UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


PROFFITT, BILLY

v.

FDIC


98-1534a

D.C. Cir. 2000


*	*	*


Karen LeCraft Henderson, Circuit Judge: In 1998 the  Federal Deposit
Insurance Corporation (FDIC) removed Bil- ly Proffitt as director of
Tennessee State Bank of Gatlinburg,  Tennessee (Bank) and prohibited
him from further partic- ipation in the banking industry. The FDIC
acted pursuant to  its removal authority under section 8(e), 12 U.S.C.
s 1818(e),  of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 
ss 1811 et seq. It ruled that 28 U.S.C. s 2462, which imposes  a
five-year statute of limitations on "an action ... for the 
enforcement of any ... penalty," does not limit a section 8(e) 
removal and prohibition action because the sanction is reme- dial, not
punitive. Relying on Johnson v. SEC, 87 F.3d 484,  488 (D.C. Cir.
1996), which defined "penalty" as used in  section 2462 as any
"punishment imposed by the government  for unlawful or proscribed
conduct, going beyond compensa- tion of the wronged party," we
conclude that the FDIC's  section 8(e) removal action imposes a
penalty and therefore  triggers the five-year statute of limitations.
We also conclude  that the limitations period can be triggered
separately under  section 8(e)'s alternative "effects" language and
therefore the  FDIC's action was timely because it was brought within
five  years of when the Bank "suffered financial loss." 12 U.S.C.  s
1818(e)(1)(B)(i). Finally, because the FDIC's section 8(e)  removal
and prohibition order imposes a penalty, due process  does not require
the FDIC to consider Proffitt's current  competence or risk to the
public vel non. Accordingly, we  deny Proffitt's petition for


I.


Proffitt was the majority shareholder of Tennessee State  Bancshares,
Inc., a holding company which, in turn, is the 


majority shareholder of the Bank. Proffitt, a co-founder of  the Bank,
served as its director from the date it was char- tered in 1971 until
the FDIC removed him in 1998. In July  1989 Charles and Nancy Boling,
customers of the Bank who  were in the motel business in Gatlinburg at
the time, ap- proached Bank president Tommy Bush to discuss a loan to 
purchase the Glenstone Lodge (Lodge), a hotel which was  then in
bankruptcy. The Bolings requested complete confi- dentiality about the
loan and all information they furnished to  the Bank. See Findings of
Fact, Chancery Court for Sevier  County, TN 3 (Feb. 17, 1992). They
specifically expressed  concern that some members of the Bank's board
of directors  (Board) who were also in the motel business might be
inter- ested in bidding on the Lodge. See id. Bush promised the 
Bolings that no director who had an interest in purchasing  the Lodge
would see any of the information they provided or  participate in the
consideration of their application for a loan.  See id. at 3-4. A few
days after their initial meeting, Bush  informed the Bolings that he
had checked with the Board and  no member was interested in buying the
Lodge. The Bolings  then applied for a $4.5 million loan and provided
the Bank  with financial information, including their personal
financial  statements and detailed projections of income and expenses 
for operation of the Lodge. See id. at 4. The Bank Board  authorized
Bush to investigate whether additional financing  could be obtained
from other lenders since the requested loan  amount exceeded the
Bank's $1.5 million loan-to-one-borrower  limit. These efforts failed
and, after several months, Bush  stopped looking for additional loan
funds, although the Bol- ings remained interested in buying the Lodge.
See Adminis- trative Law Judge's (ALJ) Recommended Decision 14 (Feb. 


In December 1989, unknown to the Bolings, Proffitt joined  the Foley
Group, a group of investors interested in acquiring  the Lodge. At the
time, Proffitt advised Bush only that he  was considering joining the
Foley Group. In early 1990  Proffitt participated with the Foley Group
in submitting  several unsuccessful offers to purchase the Lodge from
the  bankruptcy trustee. At least one other member of the Bank 


Board was at that time aware of Proffitt's participation in the  Foley
Group. See Proffitt's Statement of Disputed and Omit- ted Facts 4
(Aug. 4, 1997).


Meanwhile, in January 1990 the Bolings submitted a re- vised loan
request to the Bank. Bush considered the Bolings'  request a new
package because they requested only a $4  million loan package (with
the Bank continuing to provide  $1.5 million) and offered different
primary collateral. On  March 7, 1990 the Bank Board, including
Proffitt, met to  formally consider the Bolings' loan request. Bush
asked any  Board member who was interested in purchasing the Lodge  to
leave the room. Proffitt failed to leave the room or  disclose his
conflicting interest in the Foley Group. Bush  then distributed the
Bolings' confidential information to each  Board member. The Bank
Board, including Proffitt, unani- mously approved the Bolings' loan
package. On March 12,  1990 the Bank issued a written loan commitment
to the  Bolings in the amount of $1.5 million.


