[Federal Register Volume 65, Number 243 (Monday, December 18, 2000)]
[Proposed Rules]
[Pages 78994-79013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31978]


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FEDERAL HOUSING FINANCE BOARD

12 CFR Parts 907 and 908

[No. 2000-42]
RIN 3069-AB-03


Rules of Practice and Procedure

AGENCY: Federal Housing Finance Board.

ACTION: Proposed rule.

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SUMMARY: The Federal Housing Finance Board (Finance Board) is proposing 
to amend its regulations to implement the provisions of Title VI of the 
Gramm-Leach-Bliley Act, Public Law 106-102 (1999) and to establish 
rules of practice and procedure governing hearings on the record in 
certain administrative enforcement actions. The proposed rule is 
intended to provide Finance Board personnel, the Federal Home Loan 
Banks (Banks), the Office of Finance (OF) and the directors and 
executive officers of the Banks and OF, as well as any other interested 
parties, with sufficient notice and guidance to fully utilize the 
procedures.
    The Finance Board is also proposing to make certain conforming 
amendments to its existing rules.

DATES: The Finance Board will accept written comments on the proposed 
rule that are received on or before January 17, 2001.

ADDRESSES: Send comments to Elaine L. Baker, Secretary to the Board, by 
electronic mail at [email protected], or by regular mail at the Federal 
Housing Finance Board, 1777 F Street, N.W., Washington, D.C. 20006. 
Comments will be available for public inspection at this address.

FOR FURTHER INFORMATION CONTACT: Charlotte A. Reid, Special Counsel, 
Office of General Counsel, 202/408-2510, [email protected]. Staff also can 
be reached by regular mail at the Federal Housing Finance Board, 1777 F 
Street, N.W., Washington, D.C. 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

A. The Federal Home Loan Bank Act

    The twelve Banks are instrumentalities of the United States 
organized under the authority of the Federal Home Loan Bank Act, as 
amended, 12 U.S.C. 1421-1449 (Act). The Banks are a ``government 
sponsored enterprise'' (GSE), i.e., a federally chartered but privately 
owned institution created by Congress to serve a public purpose. The 
purpose of the Banks is to support the financing of housing and 
community development lending. See 12 U.S.C. 1422a(a)(3)(B)(ii), 
1430(i), (j)(10). The Banks are cooperatives, meaning that only a 
member of a Bank may own the Bank's capital stock and share in its 
profits. An institution that is eligible (typically, an insured 
depository institution) may become a member of a Bank if it satisfies 
certain statutory criteria and purchases a specified amount of the 
Bank's capital stock. 12 U.S.C. 1424, 1426. Only members and certain 
eligible housing associates (such as state housing finance agencies) 
may borrow from or use other products and services offered by the 
Banks. 12 U.S.C. 1426, 1430(a), 1430b.
    The Banks, together with the OF, comprise the Federal Home Loan 
Bank System (Bank System), which operates under the supervision of the 
Finance Board, an independent agency in the executive branch of the 
Federal government.\1\ Under the Act, the primary duty of the Finance 
Board is to ensure that the Banks operate in a financially safe and 
sound manner. Consistent with that duty, the Finance Board is required 
to supervise the Banks, ensure that they carry out their housing 
finance mission, and ensure that the Banks remain adequately 
capitalized and able to raise funds in the capital markets. 12 U.S.C. 
1422a(a)(3)(A), (B).
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    \1\ The Finance Board was created by the Financial Institutions 
Reform, Recovery and Enforcement Act of 1989, Pub. L. 101-73, 103 
Stat. 412 (FIRREA).
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    Section 2B of the Act sets forth the powers and duties of the 
Finance Board. 12 U.S.C. 1422b. In general, the Finance Board is 
empowered to supervise the Banks and to promulgate and enforce

[[Page 78995]]

such regulations and orders as are necessary to carry out the 
provisions of the Act. 12 U.S.C. 1422b(a)(1). The Finance Board also is 
authorized to suspend or remove for cause a director, officer, employee 
or agent of any Bank or OF. The Act requires that the Finance Board 
communicate in writing to the subject individual and the Bank or OF the 
cause of any such suspension or removal. 12 U.S.C. 1422b(a)(2). With 
the enactment of the Gramm-Leach-Bliley Act in 1999, the Finance 
Board's enforcement powers were significantly expanded.

B. The Gramm-Leach-Bliley Act Amendments

    On November 12, 1999, the Gramm-Leach-Bliley Act, Public Law No. 
106-102, 113 Stat. 1338 (Nov. 12, 1999) (GLB Act), was enacted. Title 
VI of the GLB Act, known as the Federal Home Loan Bank System 
Modernization Act of 1999 (Modernization Act), substantially amended 
the Act. In particular, section 606 of the Modernization Act amended 
section 2B of the Act, 12 U.S.C. 1422b(a)(5), to confer on the Finance 
Board certain administrative enforcement powers with respect to the 
Banks and the Office of Finance, and their executive officers and 
directors, which are substantially the same as those granted to the 
Office of Federal Housing Enterprise Oversight (OFHEO) with respect to 
the Federal National Mortgage Association, the Federal Home Loan 
Mortgage Corporation (collectively, the housing finance enterprises), 
or the directors or executive officers of the housing finance 
enterprises, by the enforcement provisions in Subtitle C of Title XIII 
of the Housing and Community Development Act of 1992, known as the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 
(Safety and Soundness Act) in sections 1371 through 1379B (codified at 
12 U.S.C. 4631-4641), and those granted to the appropriate Federal 
banking agency with respect to insured depository institutions under 
paragraphs (6) and (7) of section 8(b) of the Federal Deposit Insurance 
Act, as amended. (codified at 12 U.S.C. 1818(b)(6) and (7)).
    Specifically, section 606 of the Modernization Act enumerates the 
grounds pursuant to which the Finance Board may issue a notice of 
charges; incorporates by reference the authority and procedures 
provided for in sections 1371(c) and (f) of the Safety and Soundness 
Act (12 U.S.C. 4631(c) and (f)) with regard to the issuance of a notice 
of charges and cease and desist orders (C&D orders); confers on the 
Finance Board the same authority to issue corrective orders as the 
appropriate Federal banking agencies have with respect to insured 
depository institutions as set forth in 12 U.S.C. 1818(b)(6) and (7); 
and provides that the Finance Board has all other powers to enforce the 
Act that OFHEO has under Subtitle C of Title XIII of the Safety and 
Soundness Act to enforce its statutes, including the authority to issue 
a temporary C&D order and to assess a civil money penalty (CMP) (12 
U.S.C. 4632 and 4636, respectively). See 12 U.S.C. 1422b(a)(5). The 
Modernization Act also incorporates OFHEO's statutory authority and 
procedures for hearings, judicial review of final orders, the issuance 
of subpoenas and subpoenas duces tecum to obtain testimony and 
documents, and the enforcement of final orders (12 U.S.C. 4633-4641). 
See id. These expanded powers in no way restrict the ability of the 
Finance Board under its existing authority to supervise the Banks or to 
promulgate and enforce orders or directives under section 2B(a)(1) or 
any other provision of the Act.

II. Synopsis of the Proposed Rule

    The Act requires the Finance Board to adopt rules of practice and 
procedure consistent with the Administrative Procedure Act, 5 U.S.C. 
500-559 (APA), for all matters to be determined by the Finance Board on 
the record after an opportunity for a hearing, including cease-and-
desist orders and civil money penalty assessments.\2\ Thus, the rules 
of practice and procedure set forth in the proposed rule are intended 
to supplement the APA requirements for adjudicatory hearings required 
by the statute to be held on the record.\3\
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    \2\ See 12 U.S.C. 1422b(a)(5), which incorporates the OFHEO 
requirement from the Safety and Soundness Act of 1992 (12 U.S.C. 
4633(a)(3)).
    \3\ The procedures set forth in part 908 are distinct from those 
described in part 907, and are not contingent upon the issuance of 
an examination finding, any order or directive concerning safety and 
soundness or compliance, or any other order of the Finance Board 
under section 2B(a)(1) of the Act.
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    Subpart A of the proposed rule defines terms appearing in this 
part, prescribes the scope of the regulation, and relates the general 
rules of construction. Subpart B of the proposed rule recites the scope 
of the Finance Board's authority with respect to certain enforcement 
proceedings, including cease and desist orders, temporary cease and 
desist orders and civil money penalties, suspension and removal 
authority, judicial review of final orders, public disclosure of final 
orders, and the limitation on any implied private right of action. The 
proposed rule also provides for the service of a notice of charges on a 
former executive officer or director of a Bank or OF, within two years 
of their separation from service.
    Subpart C of the proposed rule provides the general rules that 
govern the process and recites the authority of the Finance Board, 
Board of Directors and the presiding officer. The presiding officer is 
defined to mean an Administrative Law Judge (ALJ), or other neutral, 
qualified individual who is appointed by the Finance Board under 
applicable law (presiding officer), to preside over the hearing from 
the time of the appointment until he or she files the record, including 
a recommended decision and order, for a final decision.
    The Board of Directors may intervene in any matter to perform, 
direct the performance of, or waive the performance of any authorized 
action of the presiding officer. The presiding officer is authorized 
to: Change the hearing date, time or place; issue or modify subpoenas 
or subpoenas duces tecum; issue protective orders; administer oaths and 
affirmations; regulate the course of the hearing and hold conferences 
to address issues arising in the hearing; and rule on non-dispositive 
motions.
    All hearings are open to the public, unless the Finance Board 
determines that an open hearing would be contrary to the public 
interest. Consistent with a Finance Board determination to hold an open 
hearing, the presiding officer may limit public and media access to any 
public hearing. Any party may file a motion with the presiding officer 
for a closed hearing in accordance with the applicable limitations. 
Additionally, the Finance Board may file any document or portion of a 
document under seal and the presiding officer is required to take all 
appropriate steps to preserve the confidentiality of such document(s) 
or parts thereof.
    The proposed rule provides that every filing or submission of 
record shall be signed by at least one representative of record to 
certify that the document has been read and that to the best of the 
representative's knowledge it is supported in fact and is not made for 
any improper purpose. Ex parte communications are prohibited. Any party 
or representative who makes or elicits an ex parte communication may be 
subject to appropriate sanctions. The Finance Board anticipates that in 
the future, under applicable law, the agency will have the necessary 
technological ability to enable the parties to submit documents by 
electronic media, and may specify the conditions for such electronic 
transmission. Until further notice, for purposes of this regulation,

[[Page 78996]]

all papers filed by the parties shall be filed in accordance with the 
requirements set out in proposed Sec. 908.25(c).
    Any respondent may submit a settlement proposal to the Finance 
Board in accordance with proposed Sec. 908.30. Submission of a 
settlement offer does not provide a basis for delaying a proceeding, 
and no settlement offer is admissible in evidence in the adjudicative 
proceeding or any court. Importantly, nothing in the rule prohibits or 
restricts the authority of the Finance Board to conduct any examination 
or inspection of any Bank, or to conduct or to continue any form of 
investigation authorized by law.
    Under subpart D, the Finance Board commences the hearing process by 
issuing and serving a notice of charges on a respondent. During the 
course of a hearing, the presiding officer controls virtually all 
aspects of the proceeding. The presiding officer: determines the 
hearing schedule; presides over any pre-hearing conferences; rules on 
motions, discovery, and evidentiary issues; and ensures that the 
proceeding is fair, equitable, and impartial. The presiding officer 
does not, however, have the authority to make a ruling that disposes of 
the proceeding. Only the Board of Directors has the authority to 
dismiss the proceeding or to make a final determination on the merits 
of the proceeding following a hearing on the record or a negotiated 
disposition.
    Subpart E of the proposed rule governs hearings and post-hearing 
proceedings. Section 908.60 of the proposed rule provides that hearings 
shall be conducted in accordance with the APA, and any other applicable 
law. The parties to the proceeding have the right to present evidence 
and witnesses at the hearing and to examine and cross-examine the 
witnesses. At the completion of the hearing, the parties may submit 
proposed findings of fact and conclusions of law and a proposed order. 
The presiding officer then submits the complete record to the Board of 
Directors for consideration and action. The record includes the 
presiding officer's recommended decision, recommended findings of fact 
and conclusions of law, and proposed order. The record also includes 
all pre-hearing and hearing transcripts, exhibits, rulings, motions, 
briefs and memoranda, and all supporting papers filed in connection 
with the hearing. The Board of Directors shall issue a final ruling 
within 90 days of the date the presiding officer serves notice on the 
parties that the record is complete and the case has been submitted to 
the Board of Directors for final decision, or at such time as is 
practicable within the discretion of the Board of Directors.
    Subpart F, ``Rules of Practice Before the Finance Board,'' governs 
the parties and their representatives appearing before the Finance 
Board under this rule and provides for the imposition of disciplinary 
sanctions--censure, suspension or disbarment--by the presiding officer 
or the Board of Directors against parties or their representatives. 
This subpart covers parties and individuals that appear before the 
Finance Board in a representational capacity. The presiding officer may 
decide what notice and responses are appropriate where sanctions are at 
issue for conduct arising in an adjudicatory proceeding or hearing. The 
proposed rule prescribes when sanctions may be imposed, and what those 
sanctions may be. Covered representation may include, but is not 
limited to, the practice of attorneys and accountants. Employees of the 
Finance Board are not subject to disciplinary proceedings under this 
subpart. The Finance Board may also apply these qualification and 
disciplinary rules to parties or representatives in an administrative 
proceeding under part 907 of the Finance Board's rules and regulations 
governing requests for regulatory interpretations, approvals, waivers, 
case-by-case determinations or review of disputed supervisory 
determinations, which are not required by statute to be resolved 
following a hearing on the record. See 12 CFR part 907.

III. Regulatory Impact

Executive Order 13132, Federalism

    Executive Order 13132 requires that Executive departments and 
agencies identify regulatory actions that have significant federalism 
implications, that is, regulations or actions that have substantial, 
direct effects on the States, on the relationship between the national 
Government and the States, or on the distribution of power and 
responsibilities between Federal and State Government. The Finance 
Board has determined that this proposed rule has no federalism 
implications that warrant consultation with the states or the 
preparation of a federalism summary impact statement in accordance with 
Executive Order 13132.

