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   [8001B] FDIC Docket No. FDIC-85-363e (8-7-86).

   Respondent's motion to dismiss, on constitutional grounds, of FDIC enforcement action, was denied.

   [.1] FDIC—Authority
   The FDIC may exercise both quasi-executive and quasi-judicial powers without violating the separation of powers required by the U.S. Constitution.

   [.2] Practice and Procedure—Judicial Review—Exhaustion of Administrative Process
   The policy favoring exhaustion of the administrative process prior to judicial review is strongest when constitutional questions are raised.

DECISION AND ORDER DENYING
RESPONDENT'S MOTION TO
DISMISS

FDIC-85-363e
   This proceeding arises under Section 8(e) of the Federal Deposit Insurance Act (the "Act"). 12 U.S.C. § 1818(e). On December 30, 1985, the Board of Directors of the Federal Deposit Insurance Corporation (the "Board" and the "FDIC," respectively) issued a Notice of Intention to Remove from Office and to Prohibit from further Participation ("Notice") against * * * * "Respondent"), individually and as president, chairman and member of the board of directors of * * * Bank, * * * ("Bank"). The Notice alleges that Respondent has been responsible for violations of law, rules, and/or regulations, unsafe or unsound banking practices, and breaches of fiduciary duty. The Notice alleges that Mr. * * *'s conduct evidences dishonesty and willful disregard for the safety and soundness of the Bank. An administrative law judge has been appointed to conduct a hearing and issue a recommended decision.
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   By motion filed March 21, 1986, Respondent seeks dismissal of the proceeding based on the argument that the FDIC Board may not exercise the law enforcement powers enumerated in the Federal Deposit Insurance Act because the FDIC is a nonexecutive entity. Respondent argues that law enforcement is an executive power exclusively reserved to the President by the Constitution. Respondent seeks oral argument before the Board on this issue.
   On March 28, 1986, the FDIC Compliance and Enforcement Section ("FDICC&E") filed a motion to strike Respondent's motion or, in the alternative, for an enlargement of time to respond to the motion to dismiss. The FDIC-C&E motion alleges incomplete service of Respondent's motion and argues that the motion could be denied by the administrative law judge.

Respondent's Motion to Dismiss

   [.1] The Board denies Respondent's motion to dismiss for two independent reasons. First, the constitutionality of independent agencies exercising powers associated with more than one branch has been long recognized. Humphrey's Executor v. United States, 295 U.S. 602 (1939). Citing Humphrey's Executor, the United States Court of Appeals for the Third Circuit has recently observed that "the constitutionality of independent agencies has been settled for half a century." Ameron v. U.S. Army Corps of Engineers, No. 85-5226, slip op. at 13 (3d Cir. March 27, 1986). In Ameron the court described the "core principle of Humphrey's Executor" as follows: "Congress could create agencies exercising dual functions and which were independent of unfettered executive control" Id. The FDIC, like the Federal Trade Commission which was the subject of Humphrey's Executor, may exercise both quasi-executive and quasi-judicial powers without violating the separation of powers required by the United States Constitution.
   A second reason independently justifying denial of Respondent's motion is that the matter is not yet ripe for determination.

   [.2] The administrative process should move promptly forward. If proven, the serious misconduct in which Mr. * * * is alleged to have engaged may pose a serious risk to the safety and soundness of the Bank. The public interest favors resolution of the proceeding as quickly as possible. It is possible that administrative action favorable to Respondent will moot the constitutional issue. Denial of the motion, therefore, is consistent with the long-standing judicial policy requiring exhaustion of administrative proceedings prior to judicial review. This policy favoring exhaustion of the administrative process prior to judicial review is strongest where, as here, constitutional questions are raised. Courts avoid constitutional adjudication when issues may be resolved otherwise. Moore v. City of East Cleveland, 431 U.S. 494, 526-27 (1977) (Burger, C.J., dissenting).
   The constitutional issue Respondent raises will be preserved for the court of appeals. Should the Board's final decision on the merits be adverse to Respondent the entire matter will be ripe for judicial review pursuant to 12 U.S.C. § 1818(i). Moreover, a fully developed factual record will assist the appellate court's consideration of whatever aspect of the Board's decision Respondent may challenge. W.E.B. DuBois Clubs of America v. Clark, 389 U.S. 309 (1967); Ticor Title Insurance Co. v. Federal Trade Commission, 625 F. Supp. 747 (D.D.C. 1986).

Oral Argument
   The Board has considered Respondent's request for oral argument but finds oral argument would not aid its deliberations.
   Accordingly, the request is denied.

FDIC-C&E Motion

   Since the Board has denied Respondent's motion to dismiss, the FDIC-C&E's motion to strike, or in the alternative, for enlargement of time to respond to the motion to dismiss has become moot. It is therefore dismissed.

IT IS HEREBY ORDERED:
   1. Respondent's motion to dismiss filed March 21, 1986 is DENIED.
   2. Respondent's request for oral argument is DENIED.
   3. FDIC-C&E's motion to strike, or in the alternative, for enlargement of time to respond to the motion to dismiss is DISMISSED.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 21st day of April, 1986.
/s/ Hoyle L. Robinson
Executive Secretary

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