The foreclosure sale of the Lodge was scheduled to be held  on March
30, 1990. On March 27, 1990 Charles Boling went  to Bush's office and
advised him that a Kentucky bank had  informally approved a
participating loan for the additional  amount needed. Proffitt, who
was in Bush's office at the  time, listened to the discussion between
Boling and Bush,  including Boling's strategy for bidding at the
auction. See  FDIC's Decision and Order 4 (Oct. 6, 1998). Because the 
Lodge was subject to a $100,000 tax lien, Boling told Bush  that $3.4
million was their top bid. After Boling left Bush's  office, Proffitt
informed Bush of his Foley Group connection.  Bush told Proffitt to
inform the Bolings of his conflict but he  did not do so. On March 30,
1990 the foreclosure sale of the  Lodge took place. The first
mortgagee, the Foley Group and  the Bolings were the only bidders. The
Bolings bid their  maximum of $3.4 million. The Foley Group then bid
$3.405  million and acquired the Lodge.


That night the Bolings learned for the first time that  Proffitt
belonged to the Foley Group. In July 1990 they filed  a lawsuit
against the Bank, Proffitt and Bush, alleging inter  alia breach of
fiduciary duty and fraud. In February 1992 


the state trial court entered judgment against Proffitt and the  Bank.
In August 1993 the Tennessee Court of Appeals  reversed the trial
court's judgment, concluding that Proffitt's  fraud had not caused the
Bolings any damage.1 See Boling v.  Tennessee State Bank, 1993 WL
305824 (Tenn. Ct. App. Aug.  11, 1993). In November 1994 the Tennessee
Supreme Court  reversed the intermediate appellate court's decision,
see Bol- ing v. Tennessee State Bank, 890 S.W.2d 32 (Tenn.1994), and 
reinstated the judgment against Proffitt for fraud because he 
willfully violated his fiduciary duties. The court reduced the 
compensatory damages award to $14,825 (representing the  Bolings'
costs of bid preparation) against the Bank and  Proffitt jointly and
upheld the $250,000 punitive damages  award against the Bank and the
punitive damages award in  the same amount against Proffitt.


On December 18, 1996, more than six years after Proffitt's  actions,
the FDIC issued a Notice of Intention to Remove  from Office and to
Prohibit from Further Participation (Re- moval and Prohibition
Notice), charging Proffitt with "viola- tions of law, unsafe or
unsound banking practices, and/or ...  breaches of fiduciary duty."
Removal and Prohibition Notice  1 (Dec. 18, 1996). In response to
Proffitt's motion for sum- mary disposition, the ALJ found that
Proffitt had violated  section 8(e)2 and recommended that Proffitt be




__________

n 1 Because the court determined that Proffitt had not damaged the 
Bolings, it also concluded that the Bank was not liable.


2 Section 8(e) authorizes the FDIC to remove a "party from office  or
to prohibit any further participation ... in the conduct of the 
affairs of any insured depository institution"


(1) [w]henever [it] determines that--


(A) any institution-affiliated party has, directly or indirect- ly--


(i) violated


(I) any law or regulation;


....


membership on the Bank Board and prohibited from further  participation
in the banking business. See ALJ's Proposed  Order 19-20 (Feb. 12,
1998). The ALJ rejected Proffitt's  assertion that the FDIC's removal
and prohibition action was  barred by the five-year statute of
limitations prescribed in 28  U.S.C. s 2462 (section 2462).3 The ALJ
found section 2462  inapplicable because it conflicts with the
six-year limitations  period imposed by 12 U.S.C. s 1818(i)(3).4 See


__________

n (B) by reason of the violation, practice, or breach described  in any
clause of subparagraph (A)--


(i) such insured depository institution or business insti- tution 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;.... 12
U.S.C. s 1818(e).


3 28 U.S.C. s 2462 provides: Except as otherwise provided by Act of
Congress, an action,  suit or proceeding for the enforcement of any
civil fine, penalty,  or forfeiture, pecuniary or otherwise, shall not
be entertained  unless commenced within five years from the date when
the  claim first accrued if, within the same period, the offender or 
the property is found within the United States in order that  proper
service may be made thereon.


