MERGER OF REMOVAL AND PROHIBITION AUTHORITY.

SEC. 903. MERGER OF REMOVAL AND PROHIBITION AUTHORITY. (a) Depository Institutions Insured by the FDIC.— (1) In general.—Section 8(e)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(1)) is amended to read as follows: “(e) Removal and Prohibition Authority.— “(1) Authority to issue order.—Whenever the appropriate Federal banking agency determines that— “(A) any institution-affiliated party has, directly or indirectly— “(i) violated— “(I) any law or regulation; “(II) any cease-and-desist order which has become final; “(III) any condition imposed in writing by the appropriate Federal banking agency in connection with the grant of any application or other request by such depository institution; or “(IV) any written agreement between such depository institution and such agency; “(ii) engaged or participated in any unsafe or unsound practice in connection with any insured depository institution or business institution; or “(iii) committed or engaged in any act, omission, or practice which constitutes a breach of such party’s fiduciary duty; “(B) by reason of the violation, practice, or breach described in any clause of subparagraph (A)— “(i) such insured depository institution or business institution has suffered or will probably suffer financial loss or other damage; “(ii) the interests of the insured depository institution’s depositors have been or could be prejudiced; or “(iii) such party has received financial gain or other benefit by reason of such violation, practice, or breach; and “(C) such violation, practice, or breach— “(i) involves personal dishonesty on the part of such party; or “(ii) demonstrates willful or continuing disregard by such party for the safety or soundness of such insured depository institution or business institution, the agency may serve upon such party a written notice of the agency’s intention to remove such party from office or to prohibit any further participation by such party, in any manner, in the conduct of the affairs of any insured depository institution.”. 103 STAT. 454 (2) Temporary suspension or prohibition.—Section 8(e) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)) is amended by striking out paragraphs (2) and (4), by redesignating paragraphs (3), (5), and (6) as paragraphs (2), (4), and (5), respectively, and by inserting after paragraph (2) (as so redesignated) the following new paragraph: “(3) Suspension order.— “(A) Suspension or prohibition authorized.—If the appropriate Federal banking agency serves written notice under paragraph (1) or (2) to any institution-affiliated party of such agency’s intention to issue an order under such paragraph, the appropriate Federal banking agency may suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of the depository institution, if the agency— “(i) determines that such action is necessary for the protection of the depository institution or the interests of the depository institution’s depositors; and “(ii) serves such party with written notice of the suspension order. “(B) Effective period.—Any suspension order issued under subparagraph (A)— “(i) shall become effective upon service; and “(ii) unless a court issues a stay of such order under subsection (f), shall remain in effect and enforceable until— “(I) the date the appropriate Federal banking agency dismisses the charges contained in the notice served under paragraph (1) or (2) with respect to such party; or “(II) the effective date of an order issued by the agency to such party under paragraph (1) or (2). “(C) Copy of order.—If an appropriate Federal banking agency issues a suspension order under subparagraph (A) to any institution affiliated party, the agency shall serve a copy of such order on any insured depository institution with which such party is associated at the time such order is issued.”. (3) Prohibition of certain specific activities.—Section 8(e) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)) is amended by adding after paragraph (5) (as so redesignated by paragraph (2) of this subsection) the following new paragraph: “(6) Prohibition of certain specific activities.—Any person subject to an order issued under this subsection shall not— “(A) participate in any manner in the conduct of the affairs of any institution or agency specified in paragraph (7)(A); “(B) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any institution described in subparagraph (A); “(C) violate any voting agreement previously approved by the appropriate Federal banking agency; or “(D) vote for a director, or serve or act as an institution-affiliated party.”. (4) Conforming amendments — 103 STAT. 455 (A) Section 8(f) of the Federal Deposit Insurance Act (12 U.S.C. 1818(f)) is amended— (i) by striking out “(e)(4)“ and inserting in lieu thereof “(e)(3)”; and (ii) by striking out “(e)(1), (e)(2), or (e)(3)” and inserting in lieu thereof “(e)(1) or (e)(2)”. (B) Section 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(g)(1)) is amended by striking out “(1), (2), (3), or (4)” and inserting in lieu thereof “(1), (2), or (3)”. (b) Credit Unions Insured by the NCUA.