BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM OF THE UNITED STATES OF AMERICA, PETITIONER V. MCORP FINANCIAL, INC., ET AL. MCORP, ET AL., PETITIONERS V. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM OF THE UNITED STATES OF AMERICA No. 90-913, No. 90-914 In The Supreme Court Of The United States October Term, 1990 On Writs Of Certiorari To The United States Court Of Appeals For The Fifth Circuit Brief For The Board Of Governors Of The Federal Reserve System Of The United States Of America PARTIES TO THE PROCEEDING In addition to the parties named in the caption, MCorp and MCorp Management were plaintiffs in the district court and appellees in the court of appeals. The Official Creditors' Committee of MCorp, MCorp Financial, Inc., and MCorp Management was an intervenor in the district court and an appellee in the court of appeals. TABLE OF CONTENTS Questions Presented Parties to the Proceeding Opinions below Jurisdiction Statutory and regulatory provisions involved Statement A. Federal Reserve Board regulation of bank holding companies B. Bankruptcy court jurisdiction and equitable authority C. The proceedings in this case D. The court of appeals decision Summary of argument Argument: I. Federal courts sitting in bankruptcy lack authority to enjoin pending Federal Reserve Board enforcement actions against bank holding companies under the Financial Institutions Suprevisory Act A. The Financial Institutions Supervisory Act provides the exclusive means for judicial review of Federal Reserve Board enforcement actions against bank holding companies B. The Bankruptcy Code does not supersede FISA's preclusion of judicial review or otherwise authorize equitable jurisdiction over pending Federal Reserve Board enforcement actions II. The Federal Reserve Board's source of strength regulations are not subject to judicial review under the doctrine set forth in Leedom v. Kyne, 358 U.S. 184 (1958) A. In the face of statutory judicial review provisions, jurisdiction under Leedom v. Kyne is limited to exceptional cases of unauthorized agency action B. The Board's proceedings under FISA to enforce the source of strength regulations do not fall within the limited reach of jurisdiction under Leedom v. Kyne III. The Federal Reserve Board has statutory authority to promulgate and enforce its source of strength regulations A. FISA and ILSA authorize promulgation and enforcement of the Board's source of strength regulations B. The BHCA further supports the Board's promulgation and enforcement of the source of strength regulations C. Congress's repeal of shareholder assessment provisions of the National Bank Act does not undermine the validity of the Board's source of strength regulations Conclusion OPINIONS BELOW The opinion of the court of appeals (J.A. 13-36) is reported at 900 F.2d 852. The opinion of the district court (J.A. 37-55) is reported at 101 Bankr. 483. JURISDICTION The judgment of the court of appeals was entered on May 15, 1990. A petition for rehearing was denied on August 6, 1990. 90-913 Pet. App. 27a-28a. On October 22 and 26, 1990, Justice Scalia extended the time within which to file petitions for a writ of certiorari to and including December 10, 1990. The petitions were filed on that date, and were granted on March 4, 1991. The jurisdiction of this Court rests on 28 U.S.C. 1254(1). STATUTORY AND REGULATORY PROVISIONS INVOLVED Pertinent sections of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(a), 1842(c), 1844) are reprinted at App., infra, 1a-8a. Pertinent sections of the Financial Institutions Supervisory Act of 1966 (12 U.S.C. 1818), as amended by Section 902 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 103 Stat. 450-453, are reprinted at App., infra, 9a-26a. Sections 908 and 910 of the International Lending Supervision Act of 1983 (12 U.S.C. 3907, 3909) are reprinted at App., infra, 26a-29a. Section 23A of the Federal Reserve Act, 12 U.S.C. 371c, is reprinted at App., infra, 29a-38a. Pertinent sections of Federal Reserve Board regulations, 12 C.F.R. Part 225, are reprinted at App., infra, 38a-41a. Pertinent sections of the Bankruptcy Code (11 U.S.C. 105, 362; 28 U.S.C. 1334(b), 1334(d)) are reprinted at App., infra, 41a-50a. QUESTIONS PRESENTED 1. Whether 12 U.S.C. 1818(i)(1) barred the district court presiding over MCorp's bankruptcy case from enjoining the Federal Reserve Board's pending administrative proceedings against MCorp under the Financial Institutions Supervisory Act of 1966, 12 U.S.C. 1818 et seq. 2. Whether despite the express limitation of 12 U.S.C. 1818(i)(1), the district court may invoke Leedom v. Kyne, 358 U.S. 184 (1958), to exercise jurisdiction over MCorp's claim that the Federal Reserve Board lacked statutory authority to file administrative charges enforcing its "source of strength" regulations. 3. Whether the Federal Reserve Board has statutory authority to promulgate and enforce its "source of strength" regulations, which make bank holding companies responsible for maintaining adequate capitalization of subsidiary banks. STATEMENT A. Federal Reserve Board Regulation of Bank Holding Companies 1. Congress has vested the Board of Governors of the Federal Reserve Board with substantial supervisory authority over the formation, structure, and operation of bank holding companies, i.e., any company that has direct or indirect control of any bank. 12 U.S.C. 1841 (a)(1). The Board exercises such authority under three related statutory schemes -- the Bank Holding Company Act of 1956 (BHCA), 12 U.S.C. 1841 et seq., the International Lending Supervision Act of 1983 (ILSA), 12 U.S.C. 3901 et seq., and the Financial Institutions Supervisory Act (FISA), 12 U.S.C. 1818, as amended by Section 902 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73, Tit. IX, 103 Stat. 450-453. a. Under the BHCA, a company may not acquire a bank without first obtaining the Board's approval. 12 U.S.C. 1842(a). In reviewing a company's application to acquire a bank, the Board must consider, among other factors, "the financial and managerial resources and future prospects of the company or companies and the banks concerned." 12 U.S.C. 1842(c); see Board of Governors v. First Lincolnwood Corp., 439 U.S. 234 (1978). The BHCA generally requires the company to limit its operations to banking activities and to other "nonbanking" activities that are closely related or a proper incident to banking. 12 U.S.C. 1843; see also 12 C.F.R. 225.21-225.31. /1/ Under its suprevisory powers, the Board "from time to time may require reports (from) * * * and * * * may make examinations of each bank holding company and each subsidiary thereof." 12 U.S.C. 1844(c). The Board has authority to curtail a bank holding company's "nonbank" activities that pose risks to a bank's financial stability or are "inconsistent with sound banking principles or with the purposes of (the BHCA)." 12 U.S.C. 1844(e). b. Under Section 908 and 910 of ILSA, 12 U.S.C. 3907 and 3909, the Board regulates and enforces the capital adequacy of each holding company. These provisions empower the Board to establish minimum capital levels, 12 U.S.C. 3907(a), and provide that the failure of a holding company to maintain these capital levels "may be deemed by the (Board), in its discretion, to constitute an unsafe and unsound practice within the meaning of (12 U.S.C. 1818)." 12 U.S.C. 3907(b)(1); see 12 U.S.C. 3909(a)(2). Moreover, ILSA provides that the Board may order holding companies to achieve required levels of capital where necessary to remedy unsafe or unsound banking practices. 12 U.S.C. 3907(b)(2); see 12 C.F.R. 263.35-263.40. c. Under FISA, the Board has authority to begin "cease-and-desist" proceedings against a bank holding company if, in the Board's view, the company "is engaging or has engaged" or the Board "has reasonable cause to believe that (the company) is about to engage, in an unsafe or unsound practice in conducting the business of such (company)." 12 U.S.C. 1818(b)(1); see 12 U.S.C. 1818(b)(3) (Board's authority under Section 1818(b) applies to "any bank holding company, and to any subsidiary (other than a bank) of a bank holding company"). After an administrative hearing, /2/ the Board may direct the holding company to "take affirmative action to correct the conditions resulting from any such violation or practice." 12 U.S.C. 1818(b)(1). As amended by Section 902 of FIRREA, FISA further provides that the Board's remedial powers include the authority to order the offending holding company, in certain circumstances, to make restitution to subsidiaries, to dispose of a loan or asset, or to "take such other action as (the Board) determines to be appropriate." 103 Stat. 450-451 (to be codified at 12 U.S.C. 1818(b)(6)). In addition, the Board has authority under FISA to issue a temporary cease-and-desist order -- without first holding a hearing -- if it finds that the unsafe or unsound practice "is likely to cause insolvency or substantial dissipation of assets or earnings of the bank, or is likely to seriously weaken the condition of the bank or otherwise seriously prejudice the interests of its depositors" before completion of administrative proceedings under Section 1818(b)(1). 12 U.S.C. 1818(c)(1). The Board's order under this provision may direct "afirmative action to prevent such insolvency, dissipation, condition, or prejudice pending completion of such proceedings." 12 U.S.C. 1818(c)(1). Such an order is effective immediately upon service and is enforceable by injunction in the appropriate United States District Court. 12 U.S.C. 1818(c)(1) and (d). FISA provides specific avenues for judicial review of matters involving the Board's enforcement actions. First, a bank holding company may petition for review of a final cease-and-desist order under the Administrative Procedure Act, 5 U.S.C. 701 et seq., in the appropriate United States Court of Appeals. 12 U.S.C. 1818(h)(2). Second, the United States District Courts have jurisdiction to issue an injunction "setting aside, limiting, or suspending" a temporary cease-and-desist order pending completion of the administrative enforcement proceedings. 12 U.S.C. 1818(c)(2). Third, upon the Board's application, the district courts have jurisdiction to enforce compliance with any notice or order issued under Section 1818. 12 U.S.C. 1818(i)(1). FISA, however, expressly bars federal courts from assuming jurisdiction to review or intervene in the Board's enforcement proceedings in any other manner or circumstances, stating that except as otherwise provided in (12 U.S.C. 1818) no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this section, or to review, modify, suspend, terminate, or set aside any such notice or order. 12 U.S.C. 1818(i)(1); see 12 U.S.C. 1818(h)(1). 2. As part of its supervision of bank holding companies' corporate pratices, the Board promulgated its "source of strength" regulation, which provides that "(a) bank holding company shall serve as a source of finaicial and managerial strength to its subsidiary banks and shall not con(d)uct its operations in an unsafe or unsound manner." 