4 12 U.S.C. s 1818(i)(3) provides:


The resignation, termination of employment or participation, or 
separation of an institution-affiliation party (including a separa-
tion caused by the closing of an insured depository institution) 
shall not affect the jurisdiction and authority of the appropriate 
Federal banking agency to issue any notice and proceed under  this
section against any such party, if such notice is served  before the
end of the 6-year period beginning on the date such 


mended Decision 2 (Feb. 12, 1998). On October 6, 1998 the  FDIC
affirmed the ALJ's removal and prohibition decision  but determined
that section 2462 was inapplicable for a  different reason, namely,
that a "removal and prohibition  action is intrinsically remedial ...
and can be brought 'when- ever' the statutory conditions are
satisfied." FDIC's Decision  and Order 16 (Oct. 6, 1998). The removal
order went into  effect on November 5, 1998. Proffitt petitions this


II.


Our standard of review comes from the Administrative  Procedure Act
(APA), 5 U.S.C. s 706(2)(E). "Applying the  standards set forth in the
Administrative Procedure Act ...  we will set aside the [FDIC's]
factual findings only if unsup- ported by substantial evidence on the
record as a whole, 5  U.S.C. s 706(2)(E) (1994); we will set aside the
[FDIC's]  legal conclusions only if 'arbitrary, capricious, an abuse
of  discretion, or otherwise not in accordance with law,' id.  s
706(2)(A)." Pharaon v. Board of Governors of Fed. Reserve  Sys., 135
F.3d 148, 152 (D.C. Cir. 1998); see also 12 U.S.C.  s 1818(h) (2) (APA
applies to section 8(e) proceeding). When  a statute is administered
by more than one agency, a particu- lar agency's interpretation is not
entitled to Chevron defer- ence. See Bowen v. American Hosp. Ass'n,
476 U.S. 610, 643  n.30 (1986) (because multiple agencies promulgated
rules  under statute, "there is thus not the same basis for deference 
predicated on expertise as we found" in Chevron); Salleh v. 
Christopher, 85 F.3d 689, 692 (D.C. Cir. 1996) (no Chevron  deference
applied to agency's interpretation of statute it  administers "when
more than one agency is granted authority  to interpret the same
statute"). "Because s 2462 is a statute  of general applicability
rather than one whose primary admin- istration has been delegated to
the [FDIC], we interpret it de  novo." Johnson, 87 F.3d at 486




__________

n party ceased to be such a party with respect to such depository 
institution.


Proffitt argues that the FDIC's section 8(e) removal and  prohibition
action imposes a penalty and is therefore barred  by section 2462's
five-year statute of limitations because the  FDIC's claim "first
accrued" in 1990 but it failed to take  action until 1996. The FDIC
responds that section 2462 does  not apply to a section 8(e) removal
and prohibition action  because the action is remedial. In the
alternative, the FDIC  argues that it moved against Proffitt within
five years of  when the Bank "suffered financial loss" under section 
8(e)(1)(B)(i). 12 U.S.C. s 1818(e)(1)(B)(i).


A. Section 8(e) action imposes penalty


In 3M Co. v. Browner, 17 F.3d 1453, 1457 (D.C. Cir. 1994),  the court
held that section 2462 applies to any administrative  proceeding "
'for the enforcement of' a civil penalty." In 3M  the Environmental
Protection Agency (EPA) assessed civil  fines against the 3M company
eight years after the company  was found to have first violated the
Toxic Substances Control  Act. The court held that section 2462
limited the civil fines  and penalties to those violations occurring
within five years of  the EPA's action. More recently, in Johnson v.
SEC, 87 F.3d  484, 491 (D.C. Cir. 1996), we defined a section 2462
penalty as  a sanction used to punish an individual "for unlawful or 
proscribed conduct, going beyond compensation of the  wronged party."5
There we concluded that the Securities and 




__________

n 5 The Office of the Comptroller of the Currency (OCC) as amicus 
urges the court to reconsider 3M and Johnson in light of the  Supreme
Court's holding in Hudson v. United States, 522 U.S. 93  (1997). In
Hudson the Court overturned its decision in United  States v. Halper,
490 U.S. 435 (1989), holding that the double  jeopardy clause applies
only to criminal cases. 3M, however, does  not employ Halper's
reasoning. Furthermore, in Johnson we ex- plicitly rejected the
argument that section 2462's penalty test is the  double jeopardy
punishment test, noting that the test for punish- ment "in various
constitutional contexts" does "not control the  question of whether
license suspension is a penalty for purposes of  s 2462." Johnson, 87


Nevertheless, the FDIC argues that three other Supreme Court  cases
equate the double jeopardy punishment test and the section 


