has made or filed with the Corporation a false or fraudulent certified statement with the intent to evade, in whole or in part, the payment of assessment, in which case the claim shall not be deemed to have accrued until the discovery by the Corporation that the certified statement is false or fraudulent: Provided, however, That where a cause of action has already accrued, and the period herein prescribed within which an action may be brought has expired, or will expire within one year from the date this amendment becomes effective, an action may be brought on such cause of action within one year from the effective date of this amendment: And provided further, That no action or proceeding shall be brought for the recovery of any assessment on deposits alleged to have been omitted from the assessment base of any insured bank for any year prior to 1945 except that any claim of the Corporation for the payment of any assessment may be offset by it against any claim of the bank for the overpayment of any assessment." Recommendation The first proviso of subsection (d) of section 7 should be deleted. Reason The first proviso of subsection (d) of section 7 is obsolete. 99. PROCEDURE FOR TERMINATION OF INSURED STATUS Existing law The first five sentences of subsection (a) of section 8 of the Federal Deposit Insurance Act, as amended (12 U. S. C. 1818 (a)): "Any insured bank (except a national member bank or State member bank) may, upon not less than ninety days' written notice to the Corporation, and to the Reconstruction Finance Corporation if it owns or holds as pledges any preferred stock, capital notes, or debentures of such bank, terminate its status as an insured bank. Whenever the Board of Directors shall find that an insured bank or its directors or trustees have continued unsafe or unsound practices in conducting the business of such bank, or have knowingly or negligently permitted any of its officers or agents to violate any provision of any law or regulation to which the insured bank is subject, the Board of Directors shall first give to the Comptroller of the Currency in the case of a national bank or a District bank, to the authority having supervision of the bank in the case of a State bank, or to the Board of Governors of the Federal Reserve System in the case of a State member bank, a statement with respect to such practices or violations for the purpose of securing the correction thereof and shall give a copy thereof to the bank. Unless such correction shall be made within one hundred and twenty days or such shorter period of time as the Comptroller of the Currency, the State authority, or Board of Governors of the Federal Reserve System, as the case may be, shall require, the Board of Directors, if it shall determine to proceed further, shall give to the bank not less than thirty days' written notice of intention to terminate the status of the bank as an insured bank, and shall fix a time and place for a hearing before the Board of Directors or before a person designated by it to conduct such hearing, at which evidence may be produced, and upon such evidence the Board of Directors shall make written findings which shall be conclusive. Unless the bank shall appear at the hearing by a duly authorized representative, it shall be deemed to have consented to the termination of its status as an insured bank. If the Board of Directors shall find that any unsafe or unsound practice or violation specified in such notice has been established and has not been corrected within the time above prescribed in which to make such corrections, the Board of Directors may order that the insured status of the bank be terminated on a date subsequent to such findings and to the expiration of the time specified in such notice of intention." Recommendation (a) The second sentence should be amended by deleting the word "continued" and substituting in lieu thereof the words "engaged in." (b) The second sentence should be further amended by deleting the word "or" immediately following the words "State bank" and substituting in lieu thereof the word "and.” (c) The third sentence should be amended to provide for an alternative and shortened statutory period of 20 days in those cases where the Board of Directors of the Corporation in its discretion has determined that the insurance risk of the Corporation is unduly jeopardized. (d) The third sentence should be further amended to provide that the State authority shall have the power to shorten the correction period in those cases involving State banks whether member or nonmember banks and that the Board of Governors of the Federal Reserve System shall no longer have such power. (e) The position of the fourth and fifth sentences should be transposed, with the additional words "upon such evidence" being inserted after the word "if" in the existing fifth sentence and the word "notice" deleted with the word "statement" substituted in lieu thereof. (f) The existing fourth sentence which will now appear fifth should be amended to provide that in the event the bank does not appear at the hearing termination of insured status may thereupon be ordered provided that in any case where the Board of Directors has designated a person to conduct the hearing, he