12 C.F.R. 225.4(a)(1) (Regulation Y). The Board first articulated its "source of strength" concept as a policy in the case-by-case review of companies' applications to acquire banks. In reviewing these applications, the Board made clear that it would not approve bank acquisitions unless the prospective parent holding company would retain the ability to act as a source of financial and managerial assistance to its subsidiary banks, should the need for such assistance arise. /3/ And in First Lincolnwood Corp., 439 U.S. at 248, this Court upheld the Board's authority to disapprove the formation of a bank holding company on the basis of the grounds asserted in those administrative determinations, namely, the applicant's inability to act as a "source of strength" to subsidiary banks. In 1984, the Board codified the source of strength policy in its published regulations governing a holding company's corporate practices. See 49 Fed. Reg. 818, 820 (1984). As part of that codification, the Board explained that its source of strength regulation is derived from section 3(c) of the BHC Act (12 U.S.C. 1842(c)), which requires the Board to consider the financial and managerial resources and future prospects of the company and banks concerned; from section 5(b) of the BHC Act (12 U.S.C. 1844(b)), which authorizes the Board's authority under the Financial Institutions Supervisory Act to issue cease and desist orders to prevent unsafe or unsound banking practices (12 U.S.C. 1818(b)(1) and (3)). 48 Fed. Reg. 23,520, 23,523 (1983) (notice of proposed rulemaking). In 1987, the Board issued a formal statement clarifying its long-standing policy that bank holding companies should act as sources of strength to their subsidiary banks by "standing ready to use available resources to provide adequate capital funds to subsidiary banks during periods of financial stress or adversity." Policy Statement; Responsibility of Bank Holding Companies to Act as Sources of Strength to Their Subsidiary Banks, 52 Fed. Reg. 15,707, 15,707 (1987). In support of that policy, the Board pointed out that a holding company derives finaicial benefits from ownership of institutions that can accept federally insured deposits, and reasoned that these commercial advantages create a correlative obligation to serve as sources of strength and support to subsidiary banks. Ibid. The Board also stated that bolstering a subsidiary bank's capital base promotes bank safety and public confidence, and reduces the federal deposit insurance fund's exposure to loss. Ibid. Accordingly, the Board stated that "(a) bank holding company's failure to assist a troubled or failing subsidiary bank * * * would generally be viewed as an unsafe and unsound banking practice or a violation of Regulation Y or both" that would result in an appropriate enforcement action. Id. at 15,707-15,708. 3. The Board also supervises bank holding companies' corporate practices under Section 23A of the Federal Reserve Act, 12 U.S.C. 371c. Section 23A, among other things, requires extensions of credit by a subsidiary bank to a nonbank affiliate to be secured by collateral. In particular, the statute prohibits a bank from extending credit to a nonbank affiliate unless, at the time of the transaction, the extension of credit is secured by collateral having a market value of at least 100% of the loan. Congress sought to "prevent misuse of commercial bank resources stemming from non-arm's length financial transactions with affiliated companies." S. Rep. No. 536, 97th Cong., 2d Sess. 31 (1982). Accordingly, Congress authorized the Board, in carrying out the statutory mandate, to issue such further regulations and orders, including definitions consistent with this section, as may be necessary to administer and carry out the purposes of this section and to prevent evasions thereof. 12 U.S.C. 371c(e). B. Bankruptcy Court Jurisdiction and Equitable Authority 1. Congress has vested the United States District Courts with original and exclusive jurisdiction over all cases filed under the Bankruptcy Code. 28 U.S.C. 1334(a). The district court in which a bankruptcy case is filed also has exclusive jurisdiction over all the debtor's property as of the commencement of the case and the property of the debtor's bankruptcy estate. 28 U.S.C. 1334(d). Moreover, Congress has given the district courts concurrent jurisdiction over civil proceedings related to or arising out of a debtor's bankruptcy case: Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11. 28 U.S.C. 1334(b). 2. Congress also gave the district courts certain equitable powers in connection with the exercise of bankruptcy juridcition. As relevant here, the Bankruptcy Code provides that the filing of a bankruptcy petition automatically stays the commencement or continuation * * * of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this (bankruptcy) title, or to recover a claim against the debtor that arose before the commencement of the case under this title. 11 U.S.C. 362(a)(1). The scope of this automatic stay, however, is limited. A bankruptcy petition does not operate as a stay under (11 U.S.C. 362(a)(1)), of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power. 11 U.S.C. 362(b)(4). Moreover, the Bankruptcy Code generally provides that "(t)he court may issue any oder, process, or judgment that is necessary or appropriate to carry out the provisions of this title." 11 U.S.C. 105. C. The Proceedings in This Case 1. In October 1988, the Board issued a "notice of charges" under 12 U.S.C. 1818(b) against MCorp, a bank holding company headquartered in Texas. (MCorp and two of its subsidiaries involved in this case, MCorp Financial, Inc., and MCorp Management, will be referred to collectively as MCorp). MCorp then owned 25 subsidiary banks, many of which were in deteriorating financial condition and could not meet the Comptroller of the Currency's requirements for minimally acceptable capital reserves. The Board alleged that MCorp was engaging in unsafe and unsound practices, likely to cause substantial dissipation of the assets of MCorp that could be used to allow MCorp to serve as a source of financial strength for the subsidiary Banks. J.A. 14; see id. at 39. /4/ Accordingly, the Board scheduled an admnistrative hearing to determine whether the company should be ordered to cease and desist from specified unsafe and unsound practices and to undertake appropriate remedial measures. In an amended notice of charges filed a week later, theBoard sought to require MCorp to implement() an acceptable capital plan that would ensure that all of MCorp's available assets are used to recapitalize the Subsidiary Banks that are suffering capital deficiencies. Id. at 14. At the same time, the Board issued temporary case-and-desist orders under 12 U.S.C. 1818(c)(1) that prohibited MCorp from dissipating its assets through dividend payments or unusual business transactions, and directed MCorp to identify those subsidiary banks that would receive capital infusions from MCorp's corporate assets and resources. See J.A. 65-67, 68-70, 84-86. The Board postponed resolution of the "source of strength" charges pending MCorp's attempt to secure "open bank" financial assistance from the Federal Deposit Insurance Corporation. See 12 U.S.C. 1823(c). In late March 1989, however, the FDIC denied MCorp's request, concluding that such financial assistance would not be in the public interest. 2. Soon after the FDIC's decision, three of MCorp's creditors filed an involuntary petition against MCorp in the United States Bankruptcy Court for the Southern District of New York. On March 28 and 29, 1989, the Comptroller of the Currency declared a total of 20 of MCorp's 25 subsidiary banks insolvent and, by operation of law, placed them under the receivership of the FDIC. /5/ On March 31, MCorp filed voluntary bankruptcy petitions in the United States Bankruptcy Court for the Southern District of Texas. J.A. 14, 39. /6/ At this time, the Board issued a second notice of charges against MCorp. This notice alleged that MCorp had violated Section 23A of the Federal Reserve Act, 12 U.S.C. 371c. In particular, the notice claimed that MCorp had caused two of its closed banks to lend $63.7 million to MCorp Management without requiring sufficient collateral. J.A. 87-93; see id. at 14-15. And in late May 1989, the Board issued a second amended notice of charges (relating to the original October 1988 notice), alleging that MCorp had failed to act as a "source of strength" to its five remaining subsidiary banks. Id. at 186-195. /7/ 3. Before the Board held an administrative hearing on the outstanding charges, MCorp filed an adversary bankruptcy proceeding against the Board in the Southern District of Texas. MCorp sought a temporary restraining order and a preliminary injunction to prevent the Board from prosecuting its administrative charges and taking further actions against MCorp without prior approval of the bankruptcy court. J.A. 102-124, 125-140. On May 3, 1989, the bankruptcy court denied MCorp's request for temporary relief. Id. at 15. The Board then filed in the district court for the Southern District of Texas a motion to withdraw the reference of the adversary proceeding in the bankruptcy court. See 28 U.S.C. 157(d). The district court granted that motion on May 12, thereby agreeing to exercise jurisdiction over MCorp's request for injunctive relief. J. A. 15. On June 9, the district court granted MCorp's motion and issued a preliminary injunction against the Board's administrative enforcement proceedings. J.A. 37-55. The court concluded that the express jurisdictional limitation contained in FISA, 12 U.S.C. 1818(i)(1) -- providing that "(n)o court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement" of any Board order, except as set forth in the statute -- has "been overridden through control of the debtor's estate having been entrusted to the authority of the bankruptcy court." J.A. 44-45; see 28 U.S.C. 1334(d). /8/ D. The Court of Appeals Decision In May 1990, the Fifth Circuit vacated the injunction barring further proceedings on the Board's Section 23A charges, but remanded with instructions to enjoin proceedings on the Board's source of strength charges. J.A. 13-36. With respect to its jurisdiction, the court of appeals concluded that the plain language of Section 1818(i) deprives the district court of jurisdiction to enjoin the Board's administrative proceedings if the Board's actions do not exceed the authority Congress granted to it. J.A. 22. In so concluding, the court rejected MCorp's contention that the bankruptcy jurisdiction conferred by 28 U.S.C. 1334 supersedes or otherwise qualifies FISA's express limitation (12 U.S.C. 1818(i)) on a court's equitable jurisdiction. As the court explained, 28 U.S.C. 1334(b) (as well as its legislative history) "reflects no intent that the bankruptcy court's jurisdiction supersede the exclusive jurisdiction of an administrative agency, or reinvest the courts with jurisdiction barred