California Decision Distorts Bank Liability Under FIRREA
By Ben Singer ( July 17, 2018, 1:21 PM EDT) -- On July 2, 2018, a federal district court in California held that the alleged misconduct of a former bank employee "affected" the bank for purposes of the Financial Institutions Reform, Recovery, and Enforcement Act, making the 10-year statute of limitations in 18 U.S.C. § 3293(2) applicable to an otherwise time-barred offense. In doing so, the court (1) became the first court outside the Second Circuit to endorse the so-called "self-affecting" theory of liability, in which the government uses FIRREA to impose civil or criminal liability on a bank or one of its employees for committing a fraud that "affects" that bank, and (2) enumerated new types of FIRREA-liability triggering "effects," including the government's agreement to decline to prosecute the bank....
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