Exchange Commission's six-month license suspension of  Johnson, a stock
broker, imposed a penalty within section  2462 because the suspension
went "beyond compensation of  the wronged party" and because the SEC
had not focused on  Johnson's current competence or risk to the
public. Id. The  FDIC distinguishes Johnson, contending that its
expulsion of  Proffitt is remedial because it is a permanent
suspension  designed to protect the public, unlike the SEC's temporary
 suspension of Johnson. Nevertheless, as Johnson noted, "[i]t  is
clearly possible for a sanction to be 'remedial' in the sense  that
its purpose is to protect the public, yet not be 'remedial'  because
it imposes a punishment going beyond the harm  inflicted by the
defendant." Id. at 491 n.11 (citing In re  Ruffalo, 390 U.S. 594, 550
(1968)). Although the FDIC's  expulsion of Proffitt from the banking
industry had the dual  effect of protecting the public from a
dishonest banker and  punishing Proffitt for his misconduct, its
punitive purpose  plainly goes "beyond compensation of the wronged




__________

n 2462 penalty test. See Rex Trailer Co. v. United States, 350 U.S. 
148, 149 n.2 (1956); United States v. Hougham, 364 U.S. 310, 313 
(1960) (following Rex Trailer); Koller v. United States, 359 U.S. 309 
(1959) (per curiam decision following Rex Trailer). In Rex Trailer 
the company was criminally fined for fraudulently purchasing motor 
vehicles. The United States then sued the company civilly for the 
same actions. The company challenged the civil penalties as viola-
tive of the double jeopardy clause. The lower court held that the 
monetary relief sought was civil in nature and therefore did not 
violate the double jeopardy clause. The Supreme Court granted 
certiorari to resolve a circuit conflict over whether the civil
sanction  (monetary relief) also constituted a penalty under section
2462.  The Court held that the monetary sanction was "civil in nature"
and  therefore not barred by the double jeopardy clause but the Court 
did not expressly address section 2462. Rex Trailer, 350 U.S. at  151.
The FDIC argues that the Court thus equated the double  jeopardy
punishment and section 2462's tests. We disagree. Al- though in Rex
Trailer the Supreme Court may have implicitly  recognized a connection
between the double jeopardy punishment  test and the section 2462
penalty test, the Court did not indicate  that the two tests are


That the expulsion sanction is punitive is further manifest- ed by the
fact that the FDIC did not act for more than six  years after
Proffitt's misdeeds. See id. at 490 n.9 ("If the  [agency] really
viewed [the defendant] as a clear and present  danger to the public,
it is inexplicable why it waited more  than five years to begin the
proceedings to suspend her.")  (emphasis in original). The FDIC could
have taken action as  early as 1990 under the "will probably suffer"
language of  section 8(e)(1)(B)(i) or perhaps under section
8(e)(1)(B)(ii),  asserting "the interests of the insured depository
institution's  depositors ... could be prejudiced." The FDIC admits
that  it monitored the Bolings' lawsuit after it was filed in July 
1990 and was aware of Proffitt's actions at that time through 
newspaper reports. See FDIC's Opp. Br. to Summary Dispo- sition 1-2
(Aug. 1, 1997). The FDIC might have determined  in 1990 that, because
of Proffitt's actions, the Bank "probably  will suffer financial loss"
as a result of an adverse verdict or  settlement or at least that
Proffitt "received financial gain or  other benefit." 12 U.S.C. s
1818(e)(1)(B)(iii). If in fact  Proffitt posed the threat to the
public that the FDIC por- trays, it presumably would have removed him
sooner rather  than later. Instead, it held off for six years with
Proffitt  participating in the Bank's business all the while.


The FDIC's position is further undermined by the focus of  its
proceeding. In Johnson, we noted that a "sanction would  less resemble
punishment if the [agency] had focused on  Johnson's current
competence or the degree of risk she posed  to the public." Id. at
489. The FDIC, however, based its  action solely on Proffitt's long
past conduct and made no  attempt to evaluate his present fitness or
competence. It  counters that Proffitt had ample opportunity to
present any  information he desired regarding his current competence
but  failed to do so. The FDIC's argument might carry more  weight if
it had given Proffitt notice that his current compe- tence and/or risk
was at issue. Instead, its notice focused  solely on Proffitt's prior
conduct.6 See Removal and Prohibi-




__________

n 6 Moreover, if, as the FDIC maintains, Proffitt's current compe-
tence was in fact at issue, he was entitled to fair notice and an 


tion Notice 10-11 p p 32-37. While a serious offense, even  long past,
may indicate Proffitt's current risk to the public,  that offense
cannot alone determine his fitness almost a  decade later. See 3M, 17
F.3d at 1457 ("In a country where  not even treason can be prosecuted,
after a lapse of three  years, it could scarcely be supposed that an
individual would  remain for ever liable to a pecuniary forfeiture.")
(quoting  Adams v. Woods, 6 U.S. (2 Cranch) 336, 341 (1805) (Marshall,
 C.J.)).