shall duly certify that the bank did not appear. Reason (a) The basic purpose for the power now given the Board of Directors of the Corporation to institute involuntary termination proceedings is to enable it to protect and control the insurance risk when persuasive supervisory efforts have failed. The second sentence of the existing statute provides that the Board of Directors may institute such proceedings where they determine that the insured bank or its directors or trustees "have continued unsafe and unsound practices." The use of the word "continued" raises a question as to how long a time such practices must have been pursued before the Board of Directors would be justified in instituting involuntary termination proceedings. Inasmuch as a bank, simply by engaging in unsafe and unsound practices, may in a very brief interval substantially increase the Corporation's risk, the change in terminology is recommended. The crux of the matter, at the time the Board of Directors is considering the institution of involuntary termination proceedings is that the bank has "engaged in" unsafe and unsound practices that remain uncorrected and which adversely affect the insurance risk, and not that such practices have been employed for a continuing period of time. (b) It is recommended that the word "and" be substituted for the word "or" following the words "State bank" in the second sentence inasmuch as the implication in the existing statute is that the Board of Directors need not give the State authority a copy of the statement detailing the practices or violations, in the event the State bank involved happens to be a State member bank. It is preferable that the State authority receive a copy of such statement where the State bank involved is either a member or a nonmember bank in order to allow the State authority in every case involving a State bank to exercise the power to further shorten the correction period as he may deem proper and as the facts and circumstances in the particular case may warrant, inasmuch as the State authority has primary supervision over all State banks. (c) Although the present statutory correction period of 120 days subject to shortening by the appropriate supervising authority has worked well in most cases, it is desirable and preferable that an alternative 20-day statutory correction period be provided, but with its application being limited to those cases where the Board of Directors of the Corporation in its discretion has determined that the insurance risk of the Corporation is unduly jeopardized. An obvious example of such a situation would be where the capital structure of the particular bank is so depleted that a deposit exposure exists, or a situation where only a small amount of sound capital remains. In such emergency situations, where the bank continues operation in an unsafe and unsound condition, the insurance risk is markedly increased. It is desirable that the alternative 20-day correction period be specified in the statute rather than to place reliance on the exercise of discretion by the appropriate supervisory authority in shortening the present 120-day period in such emergencies. (d) It is preferable that the appropriate State supervisory authority be given the power to shorten the correction period in all cases involving State banks and not limited to State nonmember banks, as in the present statute. This change is desirable in the case of State member banks because they are subject to the primary supervision of the State supervisory authority. Another Federal agency should not be empowered to shorten the time in such cases. (e) and (f) It is recommended that the existing fifth sentence be transposed in order that the statute may flow in logical sequence and that the additional words "upon such evidence" be added after the beginning word "If" as this sentence provides for involuntary termination by the Board of Directors following a contested hearing upon the Board making findings that any of the unsafe and unsound practices or violations specified in its original statement instituting the proceedings have been established and not corrected within the prescribed correction period. It is recommended that the existing fourth sentence in the statute become the new fifth sentence for the reason that it makes provision for the situation where the bank does not appear at the hearing by a duly authorized representative. As the statute reads at present, there is doubt whether or not it is necessary, where the bank does not appear at the hearing, for Corporation counsel to present sufficient evidence upon which the Board of Directors may subsequently make findings as a result of such ex parte proceedings prior to its order of involuntary termination of insured status. It is, therefore, proposed to amend this sentence by providing that termination of insured status thereupon may be ordered, to make it crystal clear that no evidence whatsoever need be submitted to the Board of Directors or the person designated to conduct the hearing, as the case may be, in those cases where a time and place for hearing have been set as prescribed and the bank does not put in an appearance. The existing statute provides that the bank is deemed to have consented to termination and this change would simply make it clear that no further proof is necessary, and that, if a person is designated by the Board of Directors to conduct the hearing, he shall certify that the bank did not appear. 