by Section 1818." J. A. 18. Section 1334(d) was inapplicable, the court determined, because "the Board has not sought control over the property of MCorp's estate in this action, only the opportunity to go forward in its administrative proceedings. J. A. 20. Nevertheless, citing Leedom v. Kyne, 358 U.S. 184 (1958) and circuit precedent, the court of appeals determined that (i)f the Board's proceedings exceed its statutory authority, we may review the Board's action * * * despite the jurisdictional bar of Section 1818; if the Board "was not acting within (the) authority granted by Congress, then 12 U.S.C. Section 1818(i) could not withdraw jurisdiction." J.A. 22-23 (quoting Manges v. Camp, 474 F.2d 97, 99 (5th Cir. 1973)). The court therefore concluded that the district court's authority to enjoin the Board's administrative proceedings at issue depended on whether those proceedings fell within the Board's statutory mandate. Turning first to the Board's Section 23A proceedings, the court of appeals determined that the Board had authority to regulate MCorp's relationship with former subsidiary banks and therefore held that the Board was "well within its authority in seeking an order against MCorp to cease and desist any transactions which violate the provisions of Section 23A, or 'to take affirmative action' as may be appropriate." J.A. 24 (quoting 12 U.S.C. 1818(b)(1)). Turning next to the Board's "source of strength" proceedings, the court of appeals held that those "proceedings excee(ed) (the Board's) statutory authority." J.A. 13. /9/ The court concluded that the BHCA "does not grant the Board authority to consider the financial and managerial soundness of the subsidiary banks after it approves the application." Id. at 31. Accordingly, the court held that "the Board is without authority under the BHCA to require (MCorp) to transfer its funds to its troubled subsidiary bank." Ibid. /10/ The court of appeals also rejected the Board's contention that "MCorp's failure to provide capital to its subsidiary banks (is) an unsafe or unsound practice which the Board may act to restrain under (FISA, 12 U.S.C. 1818)." J.A. 32. Applying the framework established by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the court determined that "Congress has not spoken clearly to what constitutes an unsafe or unsound practice, leaving the development of the phrase to the regulatory agencies." J.A. 33. The court therefore examined the "reasonableness" and permissibility" of the Board's construction of that phrase, i.e., that a "failure of the holding company to inject capital into subsidiary banks is an 'unsafe or unsound' practice." Ibid. In the court's view, "(e)nforcement of the Board's source of strength regulation * * * can hardly be considered a 'generally accepted standard() of prudent operation.'" J. A. 34 (quoting 112 Cong. Rec. 26,474 (1966), cited in Gulf Federal Savings & Loan Ass'n v. Federal Home Loan Bank Bd., 651 F.2d 259, 264 (5th Cir. 1981), cert. denied, 458 U.S. 1121 (1982)). Not only would such a transfer of funds require a holding company such as MCorp "to disregard its own corporation's separate status," it would also "amount to a wasting of the holding company's assets in violation of its duty to its shareholders." J.A. 34. Moreover, the court stated that the Board's regulations conflict with "one of the fundamental purposes of the BHCA," namely, "to separate banking from commercial enterprises," since those regulations would permit the Board to treat a holding company as "merely an extension of its subsidiary bank." Ibid. /11/ Accordingly, the court concluded that the Board's determination that the holding company's failure to transfer its assets to a troubled subsidiary was an "unsafe or unsound practice" under Sections 1818 (b)(1) and (3) is an unreasonable and impermissible interpretation of that term. J.A. 35. /12/ SUMMARY OF ARGUMENT I. FISA's express limitations on federal court equitable jurisdiction protect a narrow class of administrative actions from premature judicial interference. Until the Board's proceedings culminate in a final cease-and-desist order, FISA bars the federal courts from exercising equitable jurisdiction over pending administrative actions. The statute could not be clearer: "(N)o court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this section, or to review, modify, suspend, terminate, or set aside any such notice or order." 12 U.S.C. 1818(i)(1). In this case, MCorp jumped the gun in seeking to stop the Board's enforcement proceedings in their tracks upon the filing of notices of charges. Accommodating MCorp's litigation strategy, the district court's injunction flies in the face of the plain language of FISA's preclusion provision, 12 U.S.C. 1818(i). Accordingly, the court of appeals should have vacated the district court's order barring the Board from prosecuting its enforcement action. Nothing in the Bankruptcy Code calls for a different outcome. In vesting federal courts with jurisdiction and equitable authority over bankruptcy matters, see 11 U.S.C. 105, 362; 28 U.S.C. 1334, Congress has not superseded FISA's preclusion provision. None of those bankruptcy provisions -- by their terms -- purport to repeal or qualify FISA's express and more particular limitations on federal court equitable jurisdiction. The Bankruptcy Code's "automatic stay" provision, 11 U.S.C. 362, does not carve out an exception to Section 1818(i). Similarly, the Code's general grant of equitable authority, 11 U.S.C. 105(a), does not supersede the precise jurisdictional limitations of FISA. And Congress's general grant of jurisdiction over bankruptcy metters in 28 U.S.C. 1334 does not take precedence over FISA's withdrawal of jurisdiction in 12 U.S.C. 1818(i). II. Despite its otherwise correct and straightforward reading of Section 1818(i), the court of appeals proceeded to review the substantive validity of the Board's source of strength regulations under the doctrine set forth in Leedom v. Kyne, 358 U.S. 184 (1958). That review, under the circumstances presented here, amounts to a misappropriation of jurisdiction under Leedom v. Kyne in violation of Congress's intent. Jurisdiction under Leedom v. Kyne is inappropriate where, as here, Congress has provided alternative means of judicial review of agency action. See 12 U.S.C. 1818(h)(2), 1818(i)(1). Indeed, jurisdiction under Leedom is reserved for the extreme circumstance of reviewing agency action that is manifestly beyond the agency's delegated authority and thus in excess of the agency's jurisdiction. The decision below improperly brushed aside this fundamental limitation; the error in so doing is all the more manifest by the court of appeals' concession that the Board's authority to promulgate and enforce its source of strength regulations turned on application of the second prong of the Chevron framework. That only applies when the answer is not plain from the statute. In addition, Leedom does not apply in the circumstances presented, i.e., the absence of legally binding agency action. Here, the Board has only filed notices of charges and initiated administrative proceedings. At bottom, the court of appeals -- in the face of the express preclusion provision of FISA -- had no occasion even to review the Board's source of strength regulations under the guise of Leedom-based jurisdiction. III. Even assuming the court of appeals had jurisdiction to consider the validity of the Board's source of strength regulations, the court erred in striking them down. In doing so, the court of appeals misconstrued the Federal Reserve Board's statutory authority, derived from three statutes (the Financial Institutions Supervisory Act, the International Lending Supervision Act, and the Bank Holding Company Act, see pp. 2-6, supra) to supervise bank holding companies' activities regarding subsidiary banks -- particularly where those activites may adversely affect bank safety. The decision below is inconsistent with Congress's delegation of supervisory power to the Board and impermissibly restricts the Board's delegated authority to exercise continuing control and supervision of bank holding company practices that impair the stability of the Nation's banking system. ARGUMENT I. FEDERAL COURTS SITTING IN BANKRUPTCY LACK AUTHORITY TO ENJOIN PENDING FEDERAL RESERVE BOARD ENFORCEMENT ACTIONS AGAINST BANK HOLDING COMPANIES UNDER THE FINANCIAL INSTITUTIONS SUPERVISORY ACT A. The Financial Institutions Supervisory Act Provides The Exclusive Means For Judicial Review Of Federal Reserve Board Enforcement Actions Against Bank Holding Companies Under FISA, 12 U.S.C. 1818, as amended by Section 902 of FIRREA, Pub. L. No. 101-73, Tit. IX, 103 Stat. 450-453, the Federal Reeserve Board exercises broad and exclusive authority to regulate bank holding companies. Congress sought through this legislation to fill the regulatory gap concerning actions of a parent holding company or one of its "nonbank" subsidiaries that threatened the safety, soundness, or stability of a subsidiary bank. See S. Rep. No. 902, 93d Cong., 2d Sess. 10 (1974). /13/ As a result, Congress amended FISA in 1974 to grant the Board exclusive power -- after administrative proceedings -- to compel a holding company to cease and desist from unsafe and unsound banking practices. See Act of Oct. 28, 1974, Pub. L. No. 93-495, Tit. I, Section 110, 88 Stat. 1506 (codified at 12 U.S.C. 1818(b)(3)); see also pp. 37-42, infra. FISA's express provisions for judicial review of matters involving the Board's enforcement actions confirm Congress's firm commitment to the Board's expertise in regulating bank holding company practices. First, a bank holding company may petition for review of a final cease-and-desist order under the Administrative Procedure Act, 5 U.S.C. 701 et seq., in the appropriate United States Court of Appeals. 12 U.S.C. 1818(h)(2). /14/ Second, the United States District Courts have jurisdiction to issue an injunction "setting aside, limiting, or suspending" a temporary cease-and-desist order pending completion of the administrative enforcement proceedings. 12 U.S.C. 1818(c)(2). Third, upon the Board's application, the district courts have jurisdiction to enforce compliance with any notice or order issued under Section 1818. 12 U.S.C. 1818(i)(1). FISA, however, expressly bars federal courts from assuming jurisdiction to review or intervene in the Board's enforcement proceedings in any other manner or circumstances. Its language of preclusion is admirably clear: (E)xcept as otherwise provided in (12 U.S.C. 1818) no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this section, or to review, modify, suspend, terminate, or set aside any such notice or order. 