— (1) In general.—Section 206(g)(1) of the Federal Credit Union Act (12 U.S.C. 1786(g)(1)) is amended to read as follows: “(g) Removal and Prohibition Authority.— “(1) Authority to issue order.—Whenever the Board determines that— “(A) any institution-affiliated party has, directly or indirectly— “(i) violated— “(I) any law or regulation; “(II) any cease-and-desist order which has become final; “(III) any condition imposed in writing by the Board in connection with the grant of any application or other request by such credit union; or “(IV) any written agreement between such credit union and the Board; “(ii) engaged or participated in any unsafe or unsound practice in connection with any insured credit union or business institution; or “(iii) committed or engaged in any act, omission, or practice which constitutes a breach of such party’s fiduciary duty; “(B) by reason of the violation, practice, or breach described in any clause of subparagraph (A)— “(i) such insured credit union or business institution has suffered or will probably suffer financial loss or other damage; “(ii) the interests of the insured credit union’s members have been or could be prejudiced; or “(iii) such party has received financial gain or other benefit by reason of such violation, practice or breach; and “(C) such violation, practice, or breach— “(i) involves personal dishonesty on the part of such party; or “(ii) demonstrates such party’s unfitness to serve as a director or officer of, or to otherwise participate in the conduct of the affairs of, an insured credit union, the Board may serve upon such party a written notice of the Board’s intention to remove such party from office or to prohibit any further participation, by such party, in any manner in the conduct of the affairs of any insured credit union.”. (2) Temporary suspension or prohibition.—Section 206(g) of the Federal Credit Union Act (12 U.S.C. 1786(g)) is amended by striking out paragraphs (2) and (4), by redesignating paragraphs (3) and (5) as paragraphs (2) and (4), respectively, and by insert-103 STAT. 456ing after paragraph (2) (as so redesignated) the following new paragraph: “(3) Suspension order.— “(A) Suspension or prohibition authorized.—If the Board serves written notice under paragraph (1) or (2) to any institution-affiliated party of the Board’s intention to issue an order under such paragraph, the Board may suspend such party from office or prohibit such party from further participation in any manner in the conduct of the affairs of the institution, if the Board— “(i) determines that such action is necessary for the protection of the credit union or the interests of the credit union’s members; and “(ii) serves such person with written notice of the suspension order. “(B) Effective period.—Any suspension order issued under subparagraph (A)— “(i) shall become effective upon service; and “(ii) unless a court issues a stay of such order under paragraph (6), shall remain in effect and enforceable until— “(I) the date the Board dismisses the charges contained in the notice served under paragraph (1) or (2) with respect to such party; or “(II) the effective date of an order issued by the Board to such person under paragraph (1) or (2). “(C) Copy of order.—If the Board issues a suspension order under subparagraph (A) to any institution-affiliated party, the Board shall serve a copy of such order on any insured credit union with which such party is associated at the time such order is issued.”. (3) Prohibition of certain specific activities required.—Section 206(g) of the Federal Credit Union Act (12 U.S.C, 1786(g)) is amended by adding after paragraph (4) (as so redesignated by paragraph (2) of this subsection) the following new paragraph: “(5) Prohibition of certain specific activities.—Any person subject to an order issued under this subsection shall not— “(A) participate in any manner in the conduct of the affairs of any institution or agency specified in paragraph (7)(A); “(B) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any institution described in subparagraph (A); “(C) violate any voting agreement previously approved by the appropriate Federal banking agency; or “(D) vote for a director, or serve or act as an institution-affiliated party.”. (4) Conforming amendments.—Section 206(g)(6) of the Federal Credit Union Act (12 U.S.C. 1786(g)(6)) is amended— (A) by striking out “paragraph (4)” and inserting in lieu thereof “paragraph (3)”; and (B) by striking out “(1), (2), or (3)” and inserting in lieu thereof “(1) or (2)”. 103 STAT. 457 (e) Effective Date.—The amendments made by this section shall apply with respect to violations committed and activities engaged in after the date of the enactment of this Act.