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FDIC Enforcement Decisions and Orders

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{{4-1-90 p.A-1406}}
   [5123] Docket No. FDIC-87-203b (12-13-88).

   Motion for Stay pending judicial review of an Order to Cease and Desist was denied. FDIC found that petitioners failed to set forth any factual or legal basis upon which the stay could be granted. (Related proceedings in this docket appear at [¶5120]. This case has been appealed to the United States Court of Appeals for the Seventh Circuit.)

   [.1] Practice and Procedure—Judicial Review—Standards for Stay of FDIC Action
   Petitions for a stay pending judicial review must show: (1) a likelihood that the petitioner will prevail on the merits of the appeal; (2) irreparable injury if the stay is not granted; (3) no substantial harm to other interested persons; and (4) no harm to the public interest. Stay will not be granted where Motion for Stay does not address each of these points.

In the Matter of *** Bank *** ***, ***


(Insured State Nonmember Bank)
DECISION AND ORDER DENYING
MOTION FOR STAY PENDING
REVIEW

   On November 21, 1988, *** Bank ***, *** (the "Bank" or "Petitioner") filed a motion with the Board of Directors of the Federal Deposit Insurance Corporation (the "Board") seeking a stay of the Board's Decision and Order ("Order") dated October 18, 1988 ("Motion for Stay"), pending review of the Board's Order by the United States Court of Appeals for the Seventh Circuit.
   The October 18, 1988, Order was issued pursuant to the Board's authority under section 8(b) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(b). The Order was
{{4-1-90 p.A-1407}}entered following a full hearing on the merits, and required the Bank to cease and desist from a number of unsafe or unsound banking practices and violations of regulation found by the Board upon the record, and to take certain affirmative corrective actions. The Order, inter alia, directed the Bank to:
   A. Add at least three independent members to its board of directors;
   B. Establish a securities trading account on its books; and
   C. Increase its capital/asset ratio to 6.5 percent.
   In a single unsupported and conclusory paragraph, the Bank's Motion for Stay asserts that this Order is arbitrary and capricious, constitutes an improper exercise of regulatory authority in that it is contrary to the evidence, contrary to the findings of the administrative law judge, violative of the *** Business Corporation Act, and violative of the Bank's due process rights. The Motion for Stay contains the further conclusory allegation, without any factual support, that, if the Order is not stayed pending review, the Bank "will suffer irreparable injury and its right to review will be rendered meaningless."
   The Motion for Stay filed by the Bank can only be described as pro forma. The language quoted above is the only statement contained in the document which arguably would support a stay order. No additional arguments or factual reasons were presented. After a review of the corrective provisions of its Order to Cease and Desist, and upon consideration of the Bank's unsupported submission, the Board finds that Petitioner has presented no factual or legal basis upon which the Bank's Motion for Stay Pending Review could be granted.

   [.1] In deciding whether to stay an agency order, administrative agencies and the courts of appeal apply basically the same standards. Petitions for a stay pending judicial review must demonstrate that four conditions are met before a stay will be entered, to wit: (1) a likelihood that the petitioner will prevail on the merits of the appeal; (2) irreparable injury to the petitioner unless the stay is granted; (3) no substantial harm to other interested persons; and (4) no harm to the public interest. 2 Moore's Federal Practice 65.04[1] at 65:39–40 and the cases cited therein; Associated Securities Corp. v. S.E.C., 283 F.2d 773, 774-75 (10th Cir. 1960); Virginia Petroleum Jobbers Assn. v. F.P.C., 259 F.2d 921, 925 (D.C. Cir. 1958). Petitioner does not meet any of these conditions.
   First, other than Petitioner's obvious disagreement with the Board's decision, the Motion for Stay does not even address the merits of the case. Accordingly, the Board cannot find that Petitioner has carried its burden of showing a likelihood of success on the merits of the appeal. Conclusory allegations that the Order is arbitrary and capricious simply do not meet this burden. Second, the Motion to Stay contains only the assertion of irreparable injury to the Bank without so much as an additional sentence in either support or explanation of the assertion. Petitioner has not met its burden to show irreparable injury.
   Third, we consider together the interests of the FDIC and the public interest. Petitioner's submission is also silent as to how such a stay could serve any public purpose. The public generally, and the FDIC as the insurer of the Bank's depositors, have a strong interest in the Bank ceasing and desisting from the unsafe or unsound banking practices and taking the corrective actions set forth in the October 18, 1988, Order. It is, however, the public interest which is paramount in our deciding whether to issue a stay. Virginia Petroleum Jobbers Assn. v. F.P.C., 259 F.2d 921, 925 (D.C. Cir. 1958). Congress has charged the Board with preventing and correcting unsafe or unsound banking practices which pose risks to insured banks. The public interest requires a financially sound, stable banking system. After a thorough review, the Board's October 18, 1988, Order represents its best analysis of a phased program of corrective actions, including the addition of independent members to the board of directors of the Bank and management practices aimed at improving the Bank's capital and earnings. The Board has concluded that a stay of its Order and a delay of necessary corrective actions might result in injury to the Bank's depositors and creditors and the FDIC insurance fund. Significantly, the Order cannot cause injury to the Bank. The Board's Cease and Desist Order is remedial in nature, only requiring that the Bank adhere to safe and sound banking practices {{4-1-90 p.A-1408}}and take affirmative steps to correct the effects of its prior practices.
   Accordingly, it is hereby ORDERED that Petitioner's Motion for Stay Pending Review is DENIED.
   By direction of the Board of Directors.
   Dated at Washington D.C., this 13th day of December, 1988.

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