How FIRREA targets individuals.

As regulators interpret and apply the Financial Institutions Reform, Recovery and Enforcement Act, it would be easy to call 1990 the Regulatory Year of the Individual.

Many of the new enforcement powers granted to federal banking regulators by FIRREA focus on individuals-bankers and others-according to Herbert A. Biern, assistant director-enforcement in the Federal Reserve Board's Division of Banking Supervision and Regulation. Biern led off a panel called "Banking: A Public Trust" at ABA'S recent National Conference for Compliance Managers, Bank Counsel, and Auditors.

Biern noted that FIRREA expanded regulators' jurisdiction to include not only banks and bankers, but also "institution-affiliated parties." This includes employees, shareholders, consultants, independent contractors (including the "three As"-attorneys, appraisers, and accountants), joint-venture partners, and others. Biern said federal examiners are already receiving special training to better equip them to look into matters involving the three As.

The regulator said FIRREA also gave the Fed more authority over individuals affiliated with foreign institutions, as well as the institutions themselves. A major reason behind this step was to give the Fed leverage to force foreign institutions to put in more controls against money laundering, said Biern. Mini C&D. Biern, who sits on an interagency enforcement group, gave several examples of new powers that enable regulators to focus on individuals' activities.

One is a new version of the traditional regulatory power to issue "cease and desist" orders that Biern termed the mini removal authority." While regulators had the ability to bar an officer or employee from banking, Biern said, this sometimes amounted to "dropping the atom bomb on an individual to solve one particular kind of problem."

The new C&D" power enables regulators to bar an individual from a specific type of action, rather than all involvement in banking. As an example of this, Biern recounted the true story of a bank CEO who examiners found was an excellent manager-but an awful lender. Rather than strip the bank of the CEO'S management skills, he said, the Fed used the limited C&D power to bar him from involvement in loan decisions. The banker is complying with the order and still running his bank.