text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Lending Enhancement Through 
  Necessary Due Process Act''.
  
  SEC. 2. FINDINGS.
  
      The Congress hereby finds the following:
              (1) Excessive and groundless litigation against innocent 
          directors and officers of failed financial institutions is 
          adversely affecting the national economy by creating an 
          environment where bankers are reluctant to make loans.
              (2) The efforts by Federal banking regulators to impose 
          liability on bank officials for good faith business decisions 
          is impeding our banking system by making it difficult for 
          financial institutions to attract officers and directors.
              (3) Since 1989, Federal regulators have used enhanced 
          powers to pursue not only culpable individuals but also 
          countless innocent people who are targeted because of their 
          financial condition.
              (4) Tactics used by regulators to induce settlements 
          include the threat of attachment of assets and the use of 
          taxpayer-funded outside fee counsel to file lawsuits, the costs 
          of which often bankrupt individuals trying to clear their 
          names.
              (5) Reform of the banking laws are needed to curtail 
          regulatory abuse and to ensure that directors and officers have 
          due process protections and the ability to make good faith 
          lending decisions.
  
  SEC. 3. FACTORS AND STANDARDS FOR CERTAIN ENFORCEMENT PROCEEDINGS.
  
      Section 8(i) of the Federal Deposit Insurance Act (12 U.S.C. 1818) 
  is amended by adding at the end the following new paragraphs:
              ``(5) Affirmative defenses applicable with respect to 
          certain administrative and judicial proceedings.--In the 
          determination of whether any director, officer, or institution-
          affiliated party of an insured depository institution has 
          committed any violation or breach of duty for purposes of this 
          section or section 11(k), the following affirmative defenses 
          shall be available to the director, officer, or institution-
          affiliated party in any civil action against the director, 
          officer, or party before a Federal banking agency or a court of 
          jurisdiction:
                      ``(A) Business judgment.--A director, officer, or 
                  institution-affiliated party of an insured depository 
                  institution shall not be deemed to have committed any 
                  violation or breach of duty in the making of any 
                  business judgment (without regard to whether such 
                  business judgment is later determined to have been in 
                  error), if--
                              ``(i) in a case in which the director, 
                          officer, or institution-affiliated party had an 
                          interest in the subject of the business 
                          judgment, the director, officer, or party--
                                      ``(I) disclosed that interest at or 
                                  before the time the business judgment 
                                  was made; or
                                      ``(II) abstained from any vote 
                                  taken in connection with such business 
                                  judgment or from otherwise 
                                  participating in making the business 
                                  judgment;
                              ``(ii) at or before the time the business 
                          judgment was made, the director, officer, or 
                          institution-affiliated party made such inquiry 
                          about the subject of the business judgment as a 
                          reasonably prudent person would have made under 
                          the circumstances;
                              ``(iii) after being put on reasonable 
                          notice of a need to act, the director, officer, 
                          or institution-affiliated party took such 
                          actions as a reasonably prudent person would 
                          have taken under the circumstances; and
                              ``(iv) the director, officer, or 
                          institution-affiliated party acted in good 
                          faith.
                      ``(B) Regulatory approval.--A director, officer, or 
                  institution-affiliated party of an insured depository 
                  institution shall not be deemed to have committed any 
                  violation or breach of duty if any examiner or other 
                  representative of an appropriate Federal banking agency 
                  or State bank supervisor, upon full and accurate 
                  disclosure of the relevant facts, approved the good 
                  faith practice, action, or omission which is alleged to 
                  be the violation or breach, whether or not such 
                  approval was communicated to the director, officer, or 
                  institution-affiliated party or any other person at 
                  such institution.
                      ``(C) Unforeseeable economic conditions.--A 
                  director, officer, or institution-affiliated party of 
                  an insured depository institution shall not be deemed 
                  to have committed any violation or breach of duty if--
                              ``(i) unforeseeable economic conditions, 
                          which develop after the occurrence of the 
                          practice, action, or omission which is alleged 
                          to be a violation or breach, were the proximate 
                          cause of any loss experienced by the 
                          institution; and
                              ``(ii) the director, officer, or 
                          institution-affiliated party acted in good 
                          faith.
              ``(6) Minimum standard for order of production of personal 
          financial information.--
                      ``(A) In general.--Except as provided in 
                  subparagraph (B), a Federal banking agency, including 
                  the Resolution Trust Corporation in such corporation's 
                  capacity as conservator or receiver of an insured 
                  depository institution, may not seek to obtain, 
                  directly or indirectly, and no court (with respect to 
                  any request from any such agency or corporation) may 
                  order the production of, the personal financial records 
                  of any person for the agency unless the head of the 
                  agency or corporation (or the designee of the head of 
                  the agency or corporation), submits a written finding 
                  which is disclosed to such person and certified to an 
                  appropriate court of jurisdiction, and the court 
                  through a de novo finding determines, that the agency 
                  has reasonable cause to believe that--
                              ``(i) the person whose records are being 
                          sought has committed a violation for which a 
                          civil penalty may be imposed under paragraph 
                          (2) or has breached a duty owed to an insured 
                          depository institution; and
                              ``(ii) the person's financial condition is 
                          undergoing or is likely, within 6 months of the 
                          date of the request for the production of 
                          financial records, to undergo a material 
                          change.
                      ``(B) Exception.--Subparagraph (A) shall not apply 
                  with respect to a request for the production of 
                  financial records by an appropriate Federal banking 
                  agency of any person--
                              ``(i) in connection with an investigation 
                          of the person by the agency pursuant to section 
                          7(j); or
                              ``(ii) after an administrative or judicial 
                          determination, on a record after opportunity 
                          for agency hearing, that the person has 
                          committed a violation for which a civil penalty 
                          may be assessed under paragraph (2).''.
  