Finally, the FDIC argues that the six-year limitations  period imposed
by section 1818(i)(3), see supra n.4, indicates  that the Congress did
not intend section 2462's five-year  period to apply to section 8(e)
proceedings. Section 2462  limits any "action, suit or proceeding for
the enforcement of  any ... penalty" but also states "[e]xcept as
otherwise pro- vided by Act of Congress." Both the ALJ and the FDIC 
concluded that section 1818(i)(3) fits the exception. We dis- agree.
In CityFed Fin. Corp. v. OTS, 58 F.3d 738, 743 (D.C.  Cir. 1995), we
held that section 1818(i)(3) was enacted "solely  to address the
effects of ... Stoddard v. Board of Governors,  868 F.2d 1308 (D.C.
Cir. 1989)." In Stoddard, the court had  held that banking regulatory
agencies lost enforcement juris- diction over individuals who left the
industry. Then, the  Congress enacted section 1818(i)(3) as part of
the Financial  Institutions Reform, Recovery, and Enforcement Act of
1989  (FIRREA), Pub. L. No. 101-73, 103 Stat. 183, to ensure that,  so
long as the agency acted within six years of his departure,  a banker
could not avoid sanctions by simply severing his ties  with a
financial institution. Thus, section 1818(i)(3) was not  intended to
preempt section 2462 but instead to clarify the  jurisdiction of
banking regulatory agencies to pursue fleeing  bankers. Nor is the
application of section 2462 to section 8(e)  proceedings inconsistent
with section 1818(i)(3). Contrary to  the FDIC's assertion,
application of both section 2462 and  section 1818(i)(3) to a section
8(e) proceeding does not treat a  banker who leaves an institution




__________

n opportunity to be heard. See Green v. McElroy, 360 U.S. 474, 496 
(1959). The FDIC failed to provide it.


remains with the institution. Section 1818(i)(3) limits the  FDIC's
jurisdiction over a former banker to six years after  he leaves the
industry while section 2462 requires that any  action imposing a civil
penalty against any banker, regardless  whether he has left the
industry, must be initiated no later  than five years from the date
the claim "first accrue[s]".


B. Section 2462 accrual


Having concluded that section 2462 applies to the FDIC's  section 8(e)
proceeding, we must now determine when the  five-year limitations
period began to run, i.e., when the claim  accrued. "A claim normally
accrues when the factual and  legal prerequisites for filing suit are
in place." 3M, 17 F.3d  at 1460 (citations omitted). A section 8(e)
removal and  prohibition action has three prongs: misconduct, effect
and  culpability. See Oberstar v. FDIC, 987 F.2d 494, 500 (8th Cir. 
1993) ("In order to impose [section 8(e)(1)'s] sanction, the  FDIC
must establish each of the three statutory criteria-- 'misconduct'
under s 1818(e)(1)(A), 'effect' under subpara- graph (B), and
'culpability' under subparagraph (C)."); see  also Pharaon, 135 F.3d
at 157 (adopting Oberstar's "so-called  effects prong"); Cousin v.
OTS, 73 F.3d 1242, 1247 (2d Cir.  1996) ("These three sub-sections ...
have come to be known  as the (1) 'misconduct,' (2) 'effect,' and (3)
'culpability' prongs  of the prohibition test."); Grubb v. FDIC, 34
F.3d 956, 961  (10th Cir. 1994); Seidman v. OTS, 37 F.3d 911, 929 (3d
Cir.  1994). Because misconduct and effect are separate prongs,  the
underlying conduct may not always immediately effect a  section 8(e)
violation and thus the accrual of the claim. The  same misconduct can
produce different effects at different  times, resulting in separate
section 8(e) claims and separate  accruals. As the court recognized in
3M, the question of  accrual "becomes complex where considerable time
inter- venes" between the underlying conduct and the harmful  effect.


Section 8(e) expressly gives options to the FDIC. It  authorizes action
to be taken under any of several circum-


stances. For example, section 8(e)'s effect prong is satisfied  when:


(i) such insured depository institution or business in- stitution has
suffered or probably will suffer financial  loss or other damage;


(ii) the interests of the depository institution's deposi- tors 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.... 