Executive Order 12866, Regulatory Planning and Review

    In order to make the regulatory process more efficient, Executive 
Order 12866 requires the centralized review of regulatory action. The 
Finance Board has determined that this proposed rule is not a 
significant regulatory action as such term is defined in Executive 
Order 12866, has so indicated to the Office of Management and Budget 
(OMB), and was not notified by OMB that the rule must be reviewed by 
OMB.

Executive Order 12988, Civil Justice Reform

    Executive Order 12988 sets forth guidelines to promote the just and 
efficient resolution of civil claims and to reduce the risk of 
litigation to the Federal Government. This proposed rule meets the 
applicable standards of sections 3(a) and 3(b) of Executive Order 
12988.

Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 requires for any rule that 
includes a Federal mandate that may result in an annual expenditure by 
State, local and tribal governments, in the aggregate, or by the 
private sector, of $100 million, that an agency prepare an assessment 
statement of the anticipated costs and benefits of the Federal mandate. 
See 2 U.S.C. 1532(a). The proposed rule does not include such a Federal 
mandate, and, therefore, it does not warrant the preparation of such an 
assessment statement.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a regulation that has a significant economic impact on a substantial 
number of small entities must include a regulatory flexibility analysis 
describing the rule's impact on small entities. Such an analysis need 
not be undertaken if the agency head certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). The proposed rule applies only to the Banks, 
which do not come within the meaning of small entities as defined in 
the Regulatory Flexibility Act (RFA). See 5 U.S.C. 601(6). Therefore, 
in accordance with section 605(b) of the RFA, 5 U.S.C. 605(b), the 
Finance Board hereby certifies that this proposed rule, when 
promulgated as a final rule, will not have significant economic impact 
on a substantial number of small entities.

Paperwork Reduction Act

    The Paperwork Reduction Act seeks to minimize the paperwork burden 
for individuals, small businesses, and other entities resulting from 
the collection of information by or for the Federal government. See 44 
U.S.C. 3501 et seq. This proposed rule does not contain any collections 
of information pursuant to the Paperwork Reduction Act of 1995.

[[Page 78997]]

44 U.S.C. 3502(3). Therefore, the Finance Board has not submitted any 
information to the Office of Management and Budget for review.

List of Subjects

12 CFR Part 907

    Administrative practice and procedures, Federal Home Loan Banks.

12 CFR Part 908

    Administrative practice and procedures, Penalties.
    For the reasons stated in the preamble, the Finance Board proposes 
to amend 12 CFR parts 907 and 908 as follows:

PART 907--PROCEDURES

    1. The authority citation for part 907 continues to read as 
follows:

    Authority: 12 U.S.C. 1422b(a)(1).

    2. In Sec. 907.15, add paragraph (j) to read as follows:


Sec. 907.15  General provisions.

* * * * *
    (j) Rules of practice. In connection with any matter initiated or 
pending pursuant to subpart C of this part, petitioners, requestors or 
intervenors shall be subject to the provisions of subpart F of 12 CFR 
part 908. No other provision of part 908 shall apply to administrative 
matters under this part.
    3. Add a new part 908 to read as follows:

PART 908--RULES OF PRACTICE AND PROCEDURE IN HEARINGS ON THE RECORD

Subpart A--Introduction
Sec.
908.1   Definitions.
908.2   Scope.
908.3   Rules of construction.
Subpart B--Scope and Authority--Enforcement and Removal Proceedings
908.4   Cease and desist orders.
908.5   Temporary cease and desist orders.
908.6   Civil money penalties.
908.7   Suspension and removal.
908.8   Subpoenas.
908.9   Hearings on the record.
908.10   Judicial review.
908.11   Jurisdiction, enforcement of orders and notice.
908.12   Notice after separation.
908.13   Public disclosure of final orders.
908.14   No implied private right of action.
908.15--908.19   [Reserved]
Subpart C--General Rules
908.20   Authority of the Board of Directors.
908.21   Authority of the presiding officer.
908.22   Public hearings.
908.23   Good faith certification.
908.24   Ex parte communications.
908.25   Filing of papers.
908.26   Service of papers.
908.27   Computing time.
908.28   Change of time limits.
908.29   Witness fees and expenses.
908.30   Settlement or other dispute resolution.
908.31   Right to supervise the Banks.
908.32   Collateral attacks on adjudicatory proceeding.
908.33--908.39   [Reserved]
Subpart D--Pre-Hearing Proceedings
908.40   Commencement of proceeding and contents of notice of 
charges.
908.41   Answer.
908.42   Amended pleadings.
908.43   Failure to appear.
908.44   Consolidation and severance of actions.
908.45   Motions.
908.46   Discovery.
908.47   Request for document discovery from parties.
908.48   Document subpoenas to nonparties.
908.49   Deposition of witness unavailable for hearing.
908.50   Interlocutory review.
908.51   Summary disposition.
908.52   Partial summary disposition.
908.53   Scheduling and prehearing conferences.
908.54   Prehearing submissions.
908.55   Hearing subpoenas.
908.56-908.59   [Reserved]
Subpart E--Hearing and Post-Hearing Proceedings
908.60   Conduct of hearings.
908.61   Evidence.
908.62   Post hearing filings.
908.63   Recommended decision and filing of record.
908.64   Exceptions to recommended decision.
908.65   Review by Board of Directors.
908.66   Exhaustion of administrative remedies.
908.67   Stay of order pending judicial review.
908.68-908.69   [Reserved]
Subpart F--Rules of Practice Before the Finance Board
908.70   Scope.
908.71   Practice before the Finance Board.
908.72   Appearance and practice in proceedings before the Finance 
Board.
908.73   Conflicts of interest.
908.74   Sanctions.
908.75   Censure, suspension, disbarment and reinstatement.

    Authority: 12 U.S.C. 1422b(a)(5), 4631(c) and (f), and 4632-
4641. Section 908.4 is also authorized by 12 U.S.C. 1818(b)(6) and 
(7). Section 908.7 is also authorized by 12 U.S.C 1422b(a)(2).

Subpart A--Introduction


Sec. 908.1  Definitions.

    For purposes of this part--
    (a) Adjudicatory proceeding or hearing means a proceeding conducted 
pursuant to this part and leading to the formulation of a final order 
other than a regulation;
    (b) Decisional employee means any employee of the Finance Board or 
any member of the presiding officer's staff who has not engaged in an 
investigative or prosecutorial role in an adjudicatory proceeding or 
hearing and who may assist the Board of Directors or the presiding 
officer, respectively, in preparing orders, recommended decisions, 
decisions and other documents under this part.
    (c) OF means the Office of Finance as defined in Sec. 985.1 of this 
chapter.
    (d) Notice of charges means a written order so titled, which is 
issued by the Finance Board to a respondent, and that describes the 
alleged violations with sufficient specificity to put the respondent on 
notice of the nature and scope of the charges being brought against the 
respondent pursuant to this part.
    (e) Party means any person named in any notice issued by the 
Finance Board under this part.
    (f) Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, agency, Bank, the OF, or other entity or organization.
    (g) Presiding officer means an administrative law judge or other 
qualified, neutral individual who is appointed by the Finance Board 
under applicable law, and, pursuant to Title 5 of the United States 
Code, may conduct a hearing or adjudicatory proceeding under this part.
    (h) Representative of record means an individual who is authorized 
to represent a person or who is representing himself at an adjudicatory 
proceeding or hearing conducted under this part and who has filed a 
notice of appearance in accordance with Sec. 908.72.
    (i) Respondent means any person named in a notice of charges issued 
by the Finance Board.
    (j) Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501-4641) (Title 
XIII of the Housing and Community Development Act of 1992, Pub. L. No. 
102-550).
    (k) Violation includes any act or omission by a person, undertaken 
alone or with one or more others, that causes directly or indirectly, 
counsels, participates in, or otherwise furthers, aids or abets a 
violation of the Act or any other applicable law, regulation or policy.


Sec. 908.2  Scope.

    This subpart prescribes rules of practice and procedure applicable 
to an adjudicatory proceeding or hearing with regard to:

[[Page 78998]]

    (a) Cease and desist proceedings under section 2B(a)(5) of the Act; 
or
    (b) Civil money penalty assessment proceedings against a Bank or 
OF, or any executive officer or director of any Bank or OF, under 
section 2B(a)(5) of the Act.


Sec. 908.3  Rules of construction.

    For purposes of this part--
    (a) Any term in the singular includes the plural and the plural 
includes the singular, if such use would be appropriate;
    (b) Any use of a masculine, feminine, or neuter gender encompasses 
all three, if such use would be appropriate; and
    (c) Unless the context requires otherwise, a party's representative 
of record, if any, may, on behalf of that party, take any action 
required to be taken by the party.

Subpart B--Scope and Authority--Enforcement and Removal Proceedings


Sec. 908.4  Cease and desist orders.

    (a) General rule. The Finance Board may issue and serve a notice of 
charges upon a Bank, OF, or any executive officer or director of a Bank 
or OF, if in the determination of the Finance Board, the Bank, OF, or 
any executive officer or director of a Bank or OF, is engaging or has 
engaged in, or, if the Finance Board has reasonable cause to believe 
that the Bank, OF, or the executive officer or director of a Bank or 
OF, is about to engage in:
    (1) An unsafe or unsound practice in conducting the business of the 
Bank or OF;
    (2) Any conduct that violates any provision of the Act or any 
applicable law, order, rule or regulation; or
    (3) Any conduct that violates any condition imposed in writing by 
the Finance Board in connection with the granting of any application or 
other request by the Bank or OF, or any written agreement entered into 
by the Bank or OF with the Finance Board.
    (b) Actions to limit activities and remedial authority. (1) 
Remedial actions. The authority of the Finance Board to issue and serve 
a notice of charges under this part includes the authority to require a 
Bank or OF or any executive officer or director of a Bank or OF to--
    (i) Make restitution or provide reimbursement, indemnification, or 
guarantee against loss if--
    (A) Such Bank or party was unjustly enriched in connection with the 
violation, conduct or practice described in the notice of charges under 
paragraph (c) of this section; or
    (B) The violation, conduct or practice involved a reckless 
disregard for the law or any applicable regulations or prior order of 
the Finance Board;
    (ii) Restrict the growth of the Bank;
    (iii) Dispose of any loan or asset involved;
    (iv) Rescind any agreement or contract;
    (v) Employ qualified officers or employees (who may be subject to 
approval by the Finance Board at the direction of the Finance Board); 
and
    (vi) Take such other action as the Finance Board determines to be 
appropriate.
    (2) Authority to limit activities. The authority to issue a notice 
of charges under this section includes the authority to place 
limitations on the activities or functions of any Bank or OF, or any 
executive officer or director of a Bank or OF.
    (c) Procedure. (1) Statements in notice of charges. A notice of 
charges issued pursuant to paragraph (a) of this section shall contain 
a statement of the facts constituting the alleged conduct or violation 
and shall fix a time and place at which a hearing on the record will be 
held to determine whether an order to cease and desist from such 
conduct or violation should issue.
    (2) Issuance of order. If the Board of Directors finds, based on 
the record of the hearing, that any conduct or violation specified in 
the notice of charges has been established, or, if a Bank, OF or an 
executive officer or director of a Bank or OF, is deemed to have 
consented to the relief sought in the notice of charges pursuant to 
Sec. 908.43 (or otherwise consents), the Board of Directors may issue 
and serve upon the Bank, OF, or an executive officer or director of the 
Bank or OF, an order requiring such party to cease and desist from any 
such conduct or violation, to take affirmative action to correct or 
remedy the conditions resulting from any such conduct or violation, or 
to comply with such limitations on activities or functions as may be 
prescribed therein, in accordance with paragraph (a) in this section.
    (3) Effective date of order. An order issued under paragraph (c)(2) 
of this section shall become effective upon the expiration of the 30-
day period beginning on the date of service of the order upon the 
subject Bank, OF, or executive officer or director of a Bank or OF, 
(except in the case of an order issued upon consent, which shall become 
effective at the time specified therein), and shall remain effective 
and enforceable as provided in the order, except to the extent that the 
order is stayed, modified, terminated, or set aside by action of the 
Board of Directors or otherwise as provided for in this part.


Sec. 908.5  Temporary cease and desist orders.

    (a) Grounds for issuance and scope. (1) Whenever the Finance Board 
determines that any conduct or violation, or threatened conduct or 
violation, specified in a notice of charges issued and served upon a 
Bank, the OF, or an executive officer or director of a Bank or the OF, 
under this part, or the continuation thereof, is likely to cause 
insolvency; to cause a significant depletion of the total capital of a 
Bank; to cause irreparable harm to a Bank or OF; or to make the books 
and records of a Bank or OF to be so incomplete or inaccurate such that 
the Finance Board would be unable, through the normal supervisory 
process, to determine the true financial condition of the Bank or OF or 
the purpose of any transaction or transactions that may have a material 
effect on the financial condition of a Bank or OF, the Finance Board 
may issue a temporary order requiring a Bank, the OF, or an executive 
officer or director of a Bank or the OF, to immediately cease and 
desist from any such conduct or violation, or such threatened conduct 
or violation, and to take immediate affirmative action to prevent or 
remedy such insolvency, depletion, or harm pending completion of such 
proceedings.
    (2) Additionally, the Finance Board may issue a temporary order 
requiring:
    (i) The cessation of any activity or practice that caused or 
contributed, whether in whole or in part, to the incomplete or 
inaccurate state of the books or records of a Bank or the OF; or
    (ii) Affirmative action to restore the books or records to a 
complete and accurate state.
    (3) The Finance Board may issue a temporary cease and desist order 
under Sec. 908.5 prior to the initiation or completion of a proceeding 
conducted pursuant to Sec. 908.4.
    (b) Effective date and effective period. (1) Effective date. Any 
temporary order issued pursuant to paragraph (a) of this section shall 
become effective upon service upon the Bank, OF, or executive officer 
or director of a Bank or the OF.
    (2) Effective period. Any temporary order issued under paragraph 
(a) of this section, unless set aside, limited, or suspended by a court 
in a proceeding under paragraph (c) of this section, shall remain in 
effect and enforceable:
    (i) Pending the completion of a hearing pursuant to Sec. 908.9 on 
the

[[Page 78999]]

notice of charges issued under Sec. 908.4, and:
    (A) The temporary order is superceded by a cease and desist order 
issued by the Board of Directors under section Sec. 908.4; or
    (B) The Board of Directors dismisses or otherwise finally resolves 
the charges specified in the notice of charges; or
    (ii) Until the date the Finance Board determines, by examination or 
otherwise, that the books and records of the Bank or the OF are 
accurate and reflect the true financial condition of the Bank or the 
OF, and the Board of Directors issues a written determination that 
terminates the temporary order.
    (c) Judicial review. A Bank, the OF, or any executive officer or 
director of a Bank or the OF, that has been served with a temporary 
order pursuant to this subsection may apply to the United States 
District Court for the District of Columbia within 10 days after such 
service for an injunction setting aside, limiting, or suspending the 
enforcement, operation, or effectiveness of the order pending the 
completion of the hearing pursuant to the notice of charges served upon 
the Bank or the OF, or an executive officer or director of a Bank or 
the OF, under Secs. 908.4 and 908.9. In accordance with Sec. 908.9, the 
district court shall have jurisdiction only to issue such injunction.
    (d) Enforcement of temporary order. Pursuant to Sec. 908.10, in the 
case of a violation or threatened violation of, or failure to obey, a 
temporary order issued pursuant to this section, the Finance Board may 
bring an action in the United States District Court for the District of 
Columbia for an injunction to enforce such temporary order. If the 
district court finds any such violation, threatened violation, or 
failure to obey, the district court shall issue such injunction.


