(a)  PROHIBITION.--

(1)  IN GENERAL.--Except with the prior written consent of the Corporation--

(A)  any person who has been convicted of any criminal offense involving dishonesty or a breach of trust or money laundering, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense, may not--

(i)  become, or continue as, an institution-affiliated party with respect to any insured depository institution;

(ii)  own or control, directly or indirectly, any insured depository institution; or

(iii)  otherwise participate, directly or indirectly, in the conduct of the affairs of any insured depository institution; and

(B)  any insured depository institution may not permit any person referred to in subparagraph (A) to engage in any conduct or continue any relationship prohibited under such subparagraph.

(2)  MINIMUM 10-YEAR PROHIBITION PERIOD FOR CERTAIN OFFENSES.--

(A)  IN GENERAL.--If the offense referred to in paragraph (1)(A) in connection with any person referred to in such paragraph is--

(i)  an offense under--

(b)  PENALTY.--Whoever knowingly violates subsection (a) shall be fined not more than $1,000,000 for each day such prohibition is violated or imprisoned for not more than 5 years, or both.

[Codified to 12 U.S.C. 1829(b)]

[Source:  Section 2[19(b)] of the Act of September 21, 1950 (Pub. L. No. 797; 64 Stat. 893), effective September 21, 1950, as added by section 910(a) of title IX of the Act of August 9, 1989 (Pub. L. No. 101--73; 103 Stat. 477), effective August 9, 1989]

(d)  BANK HOLDING COMPANIES.--

(1)  IN GENERAL.--Subsections (a) and (b) shall apply to any company (other than a foreign bank) that is a bank holding company and any organization organized and operated under section 25A of the Federal Reserve Act or operating under section 25 of the Federal Reserve Act, as if such bank holding company or organization were an insured depository institution, except that such subsections shall be applied for purposes of this subsection by substituting "Board of Governors of the Federal Reserve System" for "Corporation" each place that term appears in such subsections.

(2)  AUTHORITY OF BOARD.--The Board of Governors of the Federal Reserve System may provide exemptions, by regulation or order, from the application of paragraph (1) if the exemption is consistent with the purposes of this subsection.

[Codified to 12 U.S.C. 1829(d)]

[Source: Section 2[19(d)] of the Act of September 1, 1950 (Pub. L. No. 797; 64 Stat. 893), effective September 21, 1950 as added by section 710(a) of title VII of the Act of October 13, 2006 (Pub. L. No. 109--351; 120 Stat. 1990), effective October 13, 2006]

(e)  SAVINGS AND LOAN HOLDING COMPANIES.--

(1)  IN GENERAL.--Subsections (a) and (b) shall apply to any savings and loan holding company as if such savings and loan holding company were an insured depository institution, except that such subsections shall be applied for purposes of this subsection by substituting Director of the Office of Thrift Supervision' for Corporation' each place that term appears in such subsections.

(2)  AUTHORITY OF DIRECTOR.--The Director of the Office of Thrift Supervision may provide exemptions, by regulation or order, from the application of paragraph (1) if the exemption is consistent with the purposes of this subsection.

[Codified to 12 U.S.C. § 1829(e)]

[Source: Section 2[19(e)] of the Act of September 1, 1950 (Pub. L. No. 797; 64 Stat. 893), effective September 21, 1950 as added by Section 710(a) of title VII of the Act of October 13, 2006 (Pub. L. No. 109--351; 120 Stat. 1990), effective October 13, 2006]

NOTES

Derivation.  Section 19(a) derives from section 2[19] of the Act of September 21, 1950 (Pub. L. No. 797; 64 Stat. 893), effective September 21, 1950.

Section 19(b) was added by section 910(a) of the Act of August 9, 1989, known as the "FIRRE Act", (Pub. L. No. 101--73; Stat. 477, effective August 9, 1989.

General guidelines and policies with respect to section 19. On September 27, 1968, the Federal Deposit Insurance Corporation's Chairman addressed the following memorandum to all insured banks.

"The Federal Deposit Insurance Corporation has for some time been studying in detail Section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829), relating to the requirement for this Corporation's consent prior to any insured bank employing persons who have been convicted of crimes involving dishonesty or breach of trust.

"Section 19 provides as follows:

"Except with the written consent of the Corporation no person shall serve as a director, officer, or employee of an insured bank who has been convicted, or who is hereafter convicted of any criminal offense involving dishonesty or breach of trust. For each willful violation of this prohibition, the bank involved shall be subject to a penalty of not more than $100 for each day this prohibition is violated, which the Corporation may recover for its use.' (emphasis supplied)

"B.  The conviction must be for a criminal offense involving dishonesty or breach of trust. Felonies as well as misdemeanors wherein dishonesty or breach of trust is involved are included within the definition. Dishonesty is defined to mean "to cheat or defraud for monetary gain or its equivalent, direct or indirect, or to wrongfully take from any person, property lawfully belonging to that person in violation of any criminal statute or code.' Breach of trust is defined to mean a wrongful use, misappropriation, or omission with respect to any property or fund which has been lawfully committed to a person in a fiduciary capacity.'

"C.  Youth Offenders

1.  Adjudgment by a court against a person as a youthful offender under any youth offender law or adjudgment as a juvenile delinquent' by a family court or any other court having jurisdiction over minors as defined by state law will not require an application under Section 19. Such adjudications are not considered convictions for criminal offenses.

"D.  Adults and All Minors Convicted of Crimes

1.  The Conviction of any adult or minor by a court of competent jurisdiction for any criminal offense involving dishonesty or breach of trust as defined in paragraph B above will require an application for consent prior to a bank's employment of that person.

"II.  THE CORPORATION'S POLICY WITH RESPECT TO APPLICATIONS MADE UNDER SECTION 19

"A.  In considering any application made by an insured bank to employ a person who has been convicted of a criminal offense involving dishonesty or breach of trust, the factors to be considered will include but will not be limited to the following:

1.  The specific nature of the offense involved and the circumstances surrounding it.

2.  The evidence of rehabilitation of the person since the date of his conviction. (Parole, suspension of sentence, and reputation of the person since conviction will be given consideration. Participation by the person in programs on the national or state levels to hire and retrain the hardcore unemployed also will be given consideration.)

3.  The age of the person at the time of his conviction.

4.  The position to be held by the person in the bank.

5.  The fidelity bond coverage applicable to the person."