12 U.S.C. 1818(i)(1); see 12 U.S.C. 1818(h)(1). Under this straightforward statutory scheme, Congress has shielded the Board's ongoing enforcement actions from premature judicial interference. Until the Board's proceedings culminate in a final cease-and-desist order, FISA's plain language bars the federal courts from exercising equitable jurisdiction over pending administrative actions. For that reason, the lower courts have unanimously agreed that Section 1818(i) divests courts of equitable jurisdiction to enjoin pending enforcement proceedings initiated under FISA's authority to order a financial institution to "cease and desist" from unsafe or unsound banking practices or violations of law. See Eastern Nat'l Bank v. Conover, 786 F.2d 192, 193 (3d Cir. 1986); Investment Co. Inst. v. FDIC, 728 F.2d 518, 524-525 (D.C. Cir. 1984); First Nat'l Bank v. United States, 530 F. Supp. 162, 166-168 (D.D.C. 1982); see also Groos Nat'l Bank v. Comptroller of Currency, 573 F.2d 899, 895 (5th Cir. 1978) (FISA precludes exercise of equitable jurisdiction absent the agency's clear departure from statutory authority). Here, MCorp jumped the gun in seeking to stop the Board's enforcement proceedings when the Board filed notices of charges. And the district court's injunction against those proceedings is flatly inconsistent with the plain language of 12 U.S.C. 1818(i). Accordingly, the court of appeals sould have vacated the district court's order barring further prosecution of the Board's enforcement action in its entirety. See Business Guides, Inc. v. Chromatic Communications Enters., Inc., 111 S. Ct. 922, 928 (1991) ("(O)ur inquiry is complete if we find the text * * * to be clear and unambiguous."); Pavelic & LeFlore v. Marvel Entertainment Group, 110 S. Ct. 456, 460 (1989) ("Our task is to apply the text, not to improve upon it."); Hallstrom v. Tillamook County, 110 S. Ct. 304, 309 (1989) (courts "are not at liberty to create an exception where Congress has declined to do so"). B. The Bankruptcy Code Does Not Supersede FISA's Preclusion Of Judicial Review Or Otherwise Authorize Equitable Jurisdiction Over Pending Federal Reserve Board Enforcement Actions In vesting federal courts with jurisdiction and equitable authority over bankruptcy matters, see 11 U.S.C. 105, 362; 28 U.S.C. 1334, Congress has not superseded FISA's preclusion provision, 12 U.S.C. 1818(i). As an initial matter, none of those bankruptcy provisions -- by their terms -- purport to repeal or qualify FISA's express limitations on federal court equitable jurisdiction. As this Court has long recognized, "(w)here there is no clear intention otherwise, a specific statute will not be controlled or nullified by a general one, regardless of the priority of enactment." Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987) (internal quotation marks and citations omitted). That canon of statutory construction applies with particular force where, as here, Congress has expressly limited federal court jurisdiction over a particular subject matter: "'When there are statutes clearly defining the jurisdiction of the courts the force and effect of such provisions should not be disturbed by mere implication flowing from subsequent legislation.'" Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 808 (1976) (quoting Rosencrans v. United States, 165 U.S. 257, 262 (1897)). In this case, Congress enacted a specific jurisdictional limitation in FISA protecting a narrow class of administrative actions from premature judicial interference. In the absence of congressional intent reflected in either the text or legislative record of the various bankruptcy provisions MCorp invokes, see 90-914 Pet. 10-25, the court of appeals correctly declined MCorp's invitation to ascribe to Congress an intention to except bankruptcy proceedings from the straightforward application of FISA's withdrawal of jurisdiction. /15/ 1. The Bankruptcy Code's "automatic stay" provision, 11 U.S.C. 362, does not carve out an exception to Section 1818(i). Section 362 generally provides that the filing of a petition in bankruptcy "operates as a stay, applicable to all entities, of -- (1) the commencement or continuation * * * of a judicial, administrative, or other action or proceeding against the debtor * * * or to recover a claim against the debtor that arose before the commencement of the (bankruptcy) case." 11 U.S.C. 362(a)(1). Although Section 362 confers certain equitable powers once the court sitting in bankruptcy acquires jurisdiction, the provision does not purport to define or confer jurisdiction. By its terms, FISA makes clear that no court has authority "to affect by injunction or otherwise" the Board's pending administrative proceedings. 12 U.S.C. 1818(i)(1). For that reason alone, Section 362 cannot otherwise trump the withholding of injunctive power in FISA. In any event, Section 362 could not support an injunction or stay of the Board's administrative proceedings in this case. The Bankruptcy Code provides that the stay imposed by 11 U.S.C. 362(a) does not extend to "the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power." 11 U.S.C. 362(b)(4). The Board's proceedings commenced under FISA fall comfortably within this so-called "police or regulatory power" exception. Courts have long recognized that the government's "police power" "embraces regulations designed to promote the public convenience or the general prosperity, as well as regulations designed to promote the public health, the public morals or the public safety." Chicago, B. & Q. Ry. v. Illinois ex rel. Drainage Commissioners, 200 U.S. 561, 592 (1906). And given the plain meaning of the term "regulatory," /16/ the courts of appeals have consistently held that the "police or regulatory power" exception to the stay extends to the broad range of regulatory activities, including economic regulation of business practices similar to the banking regulations at issue in this case. /17/ 2. The Bankruptcy Code's general grant of equitable authority, 11 U.S.C. 105(a), likewise does not supersede the jurisdictional limitations of FISA. Section 105(a) provides that a court exercising bankruptcy jurisdiction "may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of (the Bankruptcy Code." That provision, however, is not a roving commission to do equity or a license to advance the interests of the debtor without regard to other substantive limitations on the debtor's conduct or the bankruptcy courts' powers. As this Court has recognized, "whatever equitable powers remain in the bankruptcy courts must and can only be exercised within the confines of the Bankruptcy Code." Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988). Indeed, the Court recently pointed out that "a bankruptcy court order (issued under Section 105) might be inappropriate if it conflicted with another law that should have been taken into consideration in the exercise of the court's discretion." United States v. Energy Resources Co., 110 S. Ct. 2139, 2142 (1990). In other words, Section 105 -- as a grant of general equitable power -- does not purport to redefine bankruptcy court jurisdiction or otherwise repeal express limitations on the court's equitable powers. MCorp nevertheless asserts that FISA's jurisdictional limitation must give way where its application would conflict with the "policies and goals of the Bankruptcy Code, or the efficient administration of a bankruptcy case." 90-914 Pet. 15. But such ill-defined considerations do not supersede the sort of express legislative determination reflected in FISA, 12 U.S.C. 1818(i). As this Court has pointed out: If Congress wishes to grant the (bankruptcy) trustee an extraordinary exemption from nonbankruptcy law, "the intention would be clearly expressed, not left to be collected or inferred from disputable considerations of convenience in administering the estate of the bankrupt." Midlantic Nat'l Bank v. New Jersey Dep't of Envt'l Protection, 474 U.S. 494, 501 (1986) (quoting Swarts v. Hammer, 194 U.S. 441, 444 (1904)); cf. Pennsylvania Dep't of Pub. Welfare v. Davenport, 110 S. Ct. 2126, 2132 n.4 (1990) (construction of Bankruptcy Code must be based on language of statute, as opposed to policy "unsupported by any textual authority"). MCorp can point to nothing in the text of 11 U.S.C. 105 that empowers the bankruptcy court to ignore independent and express limitations on its equitable jurisdiction, such as that found in FISA, 12 U.S.C. 1818(i). 3. MCorp also errs in suggesting (90-914 Pet. 17-25) that Congress's general grant of jurisdiction over bankruptcy matters in 28 U.S.C. 1334 takes precedence over FISA's precise withdrawal of jurisdiction in 12 U.S.C. 1818(i). MCorp, for example, first mistakenly relies on 28 U.S.C. 1334(b), which provides: Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11. By providing that the district courts may exercise this jurisdiction "(n)otwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts" (emphasis added), Congress effectively superseded jurisdictional limitations that otherwise would have deprived the district courts of jurisdiction over matters previously committed to the exclusive jurisdiction of another judicial forum. See Brock v. Morysville Body Works, Inc., 829 F.2d 383, 385-387 (3d Cir. 1987). The statute, however, does not speak to ongoing proceedings before an administrative agency. Rather, Congress referred only to civil proceedings that would lie within another court's jurisdiction. For that reason, the court of appeals correctly concluded that Congress limited the reach of Section 1334(b) to the "division of jurisdiction between bankruptcy courts and other courts." J.A. 18. MCorp similarly errs (90-914 Pet. 21) in asserting that 28 U.S.C. 1334(d) vests the bankruptcy courts with exclusive jurisdiction over FISA proceedings. /18/ Section 1334(d) gives the court in rem jurisdiction to resolve issues affecting title to or control of th debtor's property, see, e.g., In re Modern Boats, Inc., 775 F.2d 619 (5th Cir. 1985), as opposed to exclusive jurisdiction over any matter that happens to touch upon the debtor's estate. As this Court has pointed out inconstruing a substantially similar predecessor to Section 1334(d): (A) court of bankruptcy has exclusive and non-delegable control over the administration of an estate in its possession. * * * There can be no question, however, that Congress did not give the bankruptcy court exclusive jurisdiction over all controversies that in some way affect the debtor's estate. Callaway v. Benton, 336 U.S. 132, 142 (1949) (citations omitted). /19/ Here, as the court of appeals recognized, "the Board has not sought control over the property of MCorp's estate in this action, only the opportunity to go forward in its administrative proceedings." J.A. 20. The Board's administrative proceedings seek to ascertain whether MCorp has violated the law or committed unsafe or unsound banking practices. Those proceedings, like all regulatory measures, may ultimately proscribe or compel certain conduct and in that indirect sense may "affect" MCorp's property. But such tangential effects -- aside from being entirely speculative at this juncture -- would not otherwise bring the Board's administrative actions within the bankruptcy court's exclusive jurisdiction over MCorp's property. 