Sec. 908.6  Civil money penalties.

    (a) Violations or conduct subject to penalty. The Finance Board may 
assess a civil money penalty on any Bank, OF, or any executive officer 
or director of a Bank or the OF, that:
    (1) Violates any provision of the Act, or any order, rule, or 
regulation issued under the Act;
    (2) Violates any final or temporary order issued by the Finance 
Board pursuant to the Act;
    (3) Violates any written agreement between a Bank, or an executive 
officer or director of a Bank and the Finance Board, or the terms of 
any condition imposed in writing by the Finance Board in connection 
with the grant or approval of an application or request by a Bank; or
    (4) Engages in any conduct that causes a loss, or that the Finance 
Board has reasonable cause to believe may cause a loss to a Bank, or 
any conduct that constitutes an unsafe and unsound practice or a breach 
of fiduciary duty.
    (b) Amount of penalty. (1) The amount of a civil money penalty the 
Finance Board may assess under paragraph (a) of this section, except as 
otherwise provided, shall not exceed $5,000.00 for each day that such 
violation or conduct continues;
    (2) The Finance Board may assess a civil money penalty on an 
executive officer or director of a Bank or OF in an amount not to 
exceed $10,000.00, or on a Bank or the OF in an amount not to exceed 
$25,000.00, for each day that a violation or conduct described in 
paragraph (a) of this section continues, if the Finance Board finds 
that the violation or conduct is part of a pattern of misconduct, or 
involved or continues to involve recklessness and caused or would be 
likely to cause a material loss to a Bank or, with respect to OF, 
adverse financial or market conditions; or
    (3) The Finance Board may assess a civil money penalty on an 
executive officer or director of a Bank or OF in an amount not to 
exceed $100,000.00, or on a Bank or OF in an amount not to exceed 
$1,000,000.00, for each day that a violation or conduct described in 
paragraph (a) of this section continues, if the Finance Board finds 
that the violation or conduct was knowing and caused or would be likely 
to cause a substantial loss to a Bank or the OF.
    (c) Factors in determining the amount of the penalty. In 
determining the amount of the civil money penalty to be assessed under 
this section, the Finance Board shall consider such factors as the 
gravity of the violation, any history of prior violations, the good 
faith of the officer or director of a Bank or OF, the effect of the 
penalty on promoting or protecting the safety and soundness of a Bank 
or the Bank System, any injury to members of the subject Bank or to the 
public at large, any benefits received, and the potential for the 
deterrence of future violations.
    (d) Order shall be made on the record after hearing. An order to 
assess a civil money penalty on a Bank or OF, or an executive officer 
or director of a Bank or OF, shall be issued in writing and made on the 
record only after the subject Bank or OF, or executive officer or 
director of a Bank or OF, has been given the opportunity for a hearing 
on the record in accordance with the procedures set forth in 
Sec. 908.9.
    (e) Limitation on judicial review. An order of the Board of 
Directors assessing a civil money penalty under this subsection shall 
not be subject to judicial review except as otherwise provided in 
Sec. 908.10.
    (f) Judicial enforcement of an order imposing a penalty. If a Bank, 
OF, or an executive officer or director of a Bank or OF, fails to 
comply with an order of the Board of Directors assessing a civil money 
penalty, the Finance Board may seek to enforce the order as follows:
    (1) After the order is final and no longer subject to judicial 
review under Sec. 908.10, the Finance Board may bring an action in the 
United States District Court for the District of Columbia to obtain a 
monetary judgment against a Bank, OF, or the executive officer or 
director of a Bank or OF;
    (2) The Finance Board may, in addition, seek such other relief as 
may be available from the District Court;
    (3) The monetary judgment may, in the discretion of the District 
Court, include any attorneys fees and other expenses incurred by the 
Finance Board in connection with the action; and
    (4) The validity and appropriateness of the Board of Directors' 
order assessing a civil money penalty shall not be subject to review of 
the United States District Court for the District of Columbia.
    (g) Board of Directors' authority to review. The Board of Directors 
may:
    (1) Review any determination or order to assess a civil money 
penalty or any interlocutory ruling arising from a hearing on the 
record, or
    (2) Settle, modify, or remit in whole or in part, any civil money 
penalty, which may be or may have been assessed under this section.
    (h) Availability of other remedies. Any civil money penalty 
assessed under this section shall be in addition to any other available 
civil remedy and may be assessed whether or not the Finance Board 
imposes other administrative sanctions pursuant to this part.
    (i) Prohibition of reimbursement or indemnification. A Bank shall 
not reimburse, indemnify, or otherwise compensate directly or 
indirectly any individual for any penalty that may be assessed against 
such individual under this part.
    (j) Applicability. Any penalty under this part may be assessed for 
conduct occurring or discovered after November 12, 1999.
    (k) Adjustment of civil money penalties by the rate of inflation. 
Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended by the Debt Collection Improvement Act of 1996, Pub. 
Law No. 104-134 (1996) (collectively, the Inflation Adjustment Act) (to 
be codified at 28 U.S.C. 2461 note), the

[[Page 79000]]

Finance Board is required to adjust each civil money penalty set forth 
herein by a prescribed cost-of-living adjustment at least once every 
four years. The adjustment is based on the formula prescribed in 
section 5(b) of the Inflation Adjustment Act.


Sec. 908.7  Suspension and removal.

    (a) Authority. The Finance Board may suspend or remove for cause 
any director, officer, employee, or agent of any Bank or the OF.
    (b) Issuance of order. The cause of such suspension or removal 
shall be communicated in writing to such person(s) and the board of 
directors of the Bank or the OF, as appropriate.
    (c) Cause. Cause for suspension or removal may, in the discretion 
of the Finance Board, include without limitation:
    (1) Misfeasance in office involving a failure to carry out the 
duties required of the director, officer, employee or agent of a Bank 
or OF by the Act or other applicable law, regulation, or order of the 
Finance Board, including without limitation any failure to operate a 
Bank in a safe and sound manner, to maintain applicable capital 
standards, to carry out the housing finance mission, or to maintain the 
ability of any Bank or OF to raise funds in the capital markets;
    (2) Commission of an act by a director, officer, employee or agent 
of a Bank or OF that constitutes a violation of any state or Federal 
criminal law involving dishonesty or breach of fiduciary duty or trust, 
including without limitation, corruption, misapplication of funds, 
extortion, receipt of illegal fees or gratuities, or the conviction of 
a director, officer, employee or agent for such an illegal act, and 
irrespective of whether such act(s) were undertaken in connection with 
the performance of his or her official Bank or OF duties; or
    (3) Conduct on the part of a director, officer, employee or agent 
of a Bank or OF, which need not be intrinsically improper or illegal, 
that the Finance Board determines to be a material inefficiency or an 
abuse of authority or discretion and not in the best interest of the 
Bank, OF or the Bank System.
    (d) Procedure. (1) Effective date. An order issued pursuant to 
paragraph (a) of this section shall be a final order, which shall 
become effective upon service upon the executive officer, director, 
employee or agent of a Bank or the OF, and unless set aside, limited or 
suspended by the United States Court of Appeals for the District of 
Columbia Circuit in an action to review the final order under 
Sec. 908.10, shall remain in effect pending completion of the 
proceeding.
    (2) Enforcement of order. If an executive officer, director, 
employee or agent of a Bank or OF fails to comply with an order issued 
pursuant to paragraph (a) of this section, the Finance Board may seek 
to enforce the order by filing an action in the United States District 
Court for the District of Columbia to obtain injunctive relief against 
the individual(s) and other relief as may be available from the Court, 
which the Court shall have jurisdiction to grant. The validity and 
appropriateness of the suspension or removal order shall not be subject 
to the review of the United States District Court for the District of 
Columbia under this paragraph.
    (e) Judicial Review. Any executive officer, director, employee or 
agent of a Bank or OF upon whom a suspension or removal order has been 
served pursuant to Sec. 908.7(a) may seek judicial review of the order 
exclusively as provided in Sec. 908.10.
    (f) No automatic stay. The commencement of an action for judicial 
review of an order pursuant to paragraph (e) of this section shall not 
operate as a stay of any such suspension or removal order in whole or 
in part, unless the United States Court of Appeals for the District of 
Columbia Circuit specifically orders a stay of the order in whole or in 
part.


Sec. 908.8  Subpoenas.

    (a) Authority. The Finance Board, in the course of or in connection 
with an administrative proceeding or hearing under this part, shall 
have the authority:
    (1) To administer oaths and affirmations;
    (2) To take and preserve testimony under oath;
    (3) To issue subpoenas and subpoenas duces tecum; and
    (4) To revoke, quash, or modify subpoenas and subpoenas duces tecum 
issued by the Finance Board pursuant to this part.
    (b) Witnesses and documents. The attendance of witnesses and the 
production of documents provided for in this subsection may be required 
from any place in any State at any designated place where such 
proceeding is being conducted.
    (c) Enforcement. The Finance Board may file an action in the United 
States district court for the judicial district where the proceeding is 
being conducted or where the witness resides, or in the United States 
District Court for the District of Columbia, for enforcement of any 
subpoena or subpoena duces tecum issued pursuant to this section. Such 
courts shall have jurisdiction over such actions and power to order and 
require compliance with such subpoenas and subpoenas duces tecum.


Sec. 908.9  Hearings on the record.

    (a) Requirements. (1) Venue and record. Any adjudicatory proceeding 
or hearing conducted pursuant to Secs. 908.4 or 908.6 shall be held on 
the record in the District of Columbia.
    (2) Timing. Any adjudicatory proceeding or hearing shall be set for 
a date not earlier than 30 days nor later than 60 days after service of 
a notice of charges under Sec. 908.4 or a determination or order to 
assess a civil money penalty under Sec. 908.6, unless an earlier or a 
later date is set by the presiding officer at the request of the party 
served.
    (3) Procedure. Any adjudicatory proceeding or hearing held pursuant 
to Secs. 908.4 or 908.6 shall be conducted in accordance with chapter 5 
of Title 5 of the United States Code.
    (4) Failure to appear. If a party who has been served with a 
subpoena under Sec. 908.8 fails to appear at an adjudicatory proceeding 
or hearing individually or through a duly authorized representative, 
such party shall be deemed to have consented to the issuance of the 
cease and desist order or the imposition of the penalty for which the 
hearing is held.
    (b) Issuance of final order. After a hearing on the record has been 
concluded, and within 90 days after the parties have been notified that 
the case has been submitted to the Board of Directors for final 
decision, the Board of Directors shall render the final decision (which 
shall include findings of fact upon which the decision is predicated) 
and shall issue and serve upon each party to the proceeding a final 
order or orders consistent with the provisions of this part.
    (c) Judicial review and modification of final orders. Judicial 
review of any such final order shall be exclusively as provided for in 
Sec. 908.10. Unless a petition for review is timely filed as provided 
in Sec. 908.10, and thereafter until the record in the proceeding has 
been filed as so provided, the Board of Directors may at any time 
modify, terminate, or set aside any such final order, upon such notice 
and in such manner as the Board of Directors, in its sole discretion, 
considers proper. Upon such filing of the record, the Board of 
Directors may modify, terminate, or set aside any such final order with 
permission of the court.

[[Page 79001]]

Sec. 908.10  Judicial review.

    (a) Authority and commencement of action to obtain judicial review 
of final order. Any respondent or party to an adjudicatory proceeding 
or hearing under Secs. 908.4 or 908.6 may obtain judicial review of a 
final order issued under Secs. 908.4 or 908.6 by filing a written 
petition exclusively in the United States Court of Appeals for the 
District of Columbia Circuit, within thirty (30) days after the date of 
service of the final order, to request the court of appeals to modify, 
terminate or set aside the final order.
    (b) Service. Rule 4 of Federal Rules of Civil Procedure shall 
govern service of process of a petition on the Finance Board.
    (c) Filing of record. The clerk of the Court of Appeals shall 
transmit a copy of the petition to the Finance Board. The Finance Board 
shall file with the Court of Appeals the hearing record, as provided in 
section 2112 of Title 28 of the United States Code (28 U.S.C. 2112).
    (d) Jurisdiction. Upon the filing of a petition, the Court of 
Appeals shall have jurisdiction, which upon the filing of the record by 
the Finance Board (except as otherwise provided in Sec. 908.9 of this 
part) shall be exclusive, to affirm, modify, terminate or set aside, in 
whole or in part, a final order of the Board of Directors.
    (e) Review. Review by the Court of Appeals of the final order and 
the record of the adjudicatory proceeding or hearing conducted pursuant 
to this part shall be governed by chapter 7 of Title 5 of the United 
States Code (5 U.S.C. 701 et seq.).
    (f) Order to pay civil money penalty. In connection with the Court 
of Appeal's review of a final order pursuant to this part, the Court of 
Appeals shall have authority to order payment of any civil money 
penalty assessed by the Finance Board.
    (g) No automatic stay. The commencement of an action for judicial 
review of a final order shall not operate as a stay of any such final 
order, unless the court specifically orders a stay of the final order 
in whole or in part.


Sec. 908.11  Jurisdiction, enforcement of orders and notice.