12 U.S.C. s 1818(e)(1)(B) (emphasis added). Plainly, there is 
substantial evidence that Proffitt "violated [the] law" when he 
breached his fiduciary duty by failing to disclose a conflict of 
interest to a Bank customer, 12 U.S.C. s 1818(e)(1)(A); that  his
breach of fiduciary duty caused the Bank to suffer "finan- cial loss,"
id. s 1818(e)(1)(B); and that his breach of fiduciary  duty at least
"involve[d] personal dishonesty." Id.  s 1818(e)(1)(C). Proffitt's
challenge does not extend to the  FDIC's findings that the misconduct
and culpability prongs  were satisfied by Proffitt's 1990 conduct. See
Petitioner's Br.  30. Proffitt argues instead that the effect prong
was also  satisfied in 1990, thus barring the FDIC's 1996 action, be-
cause the FDIC plainly could have determined in 1990 that  the Bank
"will probably suffer financial loss" because of  Proffitt's actions.
The FDIC responds that the effect prong  did not begin section 8(e)'s
accrual until the Tennessee Su- preme Court rendered its final
judgment in the Bolings'  lawsuit in 1994. The question, then, is when


Last year in Pharaon, we interpreted section 8(e)(1)'s  effect prong.
There the defendant argued that section  8(e)(1)(B) required the
Federal Reserve Board (FRB) to 




__________

n 7 Because a section 8(e) proceeding can be initiated by more than 
one agency, namely, the FDIC, the OCC, the Federal Reserve  Board and
the Office of Thrift Supervision, see Wachtel v. OTS, 982  F.2d 581,
585 (D.C. Cir. 1993), we do not extend Chevron deference  to its
interpretation of the statute. See Bowen, 476 U.S. at 643  n.30.


demonstrate the exact amount of harm in order to satisfy the  effect
prong. The court rejected that interpretation because  "[t]he plain
language of the statute provides otherwise." Id.  at 157. "Section
1818(e)(1)(B) allows the FRB to impose an  order of prohibition not
only if the insured institution 'suf- fered ... financial loss or
other damage' ... but also if the  institution 'will probably suffer
financial loss or other dam- age.' " Id. Under Pharaon, then, the
effect prong can be  met by either potential or actual "financial loss
or other  damage." See also Brickner v. FDIC, 747 F.2d 1198, 1202-03 
(8th Cir. 1984) (Section 1818(e)(1)'s use of " 'willful disregard' 
and 'continuing disregard' present two distinct, alternative 
standards for removal. The use of the disjunctive 'or' be- tween the
words 'willful' and 'continuing' in the statute re- veals a clear
intent to make either one an offense.").


Moreover, if we applied one statute of limitations to all of  the
alternative circumstances included in section 8(e)(1)(B),  we would
render the "has suffered" language superfluous.  Whenever an
institution "has suffered" financial loss, an  action based on the
"will probably suffer" language would  have been available before the
financial loss in fact occurred.  If the statute of limitations began
running as to all effects as  soon as the first effect occurred, the
"will probably suffer"  violation would always trigger the statute's
accrual. Separate  accrual for each alternative effect gives meaning
to all of the  statutory language. See Connecticut Dep't of Income
Main- tenance v. Heckler, 471 U.S. 524, 530 n.15 (1985) ("It is a 
familiar principle of statutory construction that courts should  give
effect, if possible, to every word that Congress has used  in a


Finally, Proffitt argues that because the FDIC could have  brought a
section 8(e) removal and prohibition action in 1990,  it was required
to do so under the statute. The statute,  however, expressly
authorizes the FDIC to take action  "whenever" it determines that the
statutory prongs are satis- fied. Section 8(e)'s legislative history,
spare as it is, supports  an expansive view of the enforcement options
available to the  FDIC (and the other banking regulatory agencies). In
1966,  when the Congress first gave banking regulators removal 


authority, it allowed them little latitude. See 112 Cong. Rec.  20,083
(1966) (quoting Report of Senate Committee on Bank- ing and Currency);
Anonymous v. FDIC, 619 F. Supp. 866,  871-72 (D.D.C. 1985)
(summarizing section 8(e)'s legislative  history). With the enactment
of FIRREA, however, the  Congress attempted to lift some of the
restrictions it had  originally imposed on banking regulators. Before
FIRREA  the banking regulatory agencies were required to demon- strate
that the "bank has suffered or will probably suffer  substantial
financial loss or other damage or that the inter- ests of its
depositors could be seriously prejudiced." 12  U.S.C. s 1818(e)
(1988). In FIRREA, the Congress changed  the language to "such [bank]
has suffered or will probably  suffer financial loss or other damage;
[or] the interests of the  [bank's] depositors have been or could be
prejudiced." 12  U.S.C. s 1818(e)(1)(B)(i), (ii). The Committee Report
ex- plained the legislative purpose in making the change: "[A]n 
agency [could] proceed with [a] removal or prohibition action  where
warranted, without having to quantify losses to the  institution or
the degree of prejudice to depositors...."  H.R. Rep. 101-54, at 392,
reprinted in 1989 U.S.C.C.A.N. 188.  The change was intended to:


allow an agency to proceed with such an enforcement  action whenever
the institution has suffered any financial  loss and has been harmed.
The higher threshold found  in current law has resulted in the FDIC
losing cases at  an early stage because the losses were not high
enough  ... or because the FDIC could not quantify the loss- es....
The regulators must be given the opportunity to  proceed before losses
become even greater.