4. At bottom, MCorp may not avoid the unambiguous jurisdictional limitations imposed by FISA, 12 U.S.C. 1818(i), by extolling the rehabilitative functions, policies, and goals of the Bankruptcy Code. Those attributes of the Code, however laudable, cannot confer jurisdiction where none exists. Cf. Grogan v. Garner, 111 S. Ct. 654, 659 (1991) (general policies of Bankruptcy Code do not override specific nondischargeability provision). As the courts have routinely recognized, if the bankruptcy court lacks authority to interfere with an administrative enforcement proceeding or other action against the debtor, the fact that the matter might adversely affect the debtor's reorganization is irrelevant. /20/ This Court has made clear that (t)he courts are not at liberty to pick and choose among congressional enactments, and when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective. Morton v. Mancari, 417 U.S. 535, 551 (1974). Congress, though FISA, 12 U.S.C. 1818(i), and the "police or regulatory power" exception to the automatic stay provision, 11 U.S.C. 362(b)(4), has balanced the debtor's need for protection from actions that could impede reorganization against the government's need to enforce the law. And Congress has struck the balance in favor of enabling the government to enforce its police and regulatory powers -- a state of affairs that is consistent with FISA's provisions shielding the Board's administrative proceedings from premature judicial interference. Accordingly, the court of appeals correctly concluded that "Section 1818(i) deprives the district court of jurisdiction to enjoin the Board's administrative proceedings * * *," J.A. 22, and should have vacated the district court's order barring further prosecution of the Board's enforcement action in its entirety. II. THE FEDERAL RESERVE BOARD'S SOURCE OF STRENGTH REGULATIONS ARE NOT SUBJECT TO JUDICIAL REVIEW UNDER THE DOCTRINE SET FORTH IN LEEDOM v. KYNE, 358 U.S. 184 (1958) The court of appeals had no difficulty understanding what 12 U.S.C. 1818(i) said, but it went on to conclude that it did not mean what it said. Despite the court's otherwise correct and straightforward reading of the explicit preclusion provision of FISA, 12 U.S.C. 1818(i), the court of appeals proceeded to review the substantive validity of the Board's source of strength regulations under the doctrine enunciated in Leedom v. Kyne, 358 U.S. 184 (1958). As we explain below, the court of appeals invalidated the Board's regulations based on a flawed construction of the interrelated statutory schemes Congress established to empower the Board to supervise bank holding companies' activities regarding subsidiary banks. See pp. 36-45, infra. As a threshold matter, however, the court of appeals erred in misappropriating jurisdiction to reach the merits under Leedom. Such an exercise of jurisdiction -- in the face of FISA's preclusion provision -- should not stand. A. In The Face Of Statutory Judicial Review Provisions, Jurisdiction Under Leedom v. Kyne Is Limited To Exceptional Cases Of Unauthorized Agency Action This Court has emphasized "the painstakingly delineated procedural boundaries of (Leedom v.) Kyne." Indeed, the Court has made plain that the "Kyne exception (to statutory judicial review provisions) is a narrow one." Boire v. Greyhound Corp., 376 U.S. 473, 481 (1964); see Brotherhood of Ry. & S.S. Clerks v. Association for the Benefit of Non-Contract Employees, 380 U.S. 650, 660 (1965). The limited reach of jurisdiction under Leedom v. Kyne is readily apparent in view of the circumstances presented in that case. In Leedom, union representatives challenged a National Labor Relations Board order including both professional and nonprofessional employees within the same collective bargaining unit without the professional employees' consent. 358 U.S. at 186. This Court held that although bargaining unit certifications were not reviewable final orders under the National Labor Relations Act, the district court nonetheless had jurisdiction to consider the union's challenge. Id. at 191. The Court explained that lawsuit was not one to "review," in the sense of that term as used in the (National Labor Relations) Act, a decision of the Board made within its jurisdiction. Rather it is one to strike down an order of the Board made in excess of its delegated powers and contrary to a specific prohibition in the Act. Id. at 188. The Court noted that it could not "lightly infer that Congress does not intend judicial protection of rights it confers against agency action taken in excess of delegated powers." Id. at 190. As a result, the Court concluded that, despite the governing statute's failure to provide for judicial review, Congress intended that the statutory rights violated by the NLRB remain judicially enforceable through the general jurisdiction of the federal courts. Id. at 190-191. B. The Board's Proceedings Under FISA To Enforce The Source Of Strength Regulations Do Not Fall Within The Limited Reach Of Jurisdiction Under Leedom v. Kyne In this case, the Board has only initiated administrative proceedings under FISA to determine whether MCorp has engaged in impermissible banking practices regarding its supervision of subsidiary banks. On the record presented here, the court of appeals' invocation of Leedom v. Kyne to assume jurisdiction to review the validity of the Board's substantive source of strength policy -- despite FISA's explicit preclusion provision -- ignores in several critical respects this Court's limitations on the Leedom doctrine. 1. Leedom neither held nor suggested that federal courts could invoke their "general jurisdiction" to review agency action, particularly where, as here, the governing statute itself provides an exclusive avenue of review that affords a full and complete means of securing judicial vindication of statutory rights. Leedom's jurisdictional holding was largely predicated on the fact that the aggrieved union had no other effective means of obtaining judicial review and thus would have been left without any judicial remedy for a right created by Congress. 358 U.S. at 190-191; see id. at 197 (Brennan, J., dissenting). This Court, however, has recognized that where Congress has provided an avenue of judicial review, that avenue must be followed; as a result, claims of unlawful agency action must be resolved in the manner, time, and forum ordained by Congress. E.g., Whitney Nat'l Bank v. Bank of New Orleans & Trust Co., 379 U.S. 411, 419-423 (1965). For that reason, most other courts of appeals -- contrary to the decision below -- have consistently rejected invocation of jurisdiction under Leedom v. Kyne where Congress has provided alternative means of judicial review of agency action. /21/ Here, Congress has provided companies in MCorp's position an adequate means of obtaining judicial review over any question pertaining to an exercise of the Board's regulatory enforcement power or authority that has binding legal effect. Section 1818(i)(1) is not a "jurisdictional bar." J.A. 22. Rather, that statute provides only that no court shall have jurisdiction to affect any notice or order issued under FISA, "except as otherwise provided in (12 U.S.C. 1818)." 12 U.S.C. 1818(i)(1) (emphasis added). Section 1818, in turn, provides for plenary review of final cease-and-desist orders, stating that any party subject to an order issued after a final decision under FISA may petition for review of that order in the appropriate United States Court of Appeals. 12 U.S.C. 1818(h)(2). Once this jurisdiction is properly invoked, the court of appeals has exclusive jurisdiction to "affirm, modify, terminate, or set aside, in whole or in part, the order of the agency." 12 U.S.C. 1818(h)(2). The court of appeals' assertion of jurisdiction under Leedom v. Kyne thus circumvents the elaborate scheme of judicial review ordained by Congress in FISA. And in so doing, the decision elow improperly frustrates Congress's prerogative to set the time and choose the forum for determining the validity of the Board's cease-and-desist actions. 2. This Court has stressed that jurisdiction under Leedom v. Kyne may not be invoked merely to "review" agency action. Rather, such an exercise of jurisdiction is appropriate only where necessary to remedy action that is manifestly beyond the agency's delegated authority and thus in excess of the agency's jurisdiction. E.g., Brotherhood of Ry. & S.S. Clerks, 380 U.S. at 659, Boire v. Greyhound Corp., 376 U.S. at 481; Leedom v. Kyne, 358 U.S. at 188. The decision below brushed aside this important limitation. Here, the court of appeals acknowledged (J.A. 32-33) that the Board's authority to promulgate and enforce its source of strength regulations ultimately turned on application of step two of the framework set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), because Congress has not spoken to the precise issue at hand. But the very existence of such an issue under the Chevron framework presupposes that the agency therefore has the jurisdiction and delegated authority to construe the meaning of the statutory provision. See, e.g., K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 292-293 (1988); CFTC v. Schor, 478 U.S. 833, 844 (1986). In essence, the court of appeals assumed that any error in an agency's construction of a statute amounts to an ultra vires action subject to judicial review under Leedom. But in analogous circumstances, the Court has flatly rejected that notion: (I)f a discretion is vested in (an executive officer), and he is to act in the light of the facts he ascertains and the judgment he forms, a court cannot restrain him from acting on the ground that he has exceeded his jurisdiction by reason of an error either of fact or law which induced his conclusion. Plainly, therefore, the respondents are wrong in asserting that as the facts set forth in their bill charge the (executive officer) with an error of law, he exceeded his authority. Adams v. Nagle, 303 U.S. 532, 542 (1938); see also Larson v. Domestic & Foreign Corp., 337 U.S. 682, 692-695 (1949) (government officer's tortious action is not necessarily beyond his delegated powers). The same principle holds true for purposes of determining the scope of jurisdiction under Leedom, particularly where, as here, Congress has delineated only precise avenues for judicial review of agency action. Jurisdiction under Leedom is reserved for thos rare instances where the agency violates a clear statutory prohibition. Compare Leedom, 358 U.S. at 187-189 (jurisdiction exercised where challenged administrative action was admittedly contrary to a specific, mandatory prohibition in agency's governing statute). Such circumstances are not present on this record. Rather, as the court of appeals itself recognized, the challenged administrative action is based on the Board's interpretation of statutory terms left undefined by Congress. J.A. 33 ("The Congress has not spoken clearly to what constitutes an unsafe or unsound (banking) practice, leaving the development of the phrase to the regulatory agencies."). Regardless of the validity of the Board's statutory interpretation, the Board had the delegated authority -- indeed the obligation -- to give substantive content to the statutory term "unsafe or unsound" banking practices. Right or wrong, the exercise of that authority -- although ultimately subject to judicial review under the procedures set forth in FISA -- may not be reviewed outside those procedures under the narrow exception set forth in Leedom. 