    (a) Enforcement. The Finance Board may bring an action in the 
United States District Court for the District of Columbia for the 
enforcement of any notice, determination or order issued by the Board 
of Directors under this part. Such court shall have jurisdiction and 
power to order and require compliance with any such notice, 
determination, or order of the Board of Directors.
    (b) Limitation on jurisdiction. Except as otherwise provided in the 
Act or this part, no court shall have jurisdiction to affect, by 
injunction or otherwise, the issuance or enforcement of any notice, 
determination or order issued by the Board of Directors under this 
part, or to review, modify, suspend, terminate, or set aside any such 
notice, determination or order.
    (c) Notice of service. Any service required or authorized to be 
made by the Finance Board under this part may be made by registered 
mail, or in such other manner reasonably calculated to give actual 
notice.


Sec. 908.12  Notice after separation.

    The resignation, termination of employment or participation, or 
separation of a director or executive officer of a Bank or the OF shall 
not affect the jurisdiction and authority of the Finance Board to issue 
any notice and proceed under this part against any such director or 
executive officer, if such notice is served before the end of the two-
year period beginning on the date such director or executive officer 
ceases to be associated with the Bank.


Sec. 908.13  Public disclosure of final orders.

    (a) In general. The Finance Board shall make available to the 
public--
    (1) Any written agreement or other written statement for which a 
violation may be redressed by the Finance Board on any modification to 
or termination thereof, unless the Finance Board in its discretion, 
determines that public disclosure would be contrary to the public 
interest;
    (2) Any order that is issued by the Finance Board and that has 
become final in accordance with this part; and
    (3) Any modification to or termination of any final order made 
public pursuant to this part.
    (b) Delay of public disclosure under exceptional circumstances. If 
the Finance Board makes a determination in writing that the public 
disclosure, pursuant to paragraph (a) of this section, of any final 
order or final decision of the Board of Directors would seriously 
threaten the financial health or security of the Bank System, or a Bank 
individually, the Finance Board may delay the public disclosure of such 
order for a reasonable time.
    (c) Documents filed under seal in public enforcement hearings. The 
Finance Board may file any document or part thereof under seal in any 
hearing commenced by the Finance Board under this part, if it 
determines in writing that disclosure thereof would be contrary to the 
public interest.
    (d) Retention of documents. The Finance Board shall keep and 
maintain a record, for not less than 6 years, of all documents 
described in paragraph (a) of this section and all enforcement 
agreements and other supervisory actions and supporting documents 
issued with respect to or in connection with any enforcement proceeding 
initiated by the Finance Board under this part or any other law.
    (e) Disclosure to Congress. This section may not be construed to 
authorize the withholding, or to prohibit the disclosure, of any 
information to the Congress or any committee or subcommittee thereof.


Sec. 908.14  No implied private right of action.

    This part shall not create any private right of action on behalf of 
any person against a Bank, the OF, or any director or executive officer 
of a Bank or the OF, or impair any existing private right of action 
under applicable law.


Sec. 908.15--908.19  [Reserved]

Subpart C--General Rules


Sec. 908.20  Authority of the board of directors.

    The Board of Directors may, at any time during the pendency of a 
proceeding, perform, direct the performance of, or waive the 
performance of any act that could be done or ordered by the presiding 
officer.


Sec. 908.21  Authority of the presiding officer.

    (a) General rule. All proceedings governed by this subpart shall be 
conducted in accordance with the provisions of the Administrative 
Procedure Act, 5 U.S.C. 551-559. The presiding officer shall have 
complete charge of the hearing, conduct a fair and impartial hearing, 
avoid unnecessary delay and assure that a record of the proceeding is 
made.
    (b) Powers. The presiding officer shall have all powers necessary 
to conduct the proceeding in accordance with paragraph (a) of this 
section and 5 U.S.C. 556(c). The presiding officer is authorized to--
    (1) Set and change the date, time and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding, including settlement conferences, mediation or other 
consensual methods of dispute resolution;
    (4) Administer oaths and affirmations;

[[Page 79002]]

    (5) Issue subpoenas, subpoenas duces tecum, and protective orders, 
as authorized by this part, and to revoke, quash, or modify such 
subpoenas;
    (6) Take and preserve testimony under oath;
    (7) Rule on motions and other procedural matters appropriate in an 
adjudicatory proceeding, except that only the Board of Directors shall 
have the power to grant any motion to dismiss the proceeding or make a 
final determination of the merits of the proceeding;
    (8) Regulate the scope and timing of discovery;
    (9) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (10) Examine witnesses;
    (11) Receive, exclude, limit, or otherwise rule on evidence;
    (12) Upon motion of a party, take official notice of facts;
    (13) Recuse herself/himself upon motion made by a party or on her 
or his own motion;
    (14) Prepare and present to the Board of Directors a recommended 
decision as provided in this part;
    (15) Establish time, place and manner limitations on the attendance 
of the public and the media for any public hearing; and
    (16) Do all other things necessary and appropriate to discharge the 
duties of a presiding officer.


Sec. 908.22  Public hearings.

    (a) General rule. All adjudicatory proceedings and hearings shall 
be open to the public, unless the Finance Board, in its discretion, 
determines that holding an open hearing would be contrary to the public 
interest. The Finance Board may make such determination sua sponte at 
any time by written notice to all parties.
    (b) Motion for closed hearing. Within 20 days of service of a 
notice or a notice of charges, any party or respondent may file with 
the presiding officer a motion for a non-public hearing and any party 
or respondent may file a pleading in reply to the motion. The presiding 
officer shall forward the motion and any reply, together with a 
recommended decision on the motion, to the Board of Directors, who 
shall make a final determination. Such motions and replies shall be 
governed by Sec. 908.45.
    (c) Filing documents under seal. The Finance Board, in its 
discretion , may file any document, or any part of any document, under 
seal if the agency makes a written determination that disclosure of the 
document would be contrary to the public interest. The presiding 
officer shall take all appropriate steps to preserve the 
confidentiality of such documents or parts thereof, including closing 
portions of the hearing to the public.


Sec. 908.23  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice by the Finance Board shall be signed 
by at least one representative of record in her or his individual name 
and shall state that representative's address and telephone number and 
the names, addresses and telephone numbers of all other representatives 
of record for the person making the filing or submission.
    (b) Effect of signature. (1) By signing a document, the 
representative of record or party certifies that--
    (i) The representative of record or party has read the filing or 
submission of record;
    (ii) To the best of her or his knowledge, information and belief 
formed after reasonable inquiry, the filing or submission of record is 
well-grounded in fact and is warranted by existing law or a good faith, 
non-frivolous argument for the extension, modification, or reversal of 
existing law, regulation or Finance Board policy or order; and
    (iii) The filing or submission of record is not made for any 
improper purpose, such as to harass or to cause unnecessary delay or 
needless increase in the cost of litigation.
    (2) If a filing or submission of record is not signed, the 
presiding officer shall strike the filing or submission of record, 
unless it is signed promptly after the omission is called to the 
attention of the pleader or movant.
    (c) Effect of making oral motion or argument. The act of making any 
oral motion or oral argument by any representative or party shall 
constitute a certification that to the best of her or his knowledge, 
information, and belief, formed after reasonable inquiry, such 
expressions or statements are well-grounded in fact and are warranted 
by existing law or a good faith, non-frivolous argument for the 
extension, modification, or reversal of existing law, regulation, or 
Finance Board policy or order, and are not made for any improper 
purpose, such as to harass or to cause unnecessary delay or needless 
increase in the cost of litigation.


Sec. 908.24  Ex parte communications.

    (a) Definition. (1) Ex parte communication means any material oral 
or written communication relevant to the merits of an adjudicatory 
proceeding that was neither on the record nor on reasonable prior 
notice to all parties that takes place between--
    (i) An interested person outside the Finance Board (including the 
person's representative); and
    (ii) The presiding officer handling the proceeding, the Board of 
Directors or any member thereof, a decisional employee of the Finance 
Board assigned to that proceeding, or any other person who is or may 
reasonably be expected to be involved in the decisional process.
    (2) A communication that does not concern the merits of an 
adjudicatory proceeding, such as a request for status of the 
proceeding, does not constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time the 
notice commencing the proceeding is issued by the Finance Board until 
the date that the Board of Directors issues its final decision pursuant 
to Sec. 908.65, no person referred to in paragraph (a)(1)(i) of this 
section shall knowingly make or cause to be made an ex parte 
communication. The Board of Directors, any member thereof individually, 
the presiding officer, or an employee of the Finance Board, shall not 
knowingly make or cause to be made an ex parte communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by any person identified in paragraph 
(a) of this section, that person promptly shall cause all such written 
communications (or, if the communication is oral, a memorandum stating 
the substance of the communication) to be placed on the record of the 
proceeding and served on all parties. All parties to the proceeding 
shall have an opportunity, within ten days of receipt of service of the 
ex parte communication or the written record of an oral communication, 
to file responses thereto and to recommend any sanctions, in accordance 
with paragraph (d) of this section, that they believe to be appropriate 
under the circumstances.
    (d) Sanctions. Any party or representative for a party who makes an 
ex parte communication, or who encourages or solicits another person or 
entity to make any such communication, may be subject to any 
appropriate sanction or sanctions imposed by the Board of Directors or 
the presiding officer, including, but not limited to, exclusion from 
the proceedings and an adverse ruling on the issue that is the subject 
of the prohibited communication.
    (e) Consultations by presiding officer. Except to the extent 
required for the disposition of ex parte matters as authorized by law, 
the presiding officer may not consult a person or party on

[[Page 79003]]

any matter relevant to the merits of the adjudication, unless on notice 
and opportunity for all parties to participate.
    (f) Separation of functions. An employee or agent engaged in the 
performance of investigative or prosecuting functions for the Finance 
Board in a case may not, in that or a factually related case, 
participate or advise in the decision, recommended decision, or Board 
of Directors' review under Sec. 908.65 of the recommended decision, 
except as a witness or counsel in the public proceedings.


Sec. 908.25  Filing of papers.

    (a) Filing. Any papers required to be filed shall be addressed to 
the presiding officer and filed with the Finance Board, 1777 F Street, 
NW, Washington, DC 20006.
    (b) Manner of filing. Unless otherwise specified by the Finance 
Board or the presiding officer, filing shall be accomplished by:
    (1) Personal service;
    (2) Delivery to the U.S. Postal Service or to a reliable commercial 
delivery service for same day or overnight delivery;
    (3) Mailing by first class, registered, or certified mail; or
    (4) Transmission by electronic media upon any conditions specified 
by the Finance Board or the presiding officer. All papers filed by 
electronic media shall also concurrently be filed in accordance with 
paragraph (c) of this section.
    (c) Formal requirements as to papers filed. (1) Form. All papers 
must set forth the name, address and telephone number of the 
representative or party making the filing and must be accompanied by a 
certification setting forth when and how service has been made on all 
other parties. All papers filed must be double-spaced and printed or 
typewritten on 8\1/2\ x 11-inch paper and must be clear and legible.
    (2) Signature. All papers must be dated and signed as provided in 
Sec. 908.23.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the Finance Board and of the filing party, 
the title and docket number of the proceeding and the subject of the 
particular paper.
    (4) Number of copies. Unless otherwise specified by the Finance 
Board or the presiding officer, an original and one copy of all 
documents and papers shall be filed, except that only one copy of 
transcripts of testimony and exhibits shall be filed.


Sec. 908.26  Service of papers.

    (a) By the parties. Except as otherwise provided, a party filing 
papers or serving a subpoena shall serve a copy upon the representative 
of record for each party to the proceeding so represented and upon any 
party not so represented.
    (b) Method of service. Except as provided in paragraphs (c)(2) and 
(d) of this section, a serving party shall use one or more of the 
following methods of service:
    (1) Personal service;
    (2) Delivery to the U.S. Postal Service or to a reliable commercial 
delivery service for same day or overnight delivery;
    (3) Mailing by first class, registered, or certified mail; or
    (4) Transmission by electronic media, only if the parties mutually 
agree. Any papers served by electronic media shall also concurrently be 
served in accordance with the requirements of Sec. 908.26(c).
    (c) By the Finance Board or the presiding officer. (1) All papers 
required to be served by the Finance Board or the presiding officer 
upon a party who has appeared in the proceeding in accordance with 
Sec. 908.72 may be served by any means specified in paragraph (b) of 
this section.
    (2) If a notice of appearance has not been filed in the proceeding 
for a party in accordance with Sec. 908.72, the Finance Board or the 
presiding officer shall make service upon the party by any of the 
following methods:
    (i) By personal service;
    (ii) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where 
the individual resides or works;
    (iii) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or 
to any other agent authorized by appointment or by law to receive 
service and, if the agent is one authorized by statute to receive 
service and the statute so requires, by also mailing a copy to the 
party;
    (iv) By registered or certified mail addressed to the person's last 
known address; or
    (v) By any other method reasonably calculated to give actual 
notice.
    (d) Subpoenas. Subject to applicable provisions in this part, 
service of a subpoena may be made:
    (1) By personal service;
    (2) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where 
the individual resides or works;
    (3) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or 
to any other agent authorized by appointment or by law to receive 
service and, if the agent is one authorized by statute to receive 
service and the statute so requires, by also mailing a copy to the 
party;
    (4) By registered or certified mail addressed to the person's last 
known address; or
    (5) By any other method reasonably calculated to give actual 
notice.
    (e) Area of service. Service in any State, commonwealth, 
possession, territory of the United States or the District of Columbia 
on any person doing business in any State, commonwealth, possession, 
territory of the United States or the District of Columbia, or on any 
person as otherwise permitted by law, is effective without regard to 
the place where the hearing is held.
    (f) Proof of service. Proof of service of papers filed by a party 
shall be filed before action is taken thereon. The proof of service, 
which shall serve as prima facie evidence of the fact and date of 
service, shall show the date and manner of service and may be by 
written acknowledgment of service, by declaration of the person making 
service, or by certificate of a representative of record. However, 
failure to file proof of service contemporaneously with the papers 
shall not affect the validity of actual service. The presiding officer 
may allow the proof to be amended or supplied, unless to do so would 
result in material prejudice to a party.


Sec. 908.27  Computing time.

