Page:Calcutt v. FDIC.pdf/2

2 presented; reverse the judgment of the Sixth Circuit; and order that court to remand this matter to the FDIC so it may reconsider petitioner’s case anew in a manner consistent with this opinion.

Under §8(e) of the Federal Deposit Insurance Act (FDIA), 12 U. S. C. §1818(e), as amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, §903, 103 Stat. 453, the FDIC may remove and prohibit individuals from working in the banking sector if certain conditions are met. First, the FDIC must determine that an individual committed misconduct. That occurs when, as relevant here, the individual has “engaged or participated in any unsafe or unsound practice,” or breached his “fiduciary duty.” §§§ [sic]1818(e)(1)(A)(ii)–(iii). Second, the FDIC must find that a bank or its depositors were harmed, or that the individual personally benefited, “by reason of” the individual’s misconduct. §1818(e)(1)(B). Finally, the individual’s misconduct must “involv[e] personal dishonesty” or “demonstrat[e] willful or continuing disregard … for the safety or soundness” of the bank. §1818(e)(1)(C).

In this case, the FDIC brought an enforcement action under these provisions against petitioner Harry C. Calcutt, III. From 2000 to 2013, Calcutt served as CEO of Northwestern Bank, headquartered in Traverse City, Michigan. During Calcutt’s tenure, the Bank developed a lending relationship with the Nielson Entities, a group of 19 family-owned businesses that operate in the real estate and oil industries. In 2009, the lending relationship—by then, the Bank’s biggest—began to sour. On September 1 of that year, facing financial difficulties due to the Great Recession, the Entities stopped paying their loans outright. At the time, they owed the Bank $38 million.

A few months later, the parties reached a multistep agreement known as the Bedrock Transaction to bring all