3. In any event, since jurisdiction under Leedom v. Kyne is, as this Court recognized, exercised only to prevent an agency's ultra vires action from destroying otherwise legally cognizable rights, 358 U.S. at 190, such jurisdiction must be predicated on agency action that has binding legal effect on the aggrieved party. The court of appeals, however, invoked Leedom even in the absence of legally binding agency action. In this case, the Board has only filed notices of charges and initiated administrative proceedings; the Board has not found that MCorp violated any federal law or regulation, nor has the Board issued a final cease-and-desist order directing MCorp to take any corrective measures. These preliminary steps are not the sort of final agency actions that constitute cognizable legal injury otherwise subject to judicial review. See FTC v. Standard Oil Co., 449 U.S. 232 (1980); cf. Lujan v. National Wildlife Federation, 110 S. Ct. 3177, 3191 (1990) (under APA, "we intervene in the administration of the laws only when, and to the extent that, a specific 'final agency action' has an actual or immediately threatened effect"). In the absence of such an injury, Leedom v. Kyne offers scant support for federal courts to interfere with ongoing administrative proceedings, particularly where, as here, the lawfulness of such proceedings is fully reviewable upon issuance of a final agency decision (and where the statute, by precluding other avenues of judicial review, effectively calls for the exhaustion of administrative remedies). 4. Finally, if a court is to exercise jurisdiction under Leedom, the legal issues must be ripe for decision. Those issues must be fit for judicial review and not turn on unresolved factual matters or speculation about what the agency might do in the future. See generally Abbott Laboratories v. Gardner, 387 U.S. 136, 148-149 (1967); Lujan v. National Wildlife Federation, 110 S. Ct. at 3190-3191. Here, the court of appeals adverted to these concerns, but determined that the Board's authority to enforce the source of strength policy raises pure questions of law that do not require any further factual development. J.A. 25-26. The court of appeals' own analysis belies that determination. The court of appeals concluded that an order enforcing the source of strength policy exceeds the Board's authority because it would "waste" the holding company's assets, fail to account for the company's separate corporate status, and destroy shareholder rights. J.A. 34. Nothing in the administrative record, however, supports such a conclusion; indeed, given the embryonic stage of the proceedings when the court intervened, there was no administrative record. Rather, the court assumed that any Board enforcement order, regardless of its terms, would have unduly adverse economic effects on the holding company. The economic effects of an enforcement order, however, cannot be evaluated in the absence of (1) a specific remedial order fixing the amount, timing, and terms of a source of strength asset transfer, and (2) an administrative record detailing the economic impact on the holding company. Thus, to the extent the court of appeals viewed the economic impact of a remedial order as relevant to the validity of the source of strength policy, that issue -- on the court's own terms -- was not ripe for judicial review under Leedom. Cf. Williamson Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 199-200 (1985). III. THE FEDERAL RESERVE BOARD HAS STATUTORY AUTHORITY TO PROMULGATE AND ENFORCE ITS SOURCE OF STRENGTH REGULATIONS In invalidating the source of strength regulations, the court of appeals misconstrued the Federal Reserve Board's statutory authority, derived from the Financial Institutions Suprevisory Act, the International Lending Supervision Act, and the Bank Holding Company Act, to supervise bank holding companies' activities regarding subsidiary banks -- particularly where those activities may adversely affect bank safety. The decision below is inconsistent with Congress's delegation of supervisory power to the Board and impermissibly restricts the Board's delegated authority to exercise continuing control and supervision of bank holding company practices that impair the stability of the Nation's banking system. A. FISA and ILSA Authorize Promulgation And Enforcement Of The Board's Source Of Strength Regulations The court of appeals correctly recognized -- as a threshold matter -- that "Congress has not spoken clearly to what constitutes an unsafe or unsound practice, leaving the development of the phrase to the regulatory agencies." J.A. 33; accord Investment Co. Inst. v. FDIC, 815 F.2d 1540, 1550 (D.C. Cir.), cert. denied, 484 U.S. 847 (1987). /22/ Consequently, the Board's conclusion that failure to act as a source of strength to subsidiary banks constitutes an unsafe or unsound practice should be upheld unless it is an unreasonable or impermissible construction of the statute. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. at 844. The Board's source of strength policy is a reasonable and sound interpretation of its statutory duty under FISA to compel bank holding companies to cease and desist from "unsafe or unsound (banking) practices." 12 U.S.C. 1818(b)(1) and (3). 1. As originally enacted in 1966, FISA's authority to remedy unsafe banking practices did not extend to bank holding companies. In 1974, however, Congress expressly specified that this regulatory power "shall apply to any bank holding company." Pub. L. No. 93-495, Tit. I, Section 110, 88 Stat. 1506 (codified at 12 U.S.C. 1818(b)(3)). In reporting out this legislation, the Senate Banking Committee explained that it believes that the principal concern of the Federal supervisory agencies in discharging their responsibilities under the Federal law should be with the soundness of affiliated financial institutions. It is clearly in the public inteest that these institutions remain sound and viable whether operated independently or as part of a holding company system. The cease and desist authority that the Committee recommends will, among other things, help prevent or terminate practices which might result in significant damage to depositors or to public confidence in the financial system. S. Rep. No. 902, 93d Cong., 2d Sess. 10 (1974). Accordingly, the Board has acted well within its delegated authority in determining that an unsafe bank holding company practice should be defined with reference to its impact on affiliated banks. 2. The Board has also reasonably determined that bank holding company activities (or failures to take steps) that allow subsidiary banks' capital reserves to fall below minimally acceptable standards constitute unsafe or unsound banking practices within the meaning of FISA. See 12 U.S.C. 1818(b). Subsidiary banks' safety and stability depend, in large measure, on their capital position. And as this Court has pointed out, "Congress has long regarded capital adequacy as a measure of bank safety." First Lincolnwood Corp., 439 U.S. at 250. For that reason, in ILSA Congress has authorized the Board -- and other federal banking regulatory agencies -- to establish minimum capital levels for financial institutions under their supervision. See 12 U.S.C. 3907(a). Indeed, Congress has made plain that (f)ailure of a banking institution to maintain capital at or above its minimum level * * * may be deemed by the appropriate Federal banking agency, in its discretion, to constitute an unsafe and unsound practice within the meaning of (FISA, 12 U.S.C. 1818). 12 U.S.C. 3907(b). /23/ Where a parent holding company with available assets refuses to alleviate the unsafe condition of an under-capitalized subsidiary bank by making new capital investments, the holding company certaily impairs the soundness of that bank and increases the risk of damage to its depositors, which in turn undermines public confidence in the banking system. Indeed, a bank's ability to obtain capital support from its parent company -- when needed -- is essential to the bank's safety and soundess. The reason is apparent. It is difficult for a bank wholly or substantially owned by a holding company to raise needed capital through its own efforts. Other potential suppliers of new capital to the bank typically have little incentive to make long-term equity investments in an institution that would continue to be controlled and managed by the holding company. If a subsidiary bank's inadequate capital position is to be remedied, its parent company ordinarily must provide the necessary additional capital. 3. The court of appeals' rejection of the Board's source of strength policy -- on the grounds that a parent bank holding company cannot be required to ignore its own separate corporate status, see J.A. 33-35 -- collapses under analysis. First, had Congress intended that the Board uniformly observe a rigid distinction between holding companies and subsidiary banks, it would not have vested the Board with the power, under FISA, to rectify holding company practices that adversely affect bank safety. Moreover, for purposes of assessing the effect of holding company conduct on the financial soundness of subsidiary banks, the strict separation of corporate entities demanded by the court of appeals' reasoning is belied by the economic realities of holding company operations. A holding company's subsidiary banks are -- by definition -- under the holding company's ownership or control. As expert observers have pointed out, a bank holding company under the current regulatory framework, in some respects, functions as a single economic entity. /24/ The holding company may well be separately incorporated, but that separate corporate status does not prevent it from deriving considerable economic benefits from its subsidiary banks. Indeed,the holding company derives distinct commercial advantages from control of institutions that, through their power to accept federally insured deposit, have the ability to attract capital and to make profitable loans and investments. The Board's source of strength policy ensures that the relationship between the holding company and its banks does not become a one-way street permitting the holding company to derive the full benefit of federal deposit insurance and to maximize its own economic advantage without imposing correlative obligations to preserve bank safety or to prevent injury to depositors and the federal insurance system. In any event, a key factual premise of the court of appeals' "separate corporation" analysis -- that a transfer of funds from the holding company to a trouble subsidiary would amount to