    (a) General rule. In computing any period of time prescribed or 
allowed by this subpart, the date of the act or event that commences 
the designated period of time is not included. The last day so computed 
is included unless it is a Saturday, Sunday, or Federal holiday. When 
the last day is a Saturday, Sunday or Federal holiday, the period shall 
run until the end of the next day that is not a Saturday, Sunday, or 
Federal holiday. Intermediate Saturdays, Sundays and Federal holidays 
are included in the computation of time. However, when the time period 
within which an act is to be performed is 10 days or less, not 
including any additional time allowed for in paragraph (c) of this 
section, intermediate Saturdays, Sundays and Federal holidays are not 
included.
    (b) When papers are deemed to be filed or served. (1) Filing and 
service are deemed to be effective--
    (i) In the case of personal service or same day reliable commercial 
delivery service, upon actual service;

[[Page 79004]]

    (ii) In the case of U.S. Postal Service or reliable commercial 
overnight delivery service, or first class, registered, or certified 
mail, upon deposit in or delivery to an appropriate point of 
collection; or
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing in the case of filing, and as 
agreed among the parties in the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b)(1) of this section may be modified by the Finance Board or the 
presiding officer in the case of filing or by agreement of the parties 
in the case of service.
    (c) Calculation of time for service and filing of responsive 
papers. Whenever a time limit is measured by a prescribed period from 
the service of any notice or paper, the applicable time limits shall be 
calculated as follows:
    (1) If service was made by first class, registered, or certified 
mail, or by delivery to the U.S. Postal Service for longer than 
overnight delivery service, add three calendar days to the prescribed 
period for the responsive filing.
    (2) If service was made by U.S. Postal Service or reliable 
commercial overnight delivery service, add 1 calendar day to the 
prescribed period for the responsive filing.
    (3) If service was made by electronic media transmission, add one 
calendar day to the prescribed period for the responsive filing, unless 
otherwise determined by the Board of Directors or the presiding officer 
in the case of filing, or by agreement among the parties in the case of 
service.


Sec. 908.28  Change of time limits.

    Except as otherwise provided by law, the presiding officer may, for 
good cause shown, extend the time limits prescribed above or prescribed 
by any notice or order issued in the proceedings. After the referral of 
the case to the Finance Board pursuant to Sec. 908.63, the Finance 
Board may grant extensions of the time limits for good cause shown. 
Extensions may be granted on the motion of a party after notice and 
opportunity to respond is afforded all nonmoving parties, or on the 
Finance Board's or the presiding officer's own motion.


Sec. 908.29  Witness fees and expenses.

    Witnesses (other than parties) subpoenaed for testimony or 
depositions shall be paid the same fees for attendance and mileage as 
are paid to witnesses pursuant to the Federal Rules of Civil Procedure 
(title 28 of the U.S. Code) governing proceedings in the United States 
district courts, in which the United States is a party, provided that, 
in the case of a discovery subpoena addressed to a party, no witness 
fees or mileage shall be paid. Fees for witnesses shall be tendered in 
advance by the party requesting the subpoena, except that fees and 
mileage need not be tendered in advance where the Finance Board is the 
issuer of the subpoena. The Finance Board shall not be responsible for 
or required to pay any fees to or expenses of any witness not 
subpoenaed by the Finance Board.


Sec. 908.30  Settlement or other dispute resolution.

    Any respondent may, at any time in the proceeding, unilaterally 
submit to the Finance Board's counsel of record written offers or 
proposals for settlement of a proceeding without prejudice to the 
rights of any of the parties. Any such offer or proposal shall be made 
exclusively to the Finance Board. Submission of a written settlement 
offer does not provide a basis for adjourning or otherwise delaying all 
or any portion of a proceeding under this part. Any party to a 
proceeding under this part may request a neutral individual preside 
over settlement negotiations. No settlement offer or proposal, or any 
subsequent negotiation or resolution, is admissible as evidence in any 
proceeding under this part or any court.


Sec. 908.31  Right to supervise the banks.

    Nothing contained in this part shall limit in any manner the right 
of the Finance Board to conduct any examination, inspection, or 
visitation of any Bank or the OF, or the right of the Finance Board to 
conduct or continue any form of investigation authorized by law. 
Nothing set forth in this part shall restrict or be deemed to restrict 
the authority of the Finance Board to supervise the Banks or to issue 
or enforce orders or directives pursuant to section 2B(a)(1) or any 
other provision of the Act.


Sec. 908.32  Collateral attacks on adjudicatory proceeding.

    If an interlocutory appeal or collateral attack is brought in any 
court concerning all or any part of an adjudicatory proceeding or 
hearing, the challenged adjudicatory proceeding or hearing shall 
continue without regard to the pendency of that court proceeding. No 
default or other failure to act as directed in the adjudicatory 
proceeding or hearing within the times prescribed in this subpart shall 
be excused based on the pendency before any court of any interlocutory 
appeal or collateral attack.


Sec. 908.33--39  [Reserved]

Subpart D--Pre-Hearing Proceedings


Sec. 908.40  Commencement of proceeding and contents of notice of 
charges.

    Proceedings under this subpart are commenced by the issuance of a 
notice of charges by the Finance Board that must be served upon the 
respondent. Such notice shall state all of the following:
    (a) The legal authority for the proceeding and for the Finance 
Board's jurisdiction over the proceeding;
    (b) A statement of the matters of fact or law showing that the 
Finance Board is entitled to relief;
    (c) A proposed order or prayer for an order granting the requested 
relief;
    (d) The time, place and nature of the hearing;
    (e) The time within which to file an answer;
    (f) The time within which to request a hearing; and
    (g) The address for filing the answer and/or request for a hearing.


Sec. 908.41  Answer.

    (a) Deadline for filing answer. Unless otherwise specified by the 
Finance Board in the notice, respondent shall file an answer within 20 
days of service of the notice.
    (b) Content of answer. An answer shall respond specifically to each 
paragraph or allegation of fact contained in the notice and must admit, 
deny, or state that the party lacks sufficient information to admit or 
deny each allegation of fact. A statement of lack of information has 
the effect of a denial. Denials must fairly meet the substance of each 
allegation of fact denied; general denials are not permitted. When a 
respondent denies part of an allegation, that part must be denied and 
the remainder specifically admitted. Any allegation of fact in the 
notice that is not denied in the answer is deemed admitted for purposes 
of the proceeding. A respondent is not required to respond to the 
portion of a notice that constitutes the prayer for relief or proposed 
order. The answer shall set forth affirmative defenses, if any, 
asserted by the respondent.
    (c) Default. Failure of a respondent to file an answer required by 
this section within the time provided constitutes a waiver of such 
respondent's right to appear and contest the allegations in the notice. 
If no timely answer is filed, the Finance Board's counsel of record may 
file a motion for entry of an order of default. Upon a finding that no 
good cause has been shown for the failure to file a timely answer, the 
presiding

[[Page 79005]]

officer shall file with the Board of Directors a recommended decision 
containing the findings and the relief sought in the notice. Any final 
order issued by the Board of Directors based upon a respondent's 
failure to answer shall be deemed to be an order issued upon consent.


Sec. 908.42  Amended pleadings.

    (a) Amendments. The notice or answer may be amended or supplemented 
at any stage of the proceeding. The respondent must answer an amended 
notice within the time remaining for the respondent's answer to the 
original notice, or within ten days after service of the amended 
notice, whichever period is longer, unless the Board of Directors or 
the presiding officer orders otherwise for good cause shown.
    (b) Amendments to conform to the evidence. When issues not raised 
in the notice or answer are tried at the hearing by express or implied 
consent of the parties, they shall be treated in all respects as if 
they had been raised in the notice or answer, and no formal amendments 
shall be required. If evidence is objected to at the hearing on the 
ground that it is not within the issues raised by the notice or answer, 
the presiding officer may admit the evidence when admission is likely 
to assist in adjudicating the merits of the action. The presiding 
officer will do so freely when the determination of the merits of the 
action is served thereby and the objecting party fails to satisfy the 
presiding officer that the admission of such evidence would unfairly 
prejudice that party's action or defense upon the merits. The presiding 
officer may grant a continuance to enable the objecting party to meet 
such evidence.


Sec. 908.43  Failure to appear.

    Failure of a respondent to appear in person or by a duly authorized 
representative at the hearing constitutes a waiver of respondent's 
right to a hearing and is deemed an admission of the facts as alleged 
and consent to the relief sought in the notice. Without further 
proceedings or notice to the respondent, the presiding officer shall 
file with the Board of Directors a recommended decision containing the 
findings and the relief sought in the notice.


Sec. 908.44  Consolidation and severance of actions.

    (a) Consolidation. On the motion of any party, or on the Finance 
Board's or the presiding officer's own motion, the presiding officer 
may consolidate, for some or all purposes, any two or more proceedings, 
if each such proceeding involves or arises out of the same transaction, 
occurrence or series of transactions or occurrences, or involves at 
least one common respondent or a material common question of law or 
fact, unless such consolidation would cause unreasonable delay or 
injustice. In the event of consolidation under this section, 
appropriate adjustment to the pre-hearing schedule must be made to 
avoid unnecessary expense, inconvenience, or delay.
    (b) Severance. The presiding officer may, upon the motion of the 
Finance Board or any party, sever the proceeding for separate 
resolution of the matter as to any respondent only if the presiding 
officer finds that undue prejudice or injustice to the moving party 
would result from not severing the proceeding and such undue prejudice 
or injustice would outweigh the interests of judicial economy and 
expedition in the complete and final resolution of the proceeding.


Sec. 908.45  Motions.

    (a) Written motions. (1) Except as otherwise provided herein, an 
application or request for an order or ruling must be made by written 
motion.
    (2) All written motions shall state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the presiding officer. Written memoranda, briefs, 
affidavits, or other relevant material or documents may be filed in 
support of or in opposition to a motion.
    (b) Oral motions. A motion may be made orally at an adjudicative 
proceeding or hearing on the record unless the presiding officer 
directs that such motion be reduced to writing. Oral motions must be 
made a part of the record of the adjudicative proceeding or hearing 
with an accompanying proposed order.
    (c) Filing of motions. Motions shall be filed with the presiding 
officer, except that following the filing of a recommended decision 
with the Board of Directors, motions must be filed with the Board of 
Directors.
    (d) Responses. (1) Except as otherwise provided herein, any party 
may file a written response to a motion within ten days after service 
of any written motion, or within such other period of time as may be 
established by the presiding officer or the Board of Directors. The 
presiding officer shall not rule on any oral or written motion before 
each party has had an opportunity to file a response.
    (2) The failure of a party to oppose a written motion or an oral 
motion made on the record is deemed to be consent by that party to the 
entry of an order substantially in the form of the order accompanying 
the motion.
    (e) Dilatory motions. Frivolous, dilatory, or repetitive motions 
are prohibited. The filing of such motions may form the basis for 
sanctions.
    (f) Dispositive motions. Dispositive motions shall be governed by 
Secs. 908.51 and 908.52.


Sec. 908.46  Discovery.

    (a) Limits on discovery. Subject to the limitations set out in 
paragraphs (b), (d), and (e) of this section, any party to a hearing 
under this part may obtain document discovery by serving a written 
request to produce documents. For purposes of a request to produce 
documents, the term documents may be defined to include drawings, 
graphs, charts, photographs, recordings, data stored in electronic 
form, and other data compilations from which information can be 
obtained or translated, if necessary, by the parties through detection 
devices into reasonably usable form, as well as written material of all 
kinds.
    (b) Relevance. A party may obtain document discovery regarding any 
matter not privileged that has material relevance to the merits of the 
pending action. Any request to produce documents that calls for 
irrelevant material, that is unreasonable, oppressive, excessive in 
scope, unduly burdensome, or repetitive of previous requests, or that 
seeks to obtain privileged documents will be denied or modified. A 
request is unreasonable, oppressive, excessive in scope, or unduly 
burdensome if, among other things, it fails to include justifiable 
limitations on the time period covered and the geographic locations to 
be searched, the time provided to respond in the request is inadequate, 
or the request calls for copies of documents to be delivered to the 
requesting party and fails to include the requestor's written agreement 
to pay in advance for the copying, in accordance with Sec. 908.47.
    (c) Forms of discovery. Document discovery shall be limited to 
requests for production of documents for inspection and copying. No 
other form of discovery shall be allowed. Discovery by use of 
interrogatories may be permitted. This paragraph shall not be 
interpreted to require the creation of a document.
    (d) Privileged matter. Privileged documents shall not be 
discoverable. Privileges include the attorney-client privilege, work-
product privilege, any government's or government agency's

[[Page 79006]]

deliberative process privilege and any other privileges provided by the 
Constitution, any applicable act of Congress, or the principles of 
common law.
    (e) Time limits. All discovery, including all responses to 
discovery requests, shall be completed at least 20 days prior to the 
date scheduled for the commencement of the hearing. No exception to 
this time limit shall be permitted, unless the presiding officer finds 
on the record that good cause exists for waiving the requirements of 
this paragraph.


Sec. 908.47  Request for document discovery from parties.