Id. The Conference Report iterated that the banking regula- tory
agencies should be able to take action "when an institu- tion has been
harmed or the interests of depositors have been  prejudiced without
requiring the agencies to quantify the  harm or prejudice." H.R. Rep.
No. 101-222, at 439 (1989),  reprinted in 1989 U.S.C.C.A.N. 478. The
legislative history  also notes that FIRREA was enacted in part to
"expand,  enhance, and clarify enforcement powers of the financial 


institution regulatory agencies." H.R. Rep. No. 101-54, at  311,
reprinted in 1989 U.S.C.C.A.N. 107. If the FDIC were  limited to
acting within five years of determining that the  Bank "will probably
suffer financial loss," its burden would  have been greater
(establishing probability) than if it is also  authorized to wait
until the Bank "has suffered financial loss"  (establishing
actuality). To require the FDIC to speculate  whether the Bank "will
probably suffer" harm or forfeit the  removal action altogether would
impose upon the FDIC the  kind of quantification that the Congress
sought to eliminate  with FIRREA. While the FDIC might well have
brought an  action earlier under the "will probably suffer" language,
its  failure to do so does not render untimely, and therefore, 
unauthorized, its action based on the later occurring effect.  Because
the FDIC took action within five years of when the  Bank in fact
"suffered" financial loss in 1994, its section 8(e)  action against
Proffitt is not barred by section 2462's five- year statute of


C. Due Process


Finally, Proffitt argues that the FDIC violated his right to  due
process because it evaluated neither his current compe- tence nor
whether he presented a current risk of harm. But  Proffitt also
concedes that his due process claim fails if we  conclude that the
removal and prohibition action imposes a  penalty. See Petitioner's
Br. 35-36; Reply Br. 8. Because  we have so concluded, Proffitt's due
process argument fails.


For the foregoing reasons, we conclude that the FDIC's  removal and
prohibition action was properly taken and, ac- cordingly, Proffitt's
petition for review is


Denied.




__________

n 8 Although the FDIC does not make the argument, it is not  limited to
taking action based on the institution's "financial loss"-- the
statute also includes "other damage." 12 U.S.C.  s 1818(e)(1)(B)(i).


Silberman, Circuit Judge, dissenting: I agree with the  majority's
conclusion that Johnson v. SEC, 87 F.3d 484 (D.C.  Cir. 1996),
controls this case, and requires us to apply section  2462's five-year
limitations period to the FDIC's removal  action against Proffitt.
While the FDIC makes a strong  argument for the contrary result based
on historical evidence  that state courts declined to apply general
statutes of limita- tions to disbarment proceedings, we considered and
rejected  this argument in Johnson and are in my view bound by that 
determination. See id. at 488 n.6. However, I do not agree  with my
colleagues' determination that section 8(e) allows the  FDIC to bring
an enforcement action against Proffitt seven  years after his
misconduct. The majority correctly recog- nizes that we may not defer
to the FDIC's interpretation of  section 8(e) because it is a statute
administered by more than  one agency, but proceeds to afford the FDIC
an even greater  deference by giving the agency, as a practical
matter, the  power to determine when the statute of limitations will


Relying on a construction of section 8(e) that permits  banking
regulatory agencies to bring a removal action either  at the point
that it might be thought that a bank would  probably suffer a
financial loss or at some later time that an  actual financial loss
can demonstrated (given the vagaries of  litigation and other
imponderables it could be decades after  the act), the majority
concludes that it is within a regulatory  agency's discretion as to
which eventuality begins the running  of the statute. In other words,
the majority reads the statute  as creating at least two separate1




__________

n 1 I say "at least" because the majority observes that "[t]he same 
misconduct can produce different effects at different times, result-
ing in separate section 8(e) claims and separate accruals." Maj. Op. 
at 12. That proposition treats Proffitt's misconduct as something 
resembling a "continuing violation" like a conspiracy or kidnapping, 
with the statute of limitations period starting anew at each moment 
that a different "effect" of the increasingly historical misconduct 
appears. This is not only a peculiar way of understanding a  violation
that arose out of a discrete series of misdeeds by a banker,  it is
one that has been discouraged by the Supreme Court. See  Toussie v.
United States, 397 U.S. 112, 115 (1970) (a statutory 