a wasting of the holding company's assets, see J.A. 34 -- is made from whole cloth. If such a transfer were to occur, the holding company would continue to control the bank after aditional capital has been provided. The primary effect of this new capital is to give the bank additional protection against further losses, to increase public confidence in the institution, and thus to minimize the chance that the bank would be closed. Rather than depleting holding company resources, the anticipated result of the holding company's recapitalization of a troubled subsidiary -- and the purpose of the Board's policy -- is the preservation of the bank as a going concern (often the most important asset of the parent company). Moreover, in enacting FIRREA, Congress recently amended FISA's cease-and-desist authority to make clear that the Board is empowered to order holding companies to divest themselves of assets or "take such other action as (the Board) determines to be appropriate." Pub. L. No. 101-73, Tit. IX, Section 902, 103 Stat. 450 (1989). In reporting out this legislation, the House Conference Committee explained that it "clarifies (a banking agency's authority) to order restitution or reimbursement" of a subsidiary and to restrict "specific activities of a financial institution." H.R. Conf. Rep. No. 222, 101st Cong., 1st Sess. 439 (1989). FIRREA's amendment to FISA, effective upon enactment and thus applicable to MCorp's current operations, thus confirms that the Board has broad authority to order disposition of assets or other actions deemed necessary to bank safety. B. The BHCA Further Supports The Board's Promulgation And Enforcement Of The Source Of Strength Regulations The Bank Holding Company Act -- particularly its provision empowering the Board to consider the "future prospects" of subsidiary banks when approving acquisitions, 12 U.S.C. 1842(c) -- further supports the Board's source of strength regulations. In First Lincolnwood Corp., 439 U.S. at 249-252, this Court held that Section 3(c) of the BHCA, 12 U.S.C. 1842(c), authorizes the Board, when reviewing a proposed bank acquisition, to consider whether a holding company can act as a source of strength to a subsidiary bank. Here, the court of appeals, in light of First Lincolnwood, limited the reach of Section 1842(c) to the acquisition stage. See J.A. 29-31. That limitation is at odds with the statutory scheme of the BHCA, which vests the Board with broad powers to regulate holding companies' ongoing banking practices, and purports to render First Lincolnwood much ado about nothing. 1. At the outset, unless the Board can impose on holding companies a continuing obligation to act as sources of strength to subsidiary banks, the Board's undisputed power under Section 1842(c) to consider holding companies' resources when reviewing bank acquisitions would have virtually no impact on bank safety. /25/ Such a state of affairs would be inconsistent with the mandate of Section 1842(c) that requires the Board to consider the "future prospects" of banks that may come under the holding company's control. Indeed, the Board's express statutory power to base the approval of a bank acquisition on the holding company's ability to protect the capital position of a proposed subsidiary would be nullified if the holding company has no continuing obligation to fulfill that requirement once the bank acquisition is completed. We recognize that Section 1842(c), by its terms, does not empower the Board to consider the holding company's continuing compliance with the terms and conditions of the acquisition. Nonetheless, the Board, under 12 U.S.C. 1844(b), has express authority to "issue such regulations and orders as may be necessary to enable it to administer and carry out the purposes of (the BHCA) and prevent evasions thereof" (emphasis added). Accordingly, the Board may reasonably regard a holding company's failue to adhere to the requirements governing its initial acquisition as an evasion of the purposes of the BHCA -- an evasion that is remediable as an unsafe and unsound banking practice under FISA, 12 U.S.C. 1818(b)(1). /26/ 2. The entire statutory scheme and the BHCA governing the Board's authority over holding companies reflects Congress's intent that the Board exercise ongoing supervisory powers over holding company operations that affect the stability of subsidiary banks. Accordingly, Congress gave the Board power to examine the financial transactions and records of each holding company and subsidiary, see 12 U.S.C. 1844(c) -- a power this Court has characterized as "perhaps the most effective weapon of federal regulation of banking." United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 329 (1963). In addition, Congress authorized the Board to curtail holding companies' ability to engage in "nonbank" activities that pose risks to the financial stability of subsidiary banks. See 12 U.S.C. 1843, 1844(e). These statutory provisions -- among others /27/ -- show that Congress plainly intended to vest the Board with broad and substantial powers to regulate holding company practices that bear directly on the day-to-day integrity of banking subsidiaries. Cf. Toilet Goods Ass'n v. Gardner, 387 U.S. 158, 163 (1967). The Board's source of strength regulations thus further Congress's overarching objective of "assur(ing) that financial institutions are not endangered with respect to activities engaged in by parent holding companies." S. Rep. No. 902, supra, at 10. C. Congress's Repeal Of Shareholder Assessment Provisions Of The National Bank Act Does Not Undermine The Validity Of The Board's Source Of The Board's Source Of Strength Regulations MCorp contends (90-913 Br. in Opp. 5-9) that the socalled "shareholder assessment" provisions of the National Banking Act, which Congress had repealed over 30 years ago, show that Congress had no intention of conferring similar authority on the Board under the guise of source of strength regulations. That contention is wide of the mark. First, actions of the Congresses that repeal provisions of the National Bank Act have no bearing on this case, since those Congresses assuredly did not enact the statutory provisions at issue, namely, the pertinent aspects of the BHCA, FISA, and ILSA. See pp. 2-6, supra. Second, MCorp's equating the regulatory regimes of "shareholder assessment" and source of strength is a slight of hand. Under the National Bank Act, shareholder assessments were to be collected only after the bank had failed, in order to reduce losses incurred by the bank's creditors. /28/ The Board's source of strength policy, in stark contrast, is remedial. That policy seeks to prevent bank failures -- and the resulting losses to depositors and other creditors -- by requiring the bank's parent holding company to provide needed capital before the bank fails. CONCLUSION The judgment of the court of appeals vacating the district court's injunction with respect to proceedings on the Board's Section 23A charges should be affirmed. The judgment of the court of appeals remanding the case with instructions to enjoin proceedings on the Board's source of strength charges should be reversed. Respectfully submitted. KENNETH W. STARR Solicitor General STUART M. GERSON Assistant Attorney General JOHN G. ROBERTS, JR. Deputy Solicitor General MICHAEL R. LAZERWITZ Assistant to the Solicitor General ANTHONY J. STEINMEYER JEFFREY A. CLAIR Attorneys JAMES V. MATTINGLY, JR. General Counsel RICHARD M. ASHTON Associate General Counsel Board of Governors of the Federal Reserve System APRIL 1991 /1/ The BHCA empowers the Board to "issue such regulations and orders as may be necessary to enable it to administer and carry out the purposes of (the Act) and prevent evasions thereof." 12 U.S.C. 1844(b). /2/ FISA and the Board's implementing regulations establish comprehensive procedures for exercising these enforcement powers. The statute requires sufficient notice to the holding company of the underlying charge, an evidentiary hearing before an independent presiding official, and a decision based on the hearing record. 12 U.S.C. 1818(b)(1), (b)(3), 1818(h). Board regulations further provide that the holding company may appear through counsel, compel the attendance of witnesses and the production of documents, adduce any relevant and material evidence, cross-examine adverse witnesses, and present its position through written submissions and oral arguments. 12 C.F.R. 263.1 et seq. /3/ See, e.g., Citizens Bancorporation, 61 Fed. Res. Bull. 806, 806 (1975); Midwest Bancorporation, Inc., 56 Fed. Res. Bull. 948, 950 (1970); Mid-Continent Bancorporation, 52 Fed. Res. Bull. 198, 200 (1966). /4/ In particular, the Board alleged that it had reasonable cause to believe that MCorp will not take the actions that are necessary (1) to prevent the substantial dissipation of corporate assets through cash dividends, and (2) to maintain and prevent the dissipation of available resources at the parent company level that could be used, where appropriate, to make immediate capital injections into the Subsidiary Banks. J.A. 63. In the amended notice of charges filed one week later, the Board also alleged that it had reasonable cause to believe that "MCorp will not take the actions that are necessary * * * to use all available resources to make immediate capital injections into the Subsidiary Banks." J.A. 80-81. /5/ MCorp later filed a separate federal court action against the Comptroller of the Currency and the FDIC, alleging that the closing of 12 of its subsidiary banks violated the National Bank Act. On February 1, 1991, the district court entered an order granting MCorp's motion for partial summary judgment. MCorp v. Clarke, No. CA3-89-0831-F (N.D. Tex. Feb. 1, 1991). That case remains pending before the district court. /6/ The voluntary and involuntary bankruptcy proceedings were later consolidated in the Southern District of Texas. J.A. 14. /7/ Given the divestiture of MCorp's interest in the banks declared insolvent by the Comptroller, MCorp had no further obligation to act as a source of strength to those banks. /8/ Alternatively, the court determined that "the Board's generalized, diffuse interest in the holding company as well as the duplicative, distracting hearings militate for its being not exempt from the (automatic stay provisions of the Bankruptcy Code, 11 U.S.C. 362)." J.A. 48. Moreover, the court held that it had general equitable power under 11 U.S.C. 105 to enjoin the Board's proceedings that would threaten MCorp's assets or otherwise impede MCorp's reorganization. J.A. 48-49. /9/ As a threshold matter, the court rejected the argument that MCorp may not challenge the Board's authority because it has not exhausted its administrative remedies. In the court's view, "(t)he sole question presented is a legal one * * * (and that) legal issue * * * can be resolved without further factual development." J.A. 25-26. /10/ The court suggested that the Board was not necessarily without an adequate alternative to its "source of strength" regulations. In