    (a) General rule. Any party may serve on any other party a request 
to produce for inspection any discoverable documents that are in the 
possession, custody, or control of the party upon whom the request is 
served. Copies of the request shall be served on all other parties. The 
request must identify the documents to be produced either by individual 
item or by category and must describe each item and category with 
reasonable particularity. Documents must be produced as they are kept 
in the usual course of business or they shall be labeled and organized 
to correspond with the categories in the request.
    (b) Production or copying. The request shall specify a reasonable 
time, place and manner for production and performing any related acts. 
In lieu of inspecting the documents, the requesting party may specify 
that all or some of the responsive documents be copied and the copies 
delivered to the requesting party. If copying of fewer than 250 pages 
is requested, the party to whom the request is addressed shall bear the 
cost of copying and shipping charges. If a party requests more than 250 
pages of copying, the requesting party shall pay for copying and 
shipping charges. Copying charges are at the current rate per page 
imposed by the Finance Board at Sec. 910.9(g) of this chapter for 
requests for documents filed under the Freedom of Information Act, 5 
U.S.C. 552. The party to whom the request is addressed may require 
payment in advance before producing the documents.
    (c) Obligation to update responses. A party who has responded to a 
discovery request is not required to supplement the response, unless:
    (1) The responding party learns that in some material respect the 
information disclosed is incomplete or incorrect, and
    (2) The additional or corrective information has not otherwise been 
made known to the other parties during the discovery process or in 
writing.
    (d) Motions to strike or limit discovery requests. (1) Any party 
that objects to a discovery request may, within ten days of being 
served with such request, file a motion in accordance with the 
provisions of Sec. 908.45 requesting the presiding officer order the 
request be stricken or otherwise limited. If an objection is made to 
only a portion of an item or category in a request, the objection shall 
specify that portion. Any objections not made in accordance with this 
paragraph and Sec. 908.45 are waived.
    (2) The party who served the request that is the subject of a 
motion to strike or limit may file a written response within five days 
of service of the motion. No other party may file a response.
    (e) Privilege. At the time other documents are produced, all 
documents withheld on the grounds of privilege must be reasonably 
identified, together with a statement of the basis for the assertion of 
privilege. When similar documents that are protected by deliberative 
process, attorney work-product, or attorney-client privilege are 
voluminous, these documents may be identified by category instead of by 
individual document. The presiding officer has discretion to determine 
when the identification by category is insufficient.
    (f) Motions to compel production. (1) If a party withholds any 
documents as privileged or fails to comply fully with a discovery 
request, the requesting party may, within ten days of the assertion of 
privilege or of the time the failure to comply becomes known to the 
requesting party, file a motion in accordance with the provisions of 
Sec. 908.45 for the issuance of a subpoena compelling production.
    (2) The party who asserted the privilege or failed to comply with 
the request may, within five days of service of a motion for the 
issuance of a subpoena compelling production, file a written response 
to the motion. No other party may file a response.
    (g) Ruling on motions. After the time for filing responses to 
motions pursuant to this section has expired, the presiding officer 
shall rule promptly on all such motions. If the presiding officer 
determines that a discovery request or any of its terms calls for 
irrelevant material, is unreasonable, oppressive, excessive in scope, 
unduly burdensome, or repetitive of previous requests, or seeks to 
obtain privileged documents, he or she may deny or modify the request 
and may issue appropriate protective orders, upon such conditions as 
justice may require. The pendency of a motion to strike or limit 
discovery or to compel production shall not be a basis for staying or 
continuing the proceeding, unless otherwise ordered by the presiding 
officer. Notwithstanding any other provision in this part, the 
presiding officer may not release, or order a party to produce, 
documents withheld on grounds of privilege if the party has stated to 
the presiding officer its intention to file a timely motion for 
interlocutory review of the presiding officer's order to produce the 
documents, until the motion for interlocutory review has been decided.
    (h) Enforcing discovery subpoenas. If the presiding officer issues 
a subpoena compelling production of documents by a party, the 
subpoenaing party may, in the event of noncompliance and to the extent 
authorized by applicable law, apply to any appropriate United States 
district court for an order requiring compliance with the subpoena. A 
party's right to seek court enforcement of a subpoena shall not in any 
manner limit the sanctions that may be imposed by the presiding officer 
against a party who fails to produce or induces another to fail to 
produce subpoenaed documents.


Sec. 908.48  Document subpoenas to nonparties.

    (a) General rules. (1) Any party may apply to the presiding officer 
for the issuance of a document discovery subpoena addressed to any 
person who is not a party to the proceeding. The application must 
contain a proposed document subpoena and a brief statement showing the 
general relevance and reasonableness of the scope of documents sought. 
The subpoenaing party shall specify a reasonable time, place, and 
manner for production in response to the subpoena.
    (2) A party shall only apply for a document subpoena under this 
section within the time period during which such party could serve a 
discovery request under Sec. 908.47. The party requesting the document 
subpoena is responsible for serving it on the subpoenaed person and for 
serving copies on all parties. Document subpoenas may be served in any 
State, territory, or possession of the United States, the District of 
Columbia, or as otherwise provided by law.
    (3) The presiding officer shall promptly issue any document 
subpoena applied for under this section; except that, if the presiding 
officer determines that the application does not set forth a valid 
basis for the issuance of the subpoena, or that any of its terms are 
unreasonable, oppressive, excessive in scope, or unduly burdensome, he 
may

[[Page 79007]]

refuse to issue the subpoena or may issue it in a modified form upon 
such conditions as may be determined by the presiding officer.
    (b) Motion to quash or modify. (1) Any person to whom a document 
subpoena is directed may file a motion to quash or modify such 
subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant shall serve the motion on all 
parties and any party may respond to such motion within ten days of 
service of the motion.
    (2) Any motion to quash or modify a document subpoena shall be 
filed on the same basis, including the assertion of privilege, upon 
which a party could object to a discovery request under Sec. 908.47 and 
during the same time limits during which such an objection could be 
filed.
    (c) Enforcing document subpoenas. If a subpoenaed person fails to 
comply with any subpoena issued pursuant to this section or any order 
of the presiding officer that directs compliance with all or any 
portion of a document subpoena, the subpoenaing party or any other 
aggrieved party may, to the extent authorized by applicable law, apply 
to an appropriate United States district court for an order requiring 
compliance with any part of the subpoena that the presiding officer has 
not quashed or modified. A party's right to seek court enforcement of a 
document subpoena shall in no way limit the sanctions that may be 
imposed by the presiding officer on a party who induces a failure to 
comply with subpoenas issued under this section.


Sec. 908.49  Deposition of witness unavailable for hearing.

    (a) General rules. (1) If a witness will not be available for the 
hearing, a party desiring to preserve that witness' testimony for the 
record may apply in accordance with the procedures set forth in 
paragraph (a)(2) of this section to the presiding officer for the 
issuance of a subpoena, including a subpoena duces tecum, requiring the 
attendance of the witness at a deposition. The presiding officer may 
issue a deposition subpoena under this section upon a showing that--
    (i) The witness will be unable to attend or may be prevented from 
attending the hearing because of age, sickness, or infirmity, or will 
be otherwise unavailable;
    (ii) The witness' unavailability was not produced or caused by the 
subpoenaing party;
    (iii) The testimony is reasonably expected to be material; and
    (iv) Taking the deposition will not result in any undue burden to 
any other party and will not cause undue delay of the proceeding.
    (2) The application must contain a proposed deposition subpoena and 
a brief statement of the reasons for the issuance of the subpoena. The 
subpoena must name the witness whose deposition is to be taken and 
specify the time and place for taking the deposition. A deposition 
subpoena may require the witness to be deposed anywhere within the 
United States and its possessions and territories in which that witness 
resides or has a regular place of employment or such other convenient 
place as the presiding officer shall fix.
    (3) A subpoena shall be promptly issued upon request, unless the 
presiding officer determines that the request fails to set forth a 
valid basis under this section for its issuance. The presiding officer 
shall make a determination that there is a valid basis for issuing the 
subpoena. The presiding officer may require a written response from the 
party requesting the subpoena or require attendance at a conference to 
determine whether there is a valid basis upon which to issue the 
requested subpoena.
    (4) The party obtaining a deposition subpoena is responsible for 
serving it on the witness and for serving copies on all parties. Unless 
the presiding officer orders otherwise, no deposition under this 
section shall be taken on fewer than 10 days' notice to the witness and 
all parties. Deposition subpoenas may be served anywhere within the 
United States or its possessions or territories on any person doing 
business anywhere within the United States or its possessions or 
territories, or as otherwise permitted by law.
    (b) Objections to deposition subpoenas. (1) The witness and any 
party who has not had an opportunity to oppose a deposition subpoena 
issued under this section may file a motion under Sec. 908.25 with the 
presiding officer to quash or modify the subpoena prior to the time for 
compliance specified in the subpoena, but not more than 10 days after 
service of the subpoena.
    (2) A statement of the basis for the motion to quash or modify a 
subpoena issued under this section shall accompany the motion. The 
motion must be served on all parties.
    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena shall be duly sworn and each party shall have 
the right to examine the witness. Objections to questions or documents 
must be in short form, stating the grounds for the objection. Failure 
to object to questions or documents is not deemed a waiver except where 
the ground for objection might have been avoided if the objection had 
been presented timely. All questions, answers and objections must be 
recorded.
    (2) Any party may move before the presiding officer for an order 
compelling the witness to answer any questions the witness has refused 
to answer or submit any evidence that, during the deposition, the 
witness has refused to submit.
    (3) The deposition shall be subscribed by the witness, unless the 
parties and the witness, by stipulation, have waived the signing, or 
the witness is ill, cannot be found, or has refused to sign. If the 
deposition is not subscribed by the witness, the court reporter taking 
the deposition shall certify that the transcript is a true and complete 
transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply 
with any subpoena issued pursuant to this section or with any order of 
the presiding officer made upon motion under paragraph (c)(2) of this 
section, the subpoenaing party or other aggrieved party may, to the 
extent authorized by applicable law, apply to an appropriate United 
States district court for an order requiring compliance with the 
portions of the subpoena that the presiding officer has ordered 
enforced. A party's right to seek court enforcement of a deposition 
subpoena in no way limits the sanctions that may be imposed by the 
presiding officer on a party who fails to comply with or induces a 
failure to comply with a subpoena issued under this section.


Sec. 908.50  Interlocutory review.

    (a) General rule. The Board of Directors may review a ruling of the 
presiding officer prior to the certification of the record to the Board 
of Directors only in accordance with the procedures set forth in this 
section.
    (b) Scope of review. The Board of Directors may exercise 
interlocutory review of a ruling of the presiding officer if it finds 
that--
    (1) The ruling involves a controlling question of law or policy as 
to which substantial grounds exist for a difference of opinion;
    (2) Immediate review of the ruling may materially advance the 
ultimate termination of the proceeding;
    (3) Subsequent modification of the ruling at the conclusion of the 
proceeding would be an inadequate remedy; or

[[Page 79008]]

    (4) Subsequent modification of the ruling would cause unusual delay 
or expense.
    (c) Procedure. Any motion for interlocutory review shall be filed 
by a party with the presiding officer within ten days of his ruling. 
Upon the expiration of the time for filing all responses, the presiding 
officer shall refer the matter to the Board of Directors for final 
disposition. In referring the matter to the Board of Directors, the 
presiding officer may indicate agreement or disagreement with the 
asserted grounds for interlocutory review of the ruling in question.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Board of Directors 
under this section suspends or stays the proceeding unless otherwise 
ordered by the presiding officer or the Board of Directors.


Sec. 908.51  Summary disposition.

    (a) In general. The presiding officer shall recommend that the 
Board of Directors issue a final order granting a motion for summary 
disposition if the undisputed pleaded facts, admissions, affidavits, 
stipulations, documentary evidence, matters as to which official notice 
may be taken and any other evidentiary materials properly submitted in 
connection with a motion for summary disposition show that--
    (1) There is no genuine issue as to any material fact; and
    (2) The movant is entitled to a decision in its favor as a matter 
of law.
    (b) Filing of motions and responses. (1) Any party who believes 
there is no genuine issue of material fact to be determined and that 
such party is entitled to a decision as a matter of law may move at any 
time for summary disposition in its favor of all or any part of the 
proceeding. Any party, within 20 days after service of such motion or 
within such time period as allowed by the presiding officer, may file a 
response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of material facts as to which the movant contends there is no 
genuine issue. Such motion must be supported by documentary evidence, 
which may take the form of admissions in pleadings, stipulations, 
written interrogatory responses, depositions, investigatory 
depositions, transcripts, affidavits and any other evidentiary 
materials that the movant contends support its position. The motion 
must also be accompanied by a brief containing the points and 
authorities in support of the contention of the movant. Any party 
opposing a motion for summary disposition must file a statement setting 
forth those material facts as to which such party contends a genuine 
dispute exists. Such opposition must be supported by evidence of the 
same type as that submitted with the motion for summary disposition and 
a brief containing the points and authorities in support of the 
contention that summary disposition would be inappropriate.
    (c) Hearing on motion. At the request of any party or on his own 
motion, the presiding officer may hear oral argument on the motion for 
summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the presiding officer shall 
determine whether the movant is entitled to summary disposition. If the 
presiding officer determines that summary disposition is warranted, the 
presiding officer shall submit a recommended decision to that effect to 
the Board of Directors under Sec. 908.63. If the presiding officer 
finds that the moving party is not entitled to summary disposition, the 
presiding officer shall make a ruling denying the motion.


Sec. 908.52  Partial summary disposition.

    If the presiding officer determines that a party is entitled to 
summary disposition as to certain claims only, he or she shall defer 
submitting a recommended decision to the Board of Directors as to those 
claims. A hearing on the remaining issues must be ordered. Those claims 
for which the presiding officer has determined that summary disposition 
is warranted will be addressed in the recommended decision filed at the 
conclusion of the hearing.


Sec. 908.53  Scheduling and prehearing conferences.

    (a) Scheduling conference. Within 30 days of service of the notice 
or order commencing a proceeding or at such other time as the parties 
may agree, the presiding officer shall direct representatives for all 
parties to meet with him or her in person at a specified time and place 
prior to the hearing or to confer by telephone for the purpose of 
scheduling the course and conduct of the proceeding. This meeting or 
telephone conference is called a ``scheduling conference.'' The 
identification of potential witnesses, the time for and manner of 
discovery and the exchange of any pre-hearing materials including 
witness lists, statements of issues, stipulations, exhibits and any 
other materials may also be determined at the scheduling conference.
    (b) Pre-hearing conference. The presiding officer may, in addition 
to the scheduling conference, on his own motion or at the request of 
any party, direct representatives for the parties to meet with him (in 
person or by telephone) at a pre-hearing conference to address any or 
all of the following:
    (1) Simplification and clarification of the issues;
    (2) Stipulations, admissions of fact and the contents, authenticity 
and admissibility into evidence of documents;
    (3) Matters of which official notice may be taken;
    (4) Limitation of the number of witnesses;
    (5) Summary disposition of any or all issues;
    (6) Resolution of discovery issues or disputes;
    (7) Amendments to pleadings; and
    (8) Such other matters as may aid in the orderly disposition of the 
proceeding.
    (c) Transcript. The presiding officer, in his discretion, may 
require that a scheduling or prehearing conference be recorded by a 
court reporter. A transcript of the conference and any materials filed, 
including orders, becomes part of the record of the proceeding. A party 
may obtain a copy of the transcript at such party's expense.
    (d) Scheduling or pre-hearing orders. Within a reasonable time 
following the conclusion of the scheduling conference or any pre-
hearing conference, the presiding officer shall serve on each party an 
order setting forth any agreements reached and any procedural 
determinations.


