Revising FIRREA to Secure Procedural Due Process for Savings and Loan Owners

Tuesday, January 1st, 1991 at 12:00 am by Christopher C. Canterbury
Christopher C. Canterbury, Revising FIRREA to Secure Procedural Due Process for Savings and Loan Owners, 1991 Colum. Bus. L. Rev. 113

In recent years, the national crisis sweeping the financial industry has triggered extensive takeovers by the government. However, the grip of panic must not suspend the owners’ rights to due process in such takeover proceedings. The hasty appointment of conservators and receivers, rationalized by the need to prevent financial collapse of overextended associations, may nevertheless paralyze owners without giving them an adequate opportunity to challenge the government’s decision. The meaning and scope of judicial review “upon the merits” is unclear, and the statute fails to expressly provide any other procedural safeguard for owners’ rights. Without such safeguards, many financial institutions may be seized by the government under mistaken presumptions. This Note argues that a revision of FIRREA is necessary to resolve ambiguities in its language and to assure that due process requirements are satisfied. Adequate procedural protections would assure that savings associations are not improperly seized from owners.

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