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   [8020] In the Matter of Freedom Financial Thrift and Loan Association, El Toro, California, Docket No. FDIC-92-68b (9-1-92).

   Board denies request for a private hearing because bank has not demonstrated how its situation is so different from other institutions' as to warrant special treatment. Allegation of innocence and concern for the Bank's reputation do not demonstrate that a private hearing would be in the public interest. (This order was terminated by order of the FDIC dated 7-8-97. See ¶16,175.)

   [.1] Practice and Procedure—Hearings—Public or Private—Burden
   Private hearings may be granted on the basis of safety and soundness concerns; it is Respondent's burden to show that its situation differs so significantly from those involving other banks as to warrant special treatment.
   [.2] Practice and Procedure—Hearings—Public or Private—Standard
   Allegation of innocence and concern for the Bank's reputation do not demonstrate that a private hearing would be in the public interest.

In the Matter of

FREEDOM FINANCIAL THRIFT
AND LOAN ASSOCIATION

EL TORO,CALIFORNIA
(Insured State Nonmember Bank)
DECISION AND ORDER
ON REQUEST FOR A
PRIVATE HEARING

FDIC-92-68b

BACKGROUND

   On March 12, 1992, the Regional Director (Supervision) of the Federal Deposit Insurance Corporation's ("FDIC") San Francisco Regional Office initiated this proceeding by issuing a Notice of Charges and of Hearing ("Notice"), alleging that Freedom Financial Thrift and Loan Association, El Toro, California ("Thrift" and "Respondent"), had engaged or was engaging in unsafe or unsound banking practices and violations of laws and/or regulations. The Notice sought the issuance of an appropriate order under section 8(b)(1) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. § 1818(b)(1). On March 19, 1992, Administrative Law Judge Arthur L. Shipe ("ALJ") was designated to hear the case. On March 31, 1992, Respondent filed an Answer to the Notice and a Motion to the FDIC to Grant a Private Hearing with an Affidavit of counsel for Respondent in support. The Motion requests a private hearing. On April 10, 1992, FDIC Enforcement Counsel filed FDIC's Opposition to Motion by Freedom Financial Thrift and Loan Association to the FDIC to Grant a Private Hearing with the ALJ.

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DISCUSSION

   A. The Governing Statute and Regulations.

   [.1] Requests for private hearing are to be decided by the FDIC Board of Directors ("Board"). Section 308.33(a) of the FDIC Rules and Regulations ("FDIC Rules"), 12 C.F.R. § 308.33(a); In the Matter of The Citizens Bank of Clovis, FDIC-91-406b, 2P-H FDIC Enf. Dec. ¶ 8012 (March 2, 1992).
   Section 8(u)(2) of the FDI Act, 12 U.S.C. § 1818(u)(2), provides that

    All hearings on the record with respect to any notice of charges issued by a Federal banking agency shall be open to the public, unless the agency, in its discretion, determines that holding an open hearing would be contrary to public interest.
   The legislative history of the statute "suggests increasing emphasis on the public nature of all aspects of section 1818 proceedings with any private proceedings being the exception to be justified by the party desiring privacy." In the Matter of The Citizens Bank of Clovis, at I-48. In order to qualify for a private hearing, a bank must "demonstrate in a concrete fashion how the effects of this proceeding differ so significantly from those involving other banks as to warrant special treatment." Id., at I-48. Further, "common sense suggests that concern for the safety and soundness of an institution should be the primary consideration in determining whether to mandate private proceedings in a particular case." Id. at I-48.

B. The Thrift Has Not Demonstrated Entitlement to a Private Hearing

   [.2] Respondent's request for a private hearing is based on a conclusory one-page affidavit of its attorney asserting that (1) the Thrift believes that the charges set forth in the Notice are unsubstantiated, "thus shedding false light upon the Thrift," (2) because its capital ratios and loan loss reserves "substantially exceed FDIC requirements," the Thrift believes it is highly probable it will succeed on the merits, (3) the "adverse public relations, rumor, and harm that will occur should the hearing be made public will far outweigh any marginal public policy that favors a public forum in this proceeding," and (4) "a public hearing in this proceeding would be detrimental to the reputation and image of the Thrift in the eyes of its existing and potential customer base, thus compromising the Thrift's future prospects."
   Respondent has failed to make even a minimal showing why the presumption in favor of public hearings should be discarded in this case. Respondent's concern—that its reputation will suffer as a result of public hearing—is common to nearly all section 8 proceedings, and therefore does not by itself present basis for differentiating this case from others. Similarly, Respondent's beliefs that it will prevail in the proceeding are, the Board must assume, commonly held by financial institutions that are respondents in section 8 proceedings which are not settled prior to hearings.
   The Board concludes that Respondent has not pleaded or alluded to any fact or factor which demonstrates how the effects of a public hearing in this case differ so significantly from those involving other financial institutions as to warrant special treatment. There is nothing in the record here to support a determination by this Board that an open hearing would be contrary to the public interest.
   Respondent's request for a hearing on its request for a private hearing is perforce denied. Even were such a hearing countenanced by the appropriate provision of the FDIC's Rules, section 308.23 C.F.R. § 308.23, it would be denied here because no legal or factual basis for the requested private hearing has been pleaded or asserted.
   Accordingly, the Motion for a Private Hearing is denied.

ORDER

   For the reasons set forth above, it is hereby ORDERED that the Thrift's Motion for a Private Hearing is DENIED.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 1st day of September, 1992.

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