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{{11-30-92 p.A-2079}}
   [5183] In the Matter of Donald E. Thompson, Bank of Bellevue, Bellevue, Nebraska, Docket No. FDIC-91-246jj (9-15-92).

   The FDIC Board rejects the recommendation of a hearing officer and rules that the Section 32 proceeding to determine a applicant's fitness to serve as an officer of a troubled bank is moot because the bank has closed and the position in question is no longer available.

   [.1] FDI Act Section 32—Standing to Initiate Proceedings
   Section 32 requires a new or troubled institution to notify the FDIC when it proposes to employ any new senior executive officer, but does not give the individual applicant standing to initiate proceedings if FDIC disapproves the bank's application to hire him.

   [.2] FDI Act Section 32—Proceedings Moot
   Because Section 32 requires the FDIC to evaluate an individual's fitness to serve in a specific position at a specific institution, the proceedings become moot when the institution closes and the position is no longer available.

In the Matter of
DONALD E. THOMPSON
BANK OF BELLEVUE
BELLEVUE, NEBRASKA
(Insured State Nonmember Bank)
DECISION AND ORDER
FDIC-91-246jj

I. INTRODUCTION

   This proceeding arises out of a Notification of Addition of a Director or Employment of a Senior Executive Officer ("Notification"), submitted March 11, 1991, to the Kansas City Regional Office of the Division of Supervision, Federal Deposit Insurance Corporation ("FDIC"), by the Bank of Bellevue, Bellevue, Nebraska ("Bank"). The Notification seeks approval, under section 32 of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1831i ("Section 32"), for the employment of Donald E. Thompson ("Petitioner") as vice president/senior lending officer of the
{{11-30-92 p.A-2080}} Bank, an institution in "troubled condition" for purposes of Section 32(a)(3).1
   The Bank withdrew the Notification on March 21, 1991, following request by the FDIC for additional favorable information concerning Petitioner, but Petitioner on July 23, 1991, requested that the Notification be reinstated and processed. On August 16, 1991, the Regional Director ("Supervision") of the FDIC's Kansas City Regional Office ("Regional Director") issued a Notice of Disapproval of Notification of Addition of a Director and/or Employment of a Senior Executive Officer ("Notice of Disapproval"), based on a determination that Petitioner lacked the statutorily mandated competence to act as vice president/senior lending officer of this troubled Bank. Petitioner appealed and requested a hearing. Following an interlocutory appeal to the Board of Directors of the FDIC ("Board"),2 a hearing was held before Presiding Officer Richard A. White ("Presiding Officer") on June 9, 10, and 11, 1992, in Omaha, Nebraska.3 The Bank was merged out of existence as of May 1, 1992. Tr. at 366.
   The Presiding Officer in his Recommended Decision rejected several procedural and due process arguments raised by Petitioner, summarized the oral and written evidence presented by the parties, and made a recommendation as to whether Petitioner is competent to serve as vice president/ senior lending officer of the Bank.
   After a careful review of the entire record of this proceeding, the Board declines to adopt the Presiding Officer's well-founded Recommended Decision because this proceeding has been rendered moot. The Bank no longer exists and therefore the position in question, as to which Petitioner's competency is to be evaluated, is no longer available. The Board therefore orders that the Recommended Decision be vacated and disapproval of the Notification be rescinded.

II. DISCUSSION

A. Standing To bring A Section 32 Proceeding.

   [.1] The Board is of the view that Petitioner lacked standing to initiate this proceeding because the Bank withdrew the Notification before a notice of disapproval was issued by the agency. Section 32(a) provides that "[a]n insured depository institution. . . shall notify the appropriate Federal Banking agency of the proposed. . .employment of an individual as a senior executive officer ..." 12 U.S.C. § 1831i(a). There is no statutory or regulatory authority for the submission of a notification by the individual whom the bank proposes to employ, or for the reinstatement by the applicant of a notification which has been withdrawn by the bank.
   However, the FDIC's Kansas City Regional Office allowed Petitioner to "reinstate" the Notification after it had been withdrawn by the Bank; and notified Petitioner that the Notification had been accepted for processing as of July 26, 1991. This procedure is not authorized by the statute or regulations. While sections 308.153-.154 of the FDIC regulations grant the individual applicant for employment certain procedural rights independent of the bank in question, those rights do not arise until the agency has formally disapproved a notification to employ the individual involved. Withdrawal of a notification prior to disapproval terminates agency action pursuant to Section 32.
   Petitioner argues that the FDIC's contact with the Bank to express concern with the Notification and to request additional information supporting approval constituted an "initial determination" of disapproval which caused the Bank to withdraw the application. Pet. Br. at 7. The Board finds that there is no evidence of record to support this assertion.4 Section 303.14(c) of the FDIC Rules, 12 C.F.R. § 303.14(c), specifically authorizes a regional director or his or her


1 Section 32(a) requires that a "troubled" State nonmember bank notify the FDIC of the proposed employment of any individual as a senior executive officer at least 30 days before such employment becomes effective. Section 32(e) provides that the FDIC shall issue a notice of disapproval if the competence, experience, character, or integrity of the individual with respect to whom such notice is submitted indicates that it would not be in the best interests of the depositors of the bank or of the public to permit the individual to be employed by the bank.

