Saratoga Savings and Loan Association v. Federal Home Loan Bank Board

The Saratoga Savings and Loan Association petitions for review of a cease and desist order issued by the Federal Home Loan Bank Board. Saratoga challenges the Board’s authority to issue the order and the evidentiary basis for its findings of regulatory violations. We affirm in part, reverse in part, and remand.

BACKGROUND

Saratoga is a California-chartered savings and loan association, opened in April 1983, whose accounts are insured by the Federal Savings and Loan Insurance Corporation. FSLIC was created by the National Housing Act of 1934, 12 U.S.C. §§ 1724 -1730g, to protect depositors by insuring accounts at participating institutions and to prevent participating institutions from engaging in unsafe and unsound practices. 12 U.S.C. § 1726 . The Federal Home Loan Bank Board is the operating head of the FSLIC. 12 U.S.C. § 1725 (a).

As an FSLIC-insured institution, Sarato-ga is subject to periodic examination. During the fall of 1985, FSLIC examiners discovered what they believed to be several violations of Board regulations. In response, the Board issued a Notice of Charges and Hearing under 12 U.S.C. § 1730 (e)(1). An administrative law judge conducted a hearing on the…