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Appeal of OCC's Objection of a Director for a Bank-in-Organization - (First Quarter 2003)


The ombudsman received an appeal from an individual who the OCC objected to as serving as director of a bank-in-organization.

The proposed director stated in his appeal that his character and integrity had been challenged based on erroneous assumptions and conclusions. He further stated that to allow the decision to stand without a challenge would imply acceptance of the fairness of the decision and the conclusions made in the licensing process.

The proposed director had pleaded guilty to a misdemeanor that was later expunged after a settled repayment of funds and community service. The proposed director's Interagency Biographical and Financial Report submitted with the charter application initially described the charge as a personal-property dispute. The Licensing department concluded that the individual was not forthright in the written application and disclosures regarding the background investigation, nor did he effectively address issues surrounding the conviction when asked to do so in writing or orally.


Sections 12 CFR 5.20 (g)(3)(i) Financial Resources states that:

Each organizer must have a history of responsibility, personal honesty, and integrity. Personal wealth is not a prerequisite to become an organizer or director of a national bank. However, director stock purchases, individually and in the aggregate, should reflect a financial commitment to the success of the national bank that is reasonable in relation to the individual and collective financial strength. A director should not have to depend on bank dividends, fees, or other compensation to satisfy financial obligations.

The statute, 12 CFR 5.20 (f)(2) ii) Policy Considerations further states that:

The Office of the Comptroller may also consider additional factors listed in section 6 of the Federal Deposit Insurance Act, 12 USC 1816, including the risk to the Federal deposit insurance fund, and whether the proposed bank's corporate powers are consistent with the purposes of the Federal Deposit Insurance Act and the National Bank Act.


The ombudsman considered all aspects of the case, reviewing all documentation from the Licensing department, interviews with the individual as well as the supervisory office. The information obtained in the ombudsman's review was not inconsistent with the provisions of the statute. Therefore, the ombudsman did not reverse the decision to object to the individual.