## Facts

- The Bank of Coushatta, a federally insured Louisiana bank, operated under an FDIC capital-forbearance program and agreed to raise its primary capital ratio to 5.49% by year-end 1989.
- After an April 1989 examination, the FDIC concluded the bank would not meet targets because loss classifications exceeded the amounts projected for all of 1989.
- In July 1989, the FDIC issued a notice of intent to issue a capital directive, with preliminary findings and conclusions, stating the bank’s capital was below required minimums.
- The proposed directive required, by December 31, 1989, an increase in capital of at least $725,000 and attainment of primary and total capital-to-assets ratios of 5.5% and 6.0%.
- The Board submitted a written response but the bank did not achieve the required capital levels by the deadline.
- In September 1989, the FDIC issued a formal capital directive with supporting findings.
- After continued noncompliance, the FDIC sought and obtained an ex parte federal district court order enforcing the directive; the district court later denied a stay.
- The bank and its directors appealed, challenging APA reviewability, due process, and inclusion of the directors as parties.

## Issues

1. Whether the FDIC’s issuance of a capital directive under 12 U.S.C. § 3907 was subject to pre-enforcement agency hearing and judicial review under the Administrative Procedure Act.
2. Whether enforcing the directive through an ex parte district court order, without a prior adversarial evidentiary hearing, violated Fifth Amendment due process.
3. Whether the bank’s directors were proper parties to the enforcement proceeding.

## Decision

- The Fifth Circuit affirmed the district court’s ex parte enforcement order.
- The court held that the decision to issue a capital directive under § 3907 was committed to agency discretion by law and not subject to pre-enforcement APA review.
- The court held that the FDIC’s procedures—notice of intent, supporting materials, and an opportunity to respond in writing—satisfied due process given the regulatory context and governmental interests.
- The court held the directors were properly named because the directive and related correspondence directly involved the board and assigned responsibilities connected to compliance.

## Legal Principles

- APA review is unavailable where a statute and implementing regulations provide no meaningful standards for a court to evaluate the agency’s decision, placing the action within APA § 701(a)(2)’s “committed to agency discretion by law” category.
- Supervisory determinations about bank capital adequacy may be treated as technical and predictive judgments entrusted to banking regulators, limiting pre-enforcement judicial review of the decision to issue a directive.
- Due process in bank supervision may be satisfied by written notice, disclosure of the basis for proposed action, and an opportunity to submit written objections, without requiring a pre-deprivation evidentiary hearing.
- In assessing due process, courts weigh private interests, the risk of error under the procedures used, and the government’s interest in prompt action to protect the deposit-insurance system and bank safety and soundness.
- Directors may be proper parties in enforcement proceedings when the regulator addresses directives and compliance obligations to the board and the board participates in the regulatory exchange.

## Conclusion

The Fifth Circuit upheld ex parte judicial enforcement of the FDIC’s capital directive, concluding that the agency’s decision to issue the directive under § 3907 was largely unreviewable under the APA, the notice-and-written-response process satisfied due process in the banking context, and the bank’s directors were appropriately included in the enforcement action.


FDIC v. Bank of Coushatta, 930 F.2d 1122 (5th Cir. 1991)