2 In the Matter of Donald E. Thompson, Bank of Bellevue, Bellevue, Nebraska, Docket No. FDIC-91-246jj. 2 P-H FDIC Enf. Dec. ¶8014 (March 10, 1992).

3 Citations in this Decision shall be as follows:
Transcript — "Tr. at ____."
Exhibits — "FDIC Ex. ____" or Pet. Ex ____."
Petitioner's Post-Hearing Memorandum Brief -- "Pet. Br. at ____."

4 Review Examiner Richard K. Anderson testified that he telephoned the Bank's attorney on or about March 19, (Continued)

{{11-30-92 p.A-2081}}designee to require additional information before a notification is accepted for processing. If a bank decides to withdraw a notification rather than submit additional information, no standing has been granted to the individual applicant to pursue approval of the notification, nor would such standing be appropriate under section 32.
   However, because Petitioner was in essence granted standing by the Regional Director, the Board will not base its decision on Petitioner's lack of standing.
B. This Proceedings is Moot.

   [.2] The record in this proceeding reflects that the Bank was "merged out of existence on May the 1st, 1992," Tr. at 366.5 Consequently, the specific position at issue, in relation to which Petitioner's competence must be evaluated, is no longer available.
   As the Board held in an earlier Section 32 proceeding:

    [A]n individual's competence, experience, character, or integrity is evaluated in relation to the particular institution involved, the specific position in which the Applicant seeks to be employed and any special needs of that institution.
(Emphasis added.)
In the Matter of Daniel R. Cartier, Verona Exchange Bank, Verona, Illinois, Docket No. FDIC-90-153jj, 2 P-H FDIC Enf. Dec. ¶5162A at A-1634.6 (January 15, 1991). Where, as here, the only issue raised is the competence of the applicant for the specific position at the institution in question, it is clear that no purpose will be served by hearing and deciding that issue once the position becomes no longer available.
   As of May 1, 1992, the Bank no longer existed. This proceeding became nothing more than an academic exercise, an abstract inquiry into Petitioner's competence for a nonexistent position.
   Sections 308.153-.154 of the FDIC Rules, 12 C.F.R. §§ 308.153-.154, grant a disapproved applicant the right to a review of a Notice of Disapproval and a hearing, independent of the bank in question. However, the relief to which a successful application/ petitioner is entitled after review and a hearing is rescission of the Notice of Disapproval. Section 308.155(f) of the FDIC Rules, 12 C.F.R. § 308.155(f). Complete relief will therefore be afforded the disapproved applicant, if the position becomes no longer available, by rescinding the Notice of Disapproval, without burdening the agency and the applicant with further proceedings which would be expensive, time-consuming and meaningless.

CONCLUSION

   The Board concludes that this proceeding has been rendered moot be the fact that the Bank no longer exists. The applicant's competence under Section 32 must be evaluated in relation to the particular institution involved, the specific position offered and any special needs of the institution. Because the position in question is no longer available, Petitioner's competence for that position is no longer an issue and hence the proceeding should be terminated and the Notice of Disapproval should be rescinded.

ORDER

   The Board of Directors of the Federal Deposit Insurance Corporation, having considered the entire record in this proceeding, and having determined that this proceeding concerning Petitioner's competence to serve as vice president/senor lending officer at Bank of Bellevue, Bellevue, Nebraska, is moot because the position is no longer available, hereby declines to adopt and vacates the Recommended Decision of the Presiding Officer.
   ACCORDINGLY, IT IS HEREBY ORDERED that the August 16, 1991, Notice of Disapproval of the Notification of Addition of a Director or Employment of a Senior Executive Officer, submitted by Bank of Bellevue, Bellevue, Nebraska on March 11,


4 Continued: 1991, to ascertain whether the Bank had any additional favorable information regarding Petitioner's qualifications, because he had concerns about Petitioner's performance at Occidental Nebraska Federal Savings and Loan Association, Omaha, Nebraska, Tr. at 384–385; and that the FDIC had made no determination regarding approval or disapproval at the time the Notification was withdrawn by the Bank, Tr. at 403. Petitioner presented no evidence to refute Mr. Anderson's testimony.

5 The Bank was merged into Douglas County Bank & Trust Co., Omaha, Nebraska, Tr. at 393. Review Examiner Richard K. Anderson testified, "[i]t was a merger transaction, but, in fact, it's actually a whole new bank. It obtained a new charter and they did a merger transaction, a purchase and assumption type of transaction, purchased certain assets out of the old bank and took all the deposit liabilities, formed a brand-new bank with a new charter." Tr. at 398–399.
{{11-30-92 p.A-2082}} 1991, and the October 2, 1991, Notice of Denial of Appeal from Notice of Disapproval, are hereby rescinded.
   IT IS FURTHER ORDERED, that the Executive Secretary, or his designee, is instructed to execute and serve copies of this Decision and Order on all parties, and on the Presiding Officer.
   By direction of the Board of Directors.
   Dated at Washington, D.C. this 15th day of September, 1992.
   /s/ Robert E. Feldman
   Deputy Executive Secretary

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