FDIC v. Bank of Coushatta

The Bank of Coushatta (the bank) (defendant) was a federally insured banking institution subject to the Federal Deposit Insurance Corporation’s (FDIC) (plaintiff) rules and regulations. Pursuant to 12 U.S.C. § 3907, the FDIC had the authority and discretion to issue capital directives to banking institutions. The FDIC sent a notice of intent to issue a capital directive to the bank and its board of directors (the board) (defendant) that would require the bank to increase its capital to a specified level by a specified date. The board responded to the notice by letter but failed to comply with the capital requirement by the date specified in the notice. Therefore, the FDIC issued the directive and filed a letter in the district court requesting enforcement of the directive. Without providing agency or judicial review to the bank and the board, the district court issued an order ex parte enforcing the directive and denied the bank and the board’s subsequent motion for a stay. The bank and the board appealed the order and argued that they had been denied their right to judicial review under the Administrative Procedure Act (APA) because 12 U.S.C. § 3907 does not explicitly exclude judicial review. The FDIC argued that judicial review was not available because the language of 12 U.S.C. § 3907 granted the FDIC total discretion to issue capital directives and did not provide a standard by which to judge the agency’s exercise of its discretion.