Sec. 908.54  Pre-hearing submissions.

    (a) Service deadline. Within the time set by the presiding officer, 
but in no case later than 10 days before the start of the hearing, each 
party shall serve on every other party the serving party's:
    (1) Pre-hearing statement;
    (2) Final list of witnesses to be called to testify at the hearing, 
including name and address of each witness and a short summary of the 
expected testimony of each witness;
    (3) List of the exhibits to be introduced at the hearing along with 
a copy of each exhibit; and
    (4) Stipulations of fact, if any.
    (b) Effect of failure to comply. No witness may testify and no 
exhibits may be introduced at the hearing if such witness or exhibit is 
not listed in the pre-hearing submissions pursuant to paragraph (a) of 
this section, except for good cause shown.

[[Page 79009]]

Sec. 908.55  Hearing subpoenas.

    (a) Issuance. (1) Upon application of a party showing general 
relevance and reasonableness of scope of the testimony or other 
evidence sought, the presiding officer may issue a subpoena or a 
subpoena duces tecum requiring the attendance of a witness at the 
hearing or the production of documentary or physical evidence at such 
hearing. The application for a hearing subpoena must also contain a 
proposed subpoena specifying the attendance of a witness or the 
production of evidence from any State, commonwealth, possession, 
territory of the United States, or the District of Columbia, or as 
otherwise provided by law at any designated place where the hearing is 
being conducted. The party making the application shall serve a copy of 
the application and the proposed subpoena on every other party.
    (2) A party may apply for a hearing subpoena at any time before the 
commencement of or during a hearing. During a hearing, a party may make 
an application for a subpoena orally on the record before the presiding 
officer.
    (3) The presiding officer shall promptly issue any hearing subpoena 
applied for under this section; except that, if the presiding officer 
determines that the application does not set forth a valid basis for 
the issuance of the subpoena, or that any of its terms are 
unreasonable, oppressive, excessive in scope, or unduly burdensome, he 
may refuse to issue the subpoena or may issue the subpoena in a 
modified form upon any conditions consistent with this subpart. Upon 
issuance by the presiding officer, the party making the application 
shall serve the subpoena on the person named in the subpoena and on 
each party.
    (b) Motion to quash or modify. (1) Any person to whom a hearing 
subpoena is directed or any party may file a motion to quash or modify 
such subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant must serve the motion on each party 
and on the person named in the subpoena. Any party may respond to the 
motion within ten days of service of the motion.
    (2) Any motion to quash or modify a hearing subpoena must be filed 
prior to the time specified in the subpoena for compliance, but no more 
than 10 days after the date of service of the subpoena upon the movant.
    (c) Enforcing subpoenas. If a subpoenaed person fails to comply 
with any subpoena issued pursuant to this section or any order of the 
presiding officer that directs compliance with all or any portion of a 
hearing subpoena, the subpoenaing party or any other aggrieved party 
may seek enforcement of the subpoena pursuant to Sec. 908.8(c). A 
party's right to seek court enforcement of a hearing subpoena shall in 
no way limit the sanctions that may be imposed by the presiding officer 
on a party who induces a failure to comply with subpoenas issued under 
this section.


Secs. 908.56-908.59  [Reserved]

Subpart E--Hearing and Post-hearing Proceedings


Sec. 908.60  Conduct of hearings.

    (a) General rules. (1) Hearings. Hearings shall be conducted in 
accordance with chapter 5 of Title 5 of the United States Code (5 
U.S.C. 501-559), and other applicable law, so as to provide a fair and 
expeditious presentation of the relevant disputed issues. Except as 
limited by this subpart, each party has the right to present its case 
or defense by oral and documentary evidence and to conduct such cross-
examination of witnesses as may be required for full disclosure of the 
facts.
    (2) Order of hearing. The Finance Board shall present its case-in-
chief first, unless otherwise ordered by the presiding officer or 
unless otherwise expressly specified by law or regulation. The Finance 
Board shall be the first party to present an opening statement and a 
closing statement and may make a rebuttal statement after the 
respondent's closing statement. If there are multiple respondents, 
respondents may agree among themselves as to their order or 
presentation of their cases, but if they do not agree, the presiding 
officer shall fix the order.
    (3) Examination of witnesses. Only one representative for each 
party may conduct an examination of a witness, except that in the case 
of extensive direct examination, the presiding officer may permit more 
than one representative for the party presenting the witness to conduct 
the examination. A party may have one representative conduct the direct 
examination and another representative conduct re-direct examination of 
a witness, or may have one representative conduct the cross examination 
of a witness and another representative conduct the re-cross 
examination of a witness.
    (4) Stipulations. Unless the presiding officer directs otherwise, 
all documents that the parties have stipulated as admissible shall be 
admitted into evidence upon commencement of the hearing.
    (b) Transcript. The hearing shall be recorded and transcribed. The 
transcript shall be made available to any party upon payment of the 
cost thereof. The presiding officer shall have authority to order the 
record corrected, either upon motion to correct, upon stipulation of 
the parties, or following notice to the parties upon the presiding 
officer's own motion.


Sec. 908.61  Evidence.

    (a) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551-559) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence (see generally, 28 U.S.C.) is admissible in a proceeding 
conducted pursuant to this subpart.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence (28 U.S.C.) may not be deemed or ruled to be inadmissible in a 
proceeding conducted pursuant to this subpart if such evidence is 
relevant, material, reliable and not unduly repetitive.
    (b) Official notice. (1) Official notice may be taken of any 
material fact that may be judicially noticed by a United States 
district court and any material information in the official public 
records of any Federal or State government agency.
    (2) All matters officially noticed by the presiding officer or the 
Finance Board shall appear on the record.
    (3) If official notice is requested of any material fact, the 
parties, upon timely request, shall be afforded an opportunity to 
object.
    (c) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible 
copy of the original.
    (2) Subject to the requirements of paragraph (a)(1) of this 
section, any document, including a report of examination, oversight 
activity, inspection, or visitation, prepared by the Finance Board or 
by another Federal or State financial institutions regulatory agency is 
admissible either with or without a sponsoring witness.
    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines, or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the presiding officer's discretion, be used 
with or without being admitted into evidence.

[[Page 79010]]

    (d) Objections. (1) Objections to the admissibility of evidence 
must be timely made and rulings on all objections must appear in the 
record.
    (2) When an objection to a question or line of questioning is 
sustained, the examining representative of record may make a specific 
proffer on the record of what he expected to prove by the expected 
testimony of the witness. The proffer may be by representation of the 
representative or by direct interrogation of the witness.
    (3) The presiding officer shall retain rejected exhibits, 
adequately marked for identification, for the record and transmit such 
exhibits to the Board of Directors.
    (4) Failure to object to admission of evidence or to any ruling 
constitutes a waiver of the objection.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact or the authentication of any relevant documents. Such 
stipulations must be received in evidence at a hearing and are binding 
on the parties with respect to the matters therein stipulated.
    (f) Depositions of unavailable witnesses. (1) If a witness is 
unavailable to testify at a hearing and that witness has testified in a 
deposition in accordance with Sec. 908.29, a party may offer as 
evidence all or any part of the transcript of the deposition, including 
deposition exhibits, if any.
    (2) Such deposition transcript is admissible to the same extent 
that testimony would have been admissible had that person testified at 
the hearing, provided that if a witness refused to answer proper 
questions during the depositions, the presiding officer may, on that 
basis, limit the admissibility of the deposition in any manner that 
justice requires.
    (3) Only those portions of a deposition received in evidence at the 
hearing constitute a part of the record.


Sec. 908.62  Post-hearing filings.

    (a) Proposed findings and conclusions and supporting briefs. (1) 
Using the same method of service for each party, the presiding officer 
shall serve notice upon each party that the certified transcript, 
together with all hearing exhibits and exhibits introduced but not 
admitted into evidence at the hearing, has been filed. Any party may 
file with the presiding officer proposed findings of fact, proposed 
conclusions of law and a proposed order within 30 days after the 
parties have received notice that the transcript has been filed with 
the presiding officer, unless otherwise ordered by the presiding 
officer.
    (2) Proposed findings and conclusions must be supported by citation 
to any relevant authorities and by page references to any relevant 
portions of the record. A post-hearing brief may be filed in support of 
proposed findings and conclusions, either as part of the same document 
or in a separate document.
    (3) Any party is deemed to have waived any issue not raised in 
proposed findings or conclusions timely filed by that party.
    (b) Reply briefs. Reply briefs may be filed within 15 days after 
the date on which the parties' proposed findings and conclusions and 
proposed order are due. Reply briefs must be limited strictly to 
responding to new matters, issues, or arguments raised in another 
party's papers. A party who has not filed proposed findings of fact and 
conclusions of law or a post-hearing brief may not file a reply brief.
    (c) Simultaneous filing required. The presiding officer shall not 
order the filing by any party of any brief or reply brief supporting 
proposed findings and conclusions in advance of the other party's 
filing of its brief.


Sec. 908.63  Recommended decision and filing of record.

    (a) Filing of recommended decision and record. Within 45 days after 
expiration of the time allowed for filing reply briefs under 
Sec. 908.52(b), the presiding officer shall file with and certify to 
the Board of Directors, for decision, the record of the proceeding. The 
record must include the presiding officer's recommended decision, 
recommended findings of fact and conclusions of law, and proposed 
order; all pre-hearing and hearing transcripts, exhibits and rulings; 
and the motions, briefs, memoranda and other supporting papers filed in 
connection with the hearing. The presiding officer shall serve upon 
each party the recommended decision, recommended findings and 
conclusions, and proposed order.
    (b) Filing of index. At the same time the presiding officer files 
with and certifies to the Board of Directors, for final determination, 
the record of the proceeding, the presiding officer shall furnish to 
the Board of Directors a certified index of the entire record of the 
proceeding. The certified index shall include, at a minimum, an entry 
for each paper, document or motion filed with the presiding officer in 
the proceeding, the date of the filing, and the identity of the filer. 
The certified index shall also include an exhibit index containing, at 
a minimum, an entry consisting of exhibit number and title or 
description for: Each exhibit introduced and admitted into evidence at 
the hearing; each exhibit introduced but not admitted into evidence at 
the hearing; each exhibit introduced and admitted into evidence after 
the completion of the hearing; and each exhibit introduced but not 
admitted into evidence after the completion of the hearing.


Sec. 908.64  Exceptions to recommended decision.

    (a) Filing exceptions. Within 30 days after service of the 
recommended decision, recommended findings and conclusions, and 
proposed order under Sec. 908.63, a party may file with the Finance 
Board written exceptions to the presiding officer's recommended 
decision, recommended findings and conclusions, or proposed order; to 
the admission or exclusion of evidence; or to the failure of the 
presiding officer to make a ruling proposed by a party. A supporting 
brief may be filed at the time the exceptions are filed, either as part 
of the same document or in a separate document.
    (b)  Effect of failure to file or raise exceptions. (1) Failure of 
a party to file exceptions to those matters specified in paragraph (a) 
of this section within the time prescribed is deemed a waiver of 
objection thereto.
    (2) No exception need be considered by the Board of Directors if 
the party taking exception had an opportunity to raise the same 
objection, issue, or argument before the presiding officer and failed 
to do so.
    (c) Contents. (1) All exceptions and briefs in support of such 
exceptions must be confined to the particular matters in or omissions 
from the presiding officer's recommendations to which that party takes 
exception.
    (2) All exceptions and briefs in support of exceptions must set 
forth page or paragraph references to the specific parts of the 
presiding officer's recommendations to which exception is taken, the 
page or paragraph references to those portions of the record relied 
upon to support each exception and the legal authority relied upon to 
support each exception. Exceptions and briefs in support shall not 
exceed a total of 30 pages, except by leave of the Finance Board on 
motion.
    (3) Each party may submit one reply brief within ten days of 
service of exceptions and briefs in support of exceptions. Reply briefs 
shall not exceed 15 pages, except by leave of the Finance Board on 
motion.


Sec. 908.65  Review by Board of Directors.

    (a) Notice of submission to the Board of Directors. When the Board 
of Directors determines that the record in the proceeding is complete, 
the Finance

[[Page 79011]]

Board shall serve notice upon the parties that the proceeding has been 
submitted to the Board of Directors for final decision.
    (b) Oral argument before the Board of Directors. Upon the 
initiative of the Board of Directors or on the written request of any 
party filed with the Board of Directors within the time for filing 
exceptions under Sec. 908.64, the Board of Directors may order and hear 
oral argument on the recommended findings, conclusions, decision and 
order of the presiding officer. A written request by a party must show 
good cause for oral argument and state reasons why arguments cannot be 
presented adequately in writing. A denial of a request for oral 
argument may be set forth in the Board of Directors' final decision. 
Oral argument before the Board of Directors must be transcribed.
    (c) Board of Directors's final decision. (1) Decisional employees 
may advise and assist the Board of Directors in the consideration and 
disposition of the case. The final decision of the Board of Directors 
will be based upon review of the entire record of the proceeding, 
except that the Board of Directors may limit the issues to be reviewed 
to those findings and conclusions to which opposing arguments or 
exceptions have been filed by the parties.
    (2) The Board of Directors shall render a final decision and issue 
an appropriate order within 90 days after notification of the parties 
that the case has been submitted for final decision, unless the Board 
of Directors orders that the action or any aspect thereof be remanded 
to the presiding officer for further proceedings. Copies of the final 
decision and order of the Board of Directors shall be served upon each 
party to the proceeding and upon other persons required by statute.


Sec. 908.66  Exhaustion of administrative remedies.

    To exhaust administrative remedies as to any issue on which a party 
disagrees with the presiding officer's recommendations, a party must 
file exceptions with the Board of Directors under Sec. 908.64. A party 
must exhaust administrative remedies as a precondition to seeking 
judicial review of any final decision, in whole or in part, issued 
under Sec. 908.65.


Sec. 908.67  Stay of order pending judicial review.

    The commencement of proceedings for judicial review of a final 
decision and order of the Board of Directors may not, unless 
specifically ordered by the Board of Directors or a reviewing court, 
operate as a stay of any order issued by the Board of Directors. The 
Board of Directors may, in its discretion and on such terms as it finds 
just, stay the effectiveness of all or any part of an order of the 
Board of Directors pending a final decision on a petition for review of 
that order.