100. SECTION 9 OF THE FEDERAL DEPOSIT INSURANCE ACT Existing law Section 9 of the Federal Deposit Insurance Act, as amended (12 U. S. C. 1819: "Upon the date of enactment of the Banking Act of 1933, the Corporation shall become a body corporate and as such shall have power"First. To adopt and use a corporate seal. "Second. To have succession until dissolved by an Act of Congress. "Third. To make contracts. "Fourth. To sue and be sued, complain and defend, in any court of law or equity, State or Federal. All suits of a civil nature at common law or in equity to which the Corporation shall be a party shall be deemed to arise under the laws of the United States: Provided, That any such suit to which the Corporation is a party in its capacity as receiver of a State bank and which involves only the rights or obligations of depositors, creditors, stockholders, and such State bank under State law shall not be deemed to arise under the laws of the United States. No attachment or execution shall be issued against the corporation or its property before final judgment in any suit, action, or proceeding in any State, county, municipal, or United States court. The Board of Directors shall designate an agent upon whom service of process may be made in any State, Territory, or jurisdiction in which any insured bank is located. "Fifth. To appoint by its Board of Directors such officers and employees as are not otherwise provided for in this Act, to define their duties, fix their compensation, require bonds of them and fix the penalty thereof, and to dismiss at pleasure such officers or employees. Nothing in this or any other Act shall be construed to prevent the appointment and compensation as an officer or employee of the Corporation of any officer or employee of the United States in any board, commission, independent establishment, or executive department thereof. "Sixth. To prescribe, by its Board of Directors, bylaws not inconsistent with law, regulating the manner in which its general business may be conducted, and the privileges granted to it by law may be exercised and enjoyed. "Seventh. To exercise by its Board of Directors, or duly authorized officers or agents, all powers specifically granted by the provisions of this Act, and such incidental powers as shall be neecssary to carry out the powers so granted. "Eighth. To make examinations of and to require information and reports from banks, as provided in this Act. "Ninth. To act as receiver. "Tenth. To prescribe by its Board of Directors such rules and regulations as it may deem necessary to carry out the provisions of this Act." Recommendation The provisions of section 9 designated "First" to "Tenth" should be redesignated "(a)" to "(j)", respectively. Reason This redesignation should be made to conform the subdivisions of section 9 to the designations used in all other sections of the act. 101. EMPLOYMENT, STATEMENT, AND COMPENSATION Existing law The first sentence of section 9 fifth of the Federal Deposit Insurance Act, as amended (12 U. S. C. 1819 fifth): "To appoint by its Board of Directors such officers and employees as are not otherwise provided for in this Act, to define their duties, fix their compensation, require bonds of them and fix the penalty thereof, and to dismiss at pleasure such officers or employees." Recommendation This sentence should be amended to expressly provide that the Corporation shall have the power without regard to the provisions of any laws relating to the employment, separation, or compensation of officers or employees of the United States, to appoint by its Board of Directors officers, employees, attorneys, and agents, to dismiss at pleasure any officer, employee, attorney, or agent, to define their duties, fix their compensation, require bonds of them and fix the penalty thereof. Reason Inasmuch as the existing statute at the time of its enactment was patterned after the authority of each of the 12 Federal Reserve banks by the use of identical language, the Corporation has maintained in view of the reenactment of this identical language in 1950 that appointments and dismissals are not now subject to the civil service laws and regulations. This amendment is proposed to remove any doubt as to the Corporation's authority in this respect. 102. APPLICATION BY CORPORATION FOR SUBPENA Existing law The first and second sentences of subsection (c) of section 10 of the Federal Deposit Insurance Act, as amended (12 U. S. C. 1820 (c)): "For the purpose of any hearing under this Act, the Board of Directors, any member thereof or any person designated by the Board of Directors to conduct any such hearing, is empowered to administer oaths and affirmations, subpena any officer or employee of the insured bank, compel his attendance, take evidence, take depositions and require the production of any books, records, or other papers of the insured bank which are relevant or material to the inquiry. For the purpose of any hearing, examination, or investigation under this Act, |