Order of August 4, 1987 ("Order"), be stayed pending the outcome of * * *'s appeal to the United States Court of Appeals for the Fifth Circuit. The basis for * * *'s request is that it has an application for merger pending with the FDIC that will, if approved, eliminate the need for the Order. The Board having considered * * *'s request and the {{4-1-90 p.A-1165}}opposition filed by FDIC enforcement counsel,
   IT IS HEREBY ORDERED, that the effectiveness of the Board's Cease and Desist Order of August 4, 1987, be and hereby is, stayed for a period of 30 days following service on the parties of this Order.
   IT IS FURTHER ORDERED, that on or before November 24, 1987, each party hereto shall supplement the record before the Board with respect to this motion for a stay of the Cease and Desist Order of August 4, 1987, by submitting such additional information (if any) as it may deem appropriate for the Board's consideration in determining whether the stay of the effectiveness of its August 4, 1987 Order should be continued beyond December 10, 1987, on the basis of the proposed merger of * * * into the Bank of * * * , * * *. The Board is specifically interested in information relating to the following:
   1. the nature and status of the merger application involving * * * now pending before the FDIC's * * * Regional Office and any related transactions, including any application pending with the Board of Governors of the Federal Reserve System or any Federal Reserve Bank;
   2. the source and status of any proposed contributions to the equity capital of * * * or the resulting bank; and
   3. an explanation of each parties' view as to how the specific problems addressed in the Cease and Desist Order will be eliminated or alleviated by the proposed merger, together with all evidence that supports those views. The parties are requested to address separately each provision of the Cease and Desist Order.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 3rd day of November, 1987.

/s/ Margaret M. Olsen
Hoyle L. Robinson
Executive Secretary

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