Sec. 908.68--908.69  [Reserved]

Subpart F--Rules of Practice Before the Finance Board


Sec. 908.70  Scope.

    This subpart contains rules governing practice by parties or their 
representatives in any proceeding before the Finance Board. These rules 
of practice may apply to any proceeding before the Finance Board, 
including adjudicatory proceedings or hearings, or appearances before 
the Board of Directors, under this part. This subpart also addresses 
the imposition of sanctions by the Finance Board or a presiding officer 
against parties or their representatives in an adjudicatory proceeding 
or hearing under this part. In the sole discretion of the Finance 
Board, Secs. 908.74 and 908.75 may be applied to persons who appear in 
a representational capacity in an administrative procedure under part 
907 of this chapter, an adjudicatory proceeding or hearing under this 
part 908, or in any other matter connected with presentations to the 
Finance Board relating to a client's or other principal's rights, 
privileges, or liabilities, including presentations to or 
communications with the Board of Directors or any member of the Board 
of Directors. This representation includes, but is not limited to, the 
practice of attorneys and accountants. Employees of the Finance Board 
are not subject to disciplinary proceedings under this subpart.


Sec. 908.71  Practice before the finance board.

    Practice before the Finance Board for the purposes of this subpart, 
includes, but is not limited to, transacting any business with the 
Finance Board as counsel, representative or agent for any other person, 
unless the Finance Board orders otherwise. Practice before the Finance 
Board also includes the preparation of any statement, opinion, or other 
paper by a counsel, representative or agent that is filed with the 
Finance Board in any certification, notification, application, report, 
or other document, with the consent of such counsel, representative or 
agent. Practice before the Finance Board does not include work prepared 
for a Bank solely at the request of the Bank for use in the ordinary 
course of its business.


Sec. 908.72  Appearances and practice in proceedings before the Finance 
Board.

    (a) Appearances in proceedings before the Finance Board. (1) By 
attorneys. A party may be represented by an attorney who is a member in 
good standing of the bar of the highest court of any State, 
commonwealth, possession, territory of the United States, or the 
District of Columbia and who is not currently suspended or disbarred 
from practice before the Finance Board.
    (2) By non-attorneys. An individual may appear on his own behalf. A 
member of a partnership may represent the partnership and a duly 
authorized officer, board of director member, employee, or other agent 
of any corporation or other entity not specifically listed herein may 
represent such corporation or other entity; provided that such officer, 
board of director member, employee, or other agent is not currently 
suspended or disbarred from practice before the Finance Board. A duly 
authorized officer or employee of any Government unit, agency, or 
authority may represent that unit, agency, or authority.
    (b) Notice of appearance. Any person appearing in a representative 
capacity on behalf of a party, including the Finance Board, shall 
execute and file a notice of appearance with the presiding officer at 
or before the time such person submits papers or otherwise appears on 
behalf of a party in the adjudicatory proceeding. Such notice of 
appearance shall include a written declaration that the individual is 
currently qualified as provided in paragraphs (a)(1) or (a)(2) of this 
section and is authorized to represent the particular party. By filing 
a notice of appearance on behalf of a party in an adjudicatory 
proceeding, the representative thereby agrees and represents that he is 
authorized to accept service on behalf of the represented party and 
that, in the event of withdrawal from representation, he or she will, 
if required by the presiding officer, continue to accept service until 
a new representative has filed a notice of appearance or until the 
represented party indicates that he or she will proceed on a pro se 
basis. Unless the representative filing the notice is an attorney, the 
notice of appearance shall also be executed by the person represented 
or, if the person is not an individual, by the chief executive officer, 
or duly authorized officer of that person.


Sec. 908.73  Conflicts of interest.

    (a) Conflict of interest in representation. No representative shall 
represent another person in an adjudicatory proceeding if it reasonably

[[Page 79012]]

appears that such representation may be limited materially by that 
representative's responsibilities to a third person or by that 
representative's own interests. The presiding officer may take 
corrective measures at any stage of a proceeding to cure a conflict of 
interest in representation, including the issuance of an order limiting 
the scope of representation or disqualifying an individual from 
appearing in a representative capacity for the duration of the 
proceeding.
    (b) Certification and waiver. If any person appearing as counsel or 
other representative represents two or more parties to an adjudicatory 
proceeding or also represents a nonparty on a matter relevant to an 
issue in the proceeding, that representative must certify in writing at 
the time of filing the notice of appearance required by Sec. 908.7:
    (1) That the representative has personally and fully discussed the 
possibility of conflicts of interest with each such party and nonparty;
    (2) That each such party and nonparty waives any right it might 
otherwise have had to assert any known conflicts of interest or to 
assert any non-material conflicts of interest during the course of the 
proceeding.


Sec. 908.74  Sanctions.

    (a) General rule. Appropriate sanctions may be imposed during the 
course of any proceeding when any party or representative of record has 
acted or failed to act in a manner required by applicable statute, 
regulation, or order, and that act or failure to act--
    (1) Constitutes contemptuous conduct. Contemptuous conduct includes 
dilatory, obstructionist, egregious, contumacious, unethical, or other 
improper conduct at any phase of any adjudicatory proceeding or hearing 
or before the Board of Directors;
    (2) Has caused some other party material and substantive injury, 
including, but not limited to, incurring expenses including attorney's 
fees or experiencing prejudicial delay;
    (3) Is a clear and unexcused violation of an applicable statute, 
regulation, or order; or
    (4) Has delayed the proceeding unduly.
    (b) Sanctions. Sanctions that may be imposed include, but are not 
limited to, any one or more of the following:
    (1) Issuing an order against a party;
    (2) Rejecting or striking any testimony or documentary evidence 
offered, or other papers filed, by the party;
    (3) Precluding the party from contesting specific issues or 
findings;
    (4) Precluding the party from offering certain evidence or from 
challenging or contesting certain evidence offered by another party;
    (5) Precluding the party from making a late filing or conditioning 
a late filing on any terms that may be just;
    (6) Assessing reasonable expenses, including attorney's fees, 
incurred by any other party as a result of the improper action or 
failure to act.
    (c) Procedure for imposition of sanctions. (1) The presiding 
officer, on the motion of any party, or on his own motion, and after 
such notice and responses as may be directed by the presiding officer, 
may impose any sanction authorized by this section. The presiding 
officer shall submit to the Board of Directors for final ruling any 
sanction that would result in a final order that terminates the case on 
the merits or is otherwise dispositive of the case.
    (2) Except as provided in paragraph (d) of this section, no 
sanction authorized by this section, other than refusing to accept late 
papers, shall be imposed without prior notice to all parties and an 
opportunity for any representative or party against whom sanctions 
would be imposed to be heard. The presiding officer shall determine and 
direct the appropriate notice and form for such opportunity to be 
heard. The opportunity to be heard may be limited to an opportunity to 
respond verbally immediately after the act or inaction in question is 
noted by the presiding officer.
    (3) For purposes of interlocutory review, motions for the 
imposition of sanctions by any party and the imposition of sanctions 
shall be treated the same as motions for any other ruling by the 
presiding officer.
    (4) Nothing in this section shall be read to preclude the presiding 
officer or the Finance Board from taking any other action or imposing 
any other restriction or sanction authorized by any applicable statute 
or regulation.
    (d) Sanctions for contemptuous conduct. If, during the course of 
any proceeding, a presiding officer finds any representative or any 
individual representing himself to have engaged in contemptuous 
conduct, the presiding officer may summarily suspend that individual 
from participating in that or any related proceeding or impose any 
other appropriate sanction.


Sec. 908.75  Censure, suspension, disbarment and reinstatement.

    (a) Discretionary censure, suspension and disbarment. (1) The 
Finance Board may censure any individual who practices or attempts to 
practice before it or suspend or revoke the privilege to appear or 
practice before the Finance Board of such individual if, after notice 
of and opportunity for a hearing in the matter, that individual is 
found by the Finance Board--
    (i) Not to possess the requisite qualifications or competence to 
represent others;
    (ii) To be seriously lacking in character or integrity or to have 
engaged in material unethical or improper professional conduct;
    (iii) To have caused unfair and material injury or prejudice to 
another party, such as prejudicial delay or unnecessary expenses 
including attorney's fees;
    (iv) To have engaged in, or aided and abetted, a material and 
knowing violation of the Act or the rules or regulations issued under 
the Act or any other law or regulation governing Bank operations;
    (v) To have engaged in contemptuous conduct before the Finance 
Board;
    (vi) With intent to defraud in any manner, to have willfully and 
knowingly deceived, misled, or threatened any client or prospective 
client; or
    (vii) Within the last 10 years, to have been convicted of an 
offense involving moral turpitude, dishonesty or breach of trust, if 
the conviction has not been reversed on appeal. A conviction within the 
meaning of this paragraph shall be deemed to have occurred when the 
convicting court enters its judgment or order, regardless of whether an 
appeal is pending or could be taken and includes a judgment or an order 
on a plea of nolo contendere or on consent, regardless of whether a 
violation is admitted in the consent.
    (2) Suspension or revocation on the grounds set forth in paragraphs 
(a)(1) (ii), (iii), (iv), (v), (vi) and (vii) of this section shall 
only be ordered upon a further finding that the individual's conduct or 
character was sufficiently egregious as to justify suspension or 
revocation. Suspension or disbarment under this paragraph shall 
continue until the applicant has been reinstated by the Finance Board 
for good cause shown or until, in the case of a suspension, the 
suspension period has expired.
    (3) If the final order against the respondent is for censure, the 
individual may be permitted to practice before the Finance Board, but 
such individual's future representations may be subject to conditions 
designed to promote high standards of conduct. If a written letter of 
censure is issued, a copy will be maintained in the Finance Board's 
files.
    (b) Mandatory suspension and disbarment. (1) Any counsel who has

[[Page 79013]]

been and remains suspended or disbarred by a court of the United States 
or of any State, commonwealth, possession, territory of the United 
States or the District of Columbia; any accountant or other licensed 
expert whose license to practice has been revoked in any State, 
commonwealth, possession, territory of the United States or the 
District of Columbia; any person who has been and remains suspended or 
barred from practice before the Department of Housing and Urban 
Development, the Office of the Comptroller of the Currency, the Board 
of Governors of the Federal Reserve System, the Office of Thrift 
Supervision, the Federal Deposit Insurance Corporation, the National 
Credit Union Administration, the Office of Federal Housing Enterprise 
Oversight, the Farm Credit Administration, the Securities and Exchange 
Commission, or the Commodity Futures Trading Commission is also 
suspended automatically from appearing or practicing before the Finance 
Board. A disbarment or suspension within the meaning of this paragraph 
shall be deemed to have occurred when the disbarring or suspending 
agency or tribunal enters its judgment or order, regardless of whether 
an appeal is pending or could be taken and regardless of whether a 
violation is admitted in the consent.
    (2) A suspension or disbarment from practice before the Finance 
Board under paragraph (b)(1) of this section shall continue until the 
person suspended or disbarred is reinstated under paragraph (d)(2) of 
this section.
    (c) Notices to be filed. (1) Any individual appearing or practicing 
before Finance Board who is the subject of an order, judgment, decree, 
or finding of the types set forth in paragraph (b)(1) of this section 
shall file promptly with the Finance Board a copy thereof, together 
with any related opinion or statement of the agency or tribunal 
involved.
    (2) Any individual appearing or practicing before the Finance Board 
who is or within the last 10 years has been convicted of a felony or of 
a misdemeanor that resulted in a sentence of prison term or in a fine 
or restitution order totaling more than $5,000 shall file a notice 
promptly with the Finance Board. The notice shall include a copy of the 
order imposing the sentence or fine, together with any related opinion 
or statement of the court involved.
    (d) Reinstatement. (1) Unless otherwise ordered by the Finance 
Board, an application for reinstatement for good cause may be made in 
writing by a person suspended or disbarred under paragraph (a)(1) of 
this section at any time more than three years after the effective date 
of the suspension or disbarment and, thereafter, at any time more than 
one year after the person's most recent application for reinstatement. 
An applicant for reinstatement under this paragraph (d)(1) may, in the 
Finance Board's sole discretion, be afforded a hearing.
    (2) An application for reinstatement for good cause by any person 
suspended or disbarred under paragraph (b)(1) of this section may be 
filed at any time, but not less than 1 year after the applicant's most 
recent application. An applicant for reinstatement for good cause under 
this paragraph (d)(2) may, in the Finance Board's sole discretion, be 
afforded a hearing. However, if all the grounds for suspension or 
disbarment under paragraph (b)(1) of this section have been removed by 
a reversal of the order of suspension or disbarment or by termination 
of the underlying suspension or disbarment, any person suspended or 
disbarred under paragraph (b)(1) of this section may apply immediately 
for reinstatement and shall be reinstated upon written application 
notifying the Finance Board that the grounds have been removed.
    (e) Conferences. (1) The Finance Board may confer with a proposed 
respondent concerning allegations of misconduct or other grounds for 
censure, disbarment or suspension, regardless of whether a proceeding 
for censure, disbarment or suspension has been commenced. If a 
conference results in a stipulation in connection with a proceeding in 
which the individual is the respondent, the stipulation may be entered 
in the record at the request of either party to the proceeding.
    (2) Resignation or voluntary suspension. In order to avoid the 
institution of or a decision in a disbarment or suspension proceeding, 
a person who practices before the Finance Board may consent to censure, 
suspension or disbarment from practice. At the discretion of the 
Finance Board, the individual may be censured, suspended or disbarred 
in accordance with the consent offered.
    (f) Hearings under this section. Hearings conducted under this 
section shall be conducted in substantially the same manner as other 
hearings under this part, provided that in proceedings to terminate an 
existing suspension or disbarment order, the person seeking the 
termination of the order shall bear the burden of going forward with an 
application supported with proof that the suspension should be 
terminated. The Finance Board may, in its sole discretion, direct that 
any proceeding to terminate an existing suspension or disbarment be 
limited to written submissions. All hearings held under this section 
shall be closed to the public unless the Finance Board, on its own 
motion or upon the request of a party, otherwise directs that the 
hearing be open to the public.

    Dated: November 30, 2000.

    By the Board of Directors of the Federal Housing Finance Board.
William C. Apgar,
HUD Secretary's Designee to the Board.
[FR Doc. 00-31978 Filed 12-15-00; 8:45 am]
BILLING CODE 6725-01-P