its view, "(a)s a condition to approving an application, the Board could possibly require the holding company to agree to maintain the subsidiary banks to some degree of financial (s)oundness." J.A. 31-32 n.5 (noting similar practice of the Office of Thrift Supervision). /11/ In this regard, the court noted that Congress, in enacting and amending the BHCA in 1956 and 1966, "set forth detailed limits on transactions considered unsound between subsidiary banks and holding companies, without mentioning the infusion of capital by holding companies into subsidiaries." J.A. 35. /12/ On August 6, 1990, the court of appeals denied the Board's petition for rehearing and suggestion of rehearing en banc. 90-913 Pet. App. 27a-28a. On August 23, the court of appeals denied MCorp's motion for a stay of the mandate. On remand from the court of appeals, the district court in November 1990 entered an order enjoining the Board from among other activities, prosecuting its outstanding source of strength administrative charges against MCorp. Injunction on Remand Paragraph 4, MCorp v. Board of Governors, No. H-89-1677 (S.D. Tex. Nov. 8, 1990). In January 1991, the district court issued a modified injunction retaining that prohibition. J.S. 222; see id. at 219, 220-224. MCorp, through the pending bankruptcy proceedings, has been pursuing plans to sell each of its remaining five subsidiary banks. To date, MCorp has sold two of those banks. See 90-913 Br. in Opp. 3. MCorp has also executed contracts to sell two of its three remaining banks. Those contracts have no yet received the requisite approvals from either the bankruptcy court or the appropriate federal banking regulators. /13/ As originally enacted in 1966, FISA's authority to remedy unsafe banking practices applied principally to federally insured banks and did not extend to bank holding companies. See Act of Octcober 16, 1966, Pub. L. No. 89-695, Section 201, 80 Stat. 1046. /14/ Once a petition for review is filed, FISA provides that the court of appeals' jurisdiction shall be "exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the agency." 12 U.S.C. 1818(h)(2). The sole exception to this exclusive jurisdiction is limited to instances where the Board, with the court's permission, modifies, terminates, or sets aside its order. See 12 U.S.C. 1818(h)(1) and (2). /15/ Where Congress intended the bankrupcy courts to exercise equitable jurisdiction previously withheld by statute, it said so. For example, in enacting 11 U.S.C. 105, which grants the bankruptcy court the power to issue orders necessary to carry out the purposes of the Bankruptcy Code, Congress noted its intent to carve out an exception to the anti-injunction provisions of 28 U.S.C. 2283, and to authorize injunction staying actions in state court H.R. Rep. No. 595, 95th Cong., 1st Sess. 317 (1977); see also 28 U.S.C. 1334(b) (conferring concurrent bankruptcy jurisdiction over civil proceedings otherwise committed to the exclusive jurisdiction of another court). MCorp can point to no similar expressions of Congress's intent to repeal FISA's anti-injunction provisions, let alone evidence of the "clear intention" that is required. Crawford Fitting, 482 U.S. at 445. /16/ See, e.g., Webster's Third New International Dictionary 1913 (1986) (defining "regulate" as "to govern or direct according to rule"); FPC v. Corporation Comm'n, 362 F. Supp. 522, 532 (W.D. Okla. 1973) ("The primary meaning of the word 'regulate' is to lay down the rule by which a thing shall be done."); see 5 U.S.C. 551(4) (defining "rule," for purposes of the Administrative Procedure Act, as "an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy * * * and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof"). /17/ See, e.g., Edleman v. Department of Labor, 923 F.2d 782, 790-791 (10th Cir. 1991) (Department of Labor action to enforce minimum wage standards of Service Contract Act exempt from automatic stay); In re Commonwealth Cos., 913 F.2d 518, 521-526 (8th Cir. 1990) (government's action under the False Claims Act exempt from automatic stay); Brock v. Rusco Indus., Inc., 842 F.2d 270, 273 (11th Cir.) (action under Fair Labor Standards Act to recover unpaid minimum wages exempt from automatic stay), cert. denied, 488 U.S. 889 (1988); In re Berry Estates, Inc., 812 F.2d 67, 71 (2d Cir.) (rent control proceedings exempt from automatic stay), cert. denied, 484 U.S. 819 (1987); NLRB v. Edward Cooper Painting, Inc., 804 F.2d 934, 942 (6th Cir. 1986) (NLRB unfair labor practice proceedings exempt from automatic stay); Cournoyer v. Town of Lincoln, 790 F.2d 971, 974-977 (1st Cir. 1986) (action to enforce zoning restrictions exempt from automatic stay); CFTC v. Co Petro Marketing Group, Inc., 700 F.2d 1279, 1283-1284 (9th Cir. 1983) (CFTC action to enjoin violations of Commodity Exchange Act exempt from automatic stay); SEC v. First Financial Group, 645 F.2d 429, 437 (5th Cir. 1981) (SEC proceeding to enjoin fraudulent sales of securities exempt from automatic stay). /18/ Section 1334(d) provides: The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction of all of the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate. /19/ The bankruptcy courts' exclusive jurisdiction over the debtor's property can be traced back as far as the Bankruptcy Act of 1898. As one commentator has explained: The jurisdiction of the bankruptcy court under the (1898) Act was in rem, and turned (absent consent of an adverse party) upon custody or possession of the court. If the property of the bankrupt were in the possession of the court * * * the bankruptcy court had the jurisdiction to determine rights and interests of contending parties in and to that property. Without possession, jurisdiction was absent. 1 Collier Bankruptcy Manual Paragraph 3.01, at 3-11 (3d ed. 1990); see, e.g., Cline v. Kaplan, 323 U.S. 97, 98-99 (1944); Thompson v. Magnolia Co., 309 U.S. 478, 481-482 (1940); Murphy v. John Hofman Co., 211 U.S. 562, 568-570 (1909). /20/ See, e.g., In re Heritage Village Church & Missionary Fellowship, Inc., 851 F.2d 104, 105-106 (4thCir. 1988); United States v. Huckabee Auto Co., 783 F.2d 1546, 1549 (11th Cir. 1986); Briggs Transp. Co. v. International Bhd. of Teamsters, 739 F.2d 341, 343-344 (8th Cir.), cert. denied, 469 U.S. 917 (1984); In re Crowe & Assocs., Inc., 713 F.2d 211, 214-216 (6th Cir. 1983); In re Petrusch, 14 Bankr. 825, 829 (N.D.N.Y. 1981), aff'd per curiam, 667 F.2d 297 (2d Cir.), cert. denied, 456 U.S. 974 (1982). /21/ See, e.g., Telecommunications Research & Action Center v. FCC, 750 F.2d 70, 78 (D.C. Cir. 1984); Quivira Mining Co. v. EPA, 728 F.2d 477, 484 (10th Cir. 1984), cert. denied, 474 U.S. 1055 (1986); Compensation Dep't v. Marshall, 667 F.2d 336, 343-344 (3d Cir. 1981); Nor-Am Agricultural Prods., Inc. v. Hardin, 435 F.2d 1151, 1159-1160 (7th Cir. 1970) (en banc), cert. dismissed, 402 U.S. 935 (1971); but see Greater Detroit Resource Recovery Auth. & Combustion Eng'g v. EPA, 916 F.2d 317, 323 (6th Cir. 1990). /22/ In considering FISA, Congress relied on the memorandum submitted by the then Chairman of the Federal Home Loan Bank Board, John Horne. Chairman Horne, in commenting on the proposed legislation, noted that the term "unsafe or unsound" practice would necessarily have a flexible application adapted to the circumstances of each case. 112 Cong. Rec. 26,474 (1966). See also 112 Cong. Rec. 25,007-25,008 (1966). /23/ In ILSA,Congress thus spoke to the concern that "(i)f certain capital ratios were essential for sound banking operations, and if the Comptroller is unable to achieve them, then the Board should be given power to require them by a general rule or standard applicable to all banks." First Lincolnwood Corp., 439 U.S. at 257 (Stevens, J., dissenting). In ILSA, Congress gave the Board explicit authority to set capital standards for holding companies and to enforce those standards by means of cease-and-desist proceedings under FISA. Since Congress directed the Board to ensure the "soundness of affiliated financial institutions," S. Rep. No. 902, supra, at 10, in exercising its power under FISA, the Board cannot be faulted for concluding that its authority to regulate a holding company's capital reserves includes the authority to ensure that those capital reserves are used to protect the safety of subsidiary banks. Indeed, it is difficult to conceive of any other purpose for Congress's authorizing the Board to regulate a holding company's capital adequacy. /24/ For example, then Chairman of the Federal Reserve Board, Paul Volcker, recently told Congress: "(T)he practical realitites of the market place and the internal dynamics of a business organization under central direction drive bank holding companies to act . . . as one business entity, with the component parts drawing on each other for marketing and financial strength. Certainly the market conceives of a bank holding company and its components in that way. And if market participants tend to consider the bank holding company as an integrated entity, problems in one part of the system will inevitably be transmitted to other parts." S. Rep. No. 19, 100th Cong., 1st Sess. 9 (1987); see also Mayne, New Directions in Bank Holding Company Supervision, 95 Banking L.J. 729, 730-732 (1978). /25/ The court of appeals stated that "(a)s a condition to approving an application, the Board could possibly require the holding company to agree to maintain the subsidiary banks to some degree of financial (s)oundness." J.A. 31-32 n.5. The court's equivocal statement offers the Board little solace, since the Board -- under the court's holding -- would still lack any statutory basis for enforcing the source of strength policy against the thousands of banks that are already under holding company control. /26/ As originally enacted, the BHCA's restrictions on the transfer of funds among holding company affiliates did not expressly except regulatory orders mandating recapitalization of deficient banks. Bank Holding Company Act of 1956, ch. 240, Section 6, 70 Stat. 137, repealed by Act of July 1, 1966, Pub. L. No. 89-485, Section 9, 80 Stat. 240. But that is no indication that Congress intended to deprive the Board of authority under FISA to require such recapitalization in appropriate circumstances. Congress designed the now-repealed BHCA restrictions on inter-company transactions only to prevent a holding company from initiating transactions that unduly disadvantaged the resources of the subsidiary bank. See S. Rep. No. 1095, 84th Cong., 1st Sess. Pt. 1, at 15 (1955). /27/ As mentioned above, under ILSA, the Board has authority to establish minimum capital requirements for holding companies where necessary to promote bank safety. See 12 U.S.C. 3907, 3909(a)(2); 12 C.F.R. 263.35-263.40. And under FISA, the Board can order holding companies to cease and desist from engaging in unsafe banking practices. See 12 U.S.C. 1818(b). /28/ See Act of June 3, 1864, ch. 106, Sections 12, 50, 13 Stat. 102-103, 114-115; see also Act of Dec. 23, 1913, ch. 6, Section 25, 38 Stat. 273. APPENDIX