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FDIC Enforcement Decisions and Orders |
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Board adopts recommendation of hearing officer and disapproves applicant's Section 32 application to join the Bank's board of directors, based on opinions applicant rendered as counsel to another, failed federally insured institution.
[.1] FDI Act Section 32Application to Serve as DirectorCompetence and Experience
Applicant's failure to exercise care and independent judgment as counsel to one institution, particularly regarding the rewriting of minutes of several directors' meetings, is specifically relevant to his ability to serve as a director of another bank.
[.2] FDI Act Section 32Application to Serve as DirectorCharacter and Integrity
Testimony regarding Applicant's good character and reputation for integrity, by witness unfamiliar with his advise as outside counsel, is non-responsive and therefore unpersuasive as to the evidence upon which denial of the Section 32 application is based.
In the Matter of
This proceeding is before the Board of Directors (the "Board") of the Federal Deposit Insurance Corporation ("FDIC") for final decision following the disapproval of a Notification of Addition of a Director or Employment of a Senior Executive Officer ("Notice") filed by Patrick G. Huycke and following the appeal of that disapproval. Mr. Huycke requested and received a hearing before a presiding officer after the Director of the FDIC's Division of Supervision ("Director") denied his appeal. The Presiding Officer issued a Recommended Decision
By Notice dated February 19, 1991, Patrick G. Huycke informed the FDIC that he was being added to the board of directors of the Bank of Southern Oregon, Medford, Oregon ("Bank"). Notification was given pursuant to the requirements of Section 32 of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. § 1831i, as the Bank was newly organized and recently insured.
In disapproving service by Mr. Huycke as a director of the Bank, the San Francisco Regional Director ("Regional Director") relied primarily on two incidents in which Mr. Huycke rendered opinions as counsel to Citizens Savings and Loan, Medford, Oregon ("Citizens"), a failed federally insured institution. One opinion was rendered in connection with a loan by Citizens to Charles Maestri. The other opinions at issue were provided during 1982 and 1983 regarding Citizens' purchase of real estate companies in which certain of its directors had interests. Based on these incidents, the Regional Director and the Director determined that Huycke's service as a director of the Bank "would not be in the best interests of either the depositors of the Bank or of the public." (FDIC Ex. No. 18.)
[.1] It appears to be the position of Mr. Huycke that his failures to independently investigate before providing legal opinions to his client, Citizens, and the state regulatory authority "would at most constitute nothing more than negligence," which "would have no reflection whatsoever upon Mr. Huycke's integrity or character." Huycke Br. at 3. While the issue of Mr. Huycke's negligence or malpractice is left to another tribunal, the Board is of the view that Mr. Huycke's handling of one depository institution's relationship to its regulators is specifically relevant to his handling of another institution's relationship to its regulators. This is particularly true for the types of institutions which are the focus of Section 32 newly chartered institutions, institutions where control has recently changed, or troubled institutions.
[.2] Mr. Huycke presented a series of witnesses, including the Administrator of the Division of Finance and Securities for the State of Oregon, who testified to his good character and reputation. None of these witnesses addressed the two incidents which are the focus of this proceeding and, indeed, none of them possessed any knowledge of Huycke's activity while rendering opinions as outside counsel to Citizens. The Board finds their testimony to be non-responsive and therefore unpersuasive as to the evidence upon which denial by the Director was based.
For the reasons discussed above, the Board finds substantial evidence in this record to support the findings of the Presiding Officer. The Board, therefore, adopts the decision of the Presiding Officer and incorporates it herein by reference, and finds that Mr. Huycke's service as a director of the Bank of Southern Oregon would not be in the best
The Board of the FDIC, having considered the entire record in this proceeding, hereby adopts the recommendation of the Presiding Officer to continue the Notice of Disapproval of Patrick G. Huycke.
In the Matter of
This is a proceeding under Section 32 of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. Section 1831i.
In disapproving service by Mr. Huycke as a Director of the Bank of Southern Oregon, the Regional Director cited, among other matters, actions of Mr. Huycke in rendering certain opinions as counsel to Citizens Savings and Loan ("Citizens"), now defunct (FDIC Ex. 15; Tr. 25). |
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Last Updated 6/6/2003 | legal@fdic.gov |
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