Section 19 of the FDIA (Federal Deposit Insurance Act) allows banks and other financial institutions to bar prospective employees who have had certain “Breach of Trust” convictions from jobs that they are otherwise qualified for even if they had the conviction expunged. If a FDIC ( Federal Deposit Insurance Corporation) backed company, such as a bank or other financial institution, was to hire an employee who had one of these convictions on their record, expunged or not, they could face a daily fine of $1,000,000 for every day the employee works for the company. (12 U.S.C. § 1829(b))

 

Within Section 19 of the FDIA regulations, there is an exception that allows a financial institution to hire an employee despite the employee having a “breach of trust” conviction on his criminal record. (12 U.S.C. § 1829(a)(2))

 

This usually occurs when a financial institution is attempting to bring in a high-end employee for a top tier position. In this situation, the financial institution is allowed to petition on behalf of the individual directly to the FDIC for a bypass of Section 19 of the FDIA. Banks tend to only do this procedure for very important business candidates.

 

If you have a “breach of trust” conviction and were denied a job with a financial institution because of that conviction, there still is another possible way to obtain that job. Financial institutions fail to alert denied candidates that if they meet certain requirements, they are allowed to petition directly to the FDIC on their own behalf for a bypass of Section 19. It is a two-step process that first requires petitioning to the regional FDIC office and then the FDIC national headquarters.

 

However, not everyone is eligible to petition and obtain a waiver. It is important to speak with an attorney about your specific circumstances to see if you would qualify for such a waiver from the FDIC.

 

If a waiver is granted at the regional FDIC office level, the petitioner is then allowed to move on to the second stage and petition to the FDIC headquarters for a bypass of Section 19 of the FDIA. This step is much more difficult for an unrepresented party to accomplish on their own as several legal standards must be met within the petition in order for the petition to be granted. A successfully granted petition will provide the petitioner with an order allowing them to bypass the Section 19 “breach of trust” rule on past convictions.

 

This person could then show the FDIC backed entity their Section 19 bypass order and would then be fully considered for employment.

 

Answers to common questions

  1. How long does it take to complete an appeal?
    Typically, it is taking anywhere from 9-12 months to complete the entire process. This is because the petition must first go to the proper regional FDIC office, where they must approve it before it can go on the the FDIC headquarters in Washington DC for final approval.
  2. What is the typical cost?
    There are two stages to this process so the cost is broken down into two payments. We typically charge $1500 to assemble the petition, send it off, and deal with the regional FDIC office. If approved at the regional FDIC office, the petition then has to go to the FDIC headquarters office in DC and additional documents are needed. This requires a second charge of $1000. This includes all filing fees, costs, and postage. The only way these numbers will change is if your case requires special attention due to exigent circumstances or if your petition is denied at either level and you would like to appeal the FDIC ruling.
  3. What are the chances of success?
    The chances of success vary greatly on a case to case basis. The older the case is and the less severe the case or cases are, the better the chances of success.