the regulatory agencies an option to choose to bring an action  based
on a probable financial loss or an actual financial loss.  That is not
all. Since the statute allows a removal action  based on probable or
actual other damage, which would  certainly include reputational harm,
the agency presumably  could also wait until sufficient newspaper
articles appeared  (which incidentally embarrassed the regulatory
agency) and  then determine that actual reputational harm to the
deposito- ry institution had occurred. Add to this the majority's
rather  improbable reliance on section 8(e)'s language authorizing an 
agency to bring a removal action "whenever" it determines  that the
statute's requirements are met, Maj. Op. at 14-- which I take it means
that the statute of limitations is  triggered not by objective facts
but by a subjective determi- nation of the agency as prosecutor--and
one arrives at the  inevitable and astounding conclusion that, on the
majority's  view, the statute of limitations for an section 8(e)
removal  action begins to run when the agency decides it should begin 
to run (making it a non-statute statute reminiscent of the  once
infamous non-bank bank, cf. Board of Governors of the  Fed. Reserve
Sys. v. Dimension Fin. Corp., 474 U.S. 361, 363  (1986)). With all due
respect to my colleagues this interpre- tation simply will not do.


It seems to me that it is the "three prong" characterization  of the
elements of a removal cause of action which leads my  colleagues
astray. Section 8(e) actually contemplates only  one act on the part
of the wrongdoer, the misconduct which  amounts to a violation of a
banking law or regulation. See 12  U.S.C. s 1818(e)(1)(A). To be sure,
that act must also have  certain characteristics. Section 8(e)(1)(C)
requires that this  act involve personal dishonesty on the part of the
target;  innocent mistakes are not grounds for removal. And the 
requirement of section 8(e)(1)(B) must be satisfied, which  means that
some consequences must flow from the act. But  it does not follow that
the so-called "culpability" and "effect"  prongs constitute separate
temporal events, as the majority 




__________

n prohibition should rarely be construed as a continuing violation for 
statute of limitations purposes).


concludes. I think it makes far more sense to think of them  as
characteristics of a banker's misconduct, which must be  present at
the time of the wrongful act. (Indeed, it seems  that the "culpability
prong" could only be established by  reference to the time of a
wrongdoer's misconduct.) Just as a  new cause of action would not
spring up if evidence of  dishonesty--meeting section 8(e)(1)(C)'s
requirement--ap- peared ten years after a banker's misconduct, a new
and  distinct FDIC removal action should not arise at every point 
that evidence of new consequences flowing from that miscon- duct is
uncovered. Cf. 3M Co. v. Browner, 17 F.3d 1453,  1460-63 (D.C. Cir.
1994) (rejecting the application of the  "discovery rule" in the
context of an agency enforcement  proceeding).


My colleagues believe that such a reading "render[s] the  'has
suffered' language [in 1818(e)(1)(B)] superfluous." Maj.  Op. at 14.
But this is plainly mistaken. Actual damage to an  institution may or
may not be immediately apparent at the  time of the wrongful act; thus
the FDIC is also permitted to  bring an action where an institution
"will probably suffer  financial loss or other damage" or the
depositors "could be  prejudiced" from a banker's misconduct. 12
U.S.C.  s 1818(e)(1)(B) (emphasis added). The majority is right  when
it notes that section 8(e)'s language gives enforcement  agencies a
great deal of discretion; the obvious purpose of  the statute is to
allow the regulatory agencies potentially to  prosecute a wide range
of misconduct. Its threshold is so low  that I cannot imagine any
violation of law, involving personal  dishonesty on the part of a bank
officer, that would not  qualify.2 However, this discretion is
relevant to the range of  actions that may be prosecuted, not to the
time at which an  agency may bring an enforcement action. To the
contrary,  the early running of the statute of limitations seems to me
the  inevitable price of section 8(e)'s low threshold; the agencies 


As we have recently noted in the very context of an  administrative
enforcement proceeding, the statute of limita-




__________

n 2 Unless, perhaps, the act fortuitously led to a bank profit.


tions begins to run when the factual and legal prerequisites  for an
enforcement action are in place. See 3M, 17 F.3d at  1460. There is no
serious question that these prerequisites  were in place at the time
of Proffitt's misconduct in 1990; the  FDIC's objection that my
reading of the statute would force  it to bring actions too early is
ridiculous, given the minimal  hurdle set by the "other damage"
language in section  8(e)(1)(B). Nor was there any practical excuse
for the  FDIC's behavior in this case. If the FDIC were sincere in 
claiming that it delayed its action out of concerns of fairness  given
the pending litigation in the Tennessee courts, it could  have sought
an agreement with Proffitt tolling the running of  the statute of


Indeed, the facts presented here aptly demonstrate the  costs of not
enforcing statutes of limitations vigorously. The  pressure on courts
not to do so is obvious, as it can permit a  wrongdoer to escape his
or her just desserts. But ignoring  the limitations on an agency's
action creates an undesirable  incentive for government prosecutors to
sit on their hands  until some event--typically publicity--induces