  SEC. 4. DUE PROCESS PROTECTIONS RELATING TO ATTACHMENT OF ASSETS.
  
      Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) is 
  amended--
              (1) by striking subsection (i)(4)(B) and inserting the 
          following new subparagraph:
                      ``(B) Standard.--
                              ``(i) Showing.--Rule 65 of the Federal 
                          Rules of Civil Procedure shall apply with 
                          respect to any proceeding under subparagraph 
                          (A).
                              ``(ii) State proceeding.--If, in the case 
                          of any proceeding in a State court, the court 
                          determines that rules of civil procedure 
                          available under the laws of such State provide 
                          substantially similar protections to such 
                          party's right to due process as Rule 65 of the 
                          Federal Rules of Civil Procedure, the relief 
                          sought under subparagraph (A) may be requested 
                          under the laws of such State.''; and
              (2) in subsection (b), by adding at the end the following 
          new paragraph:
              ``(10) Standard for certain orders.--No authority under 
          this subsection or subsection (c) to prohibit any institution-
          affiliated party from withdrawing, transferring, removing, 
          dissipating, or disposing of any funds, assets, or other 
          property may be exercised unless the agency meets the standards 
          of Rule 65 of the Federal Rules of Civil Procedure.''.
  
  SEC. 5. DIRECTOR AND OFFICER LIABILITY.
  
      Section 11(k) of the Federal Deposit Insurance Act (12 U.S.C. 
  1821(k)) is amended by adding at the end the following new sentence: 
  ``Notwithstanding the preceding sentence, a civil action for monetary 
  damages for losses due to a disregard of a duty of care may not be 
  brought against any director or officer of any insured depository 
  institution by the Corporation in any capacity described in clause (1), 
  (2), or (3) of the 1st sentence of this subsection under any provision 
  of State law, unless the standard of disregard required to be 
  demonstrated under such provision of law is as great or greater than 
  the standard described in the 1st sentence.''.
target: Lending Enhancement Through Necessary Due Process Act - Amends the Federal Deposit Insurance Act to make the following affirmative defenses available to a director, officer, or institution-affiliated party of an insured depository institution facing a civil action before a Federal banking agency or a court of jurisdiction:  (1) business judgment; (2) regulatory approval; and (3) unforeseeable economic conditions. 
  Sets forth a minimum standard for the order of production of personal financial information by a regulatory agency or court. 
  Declares the Federal Rules of Civil Procedure relating to prejudgment attachment of assets applicable to Federal banking regulatory agencies. 
  Prohibits the Federal Deposit Insurance Corporation from bringing a civil action under State law against an officer or director of an insured depository institution for monetary damages for losses due to a disregard of a duty of care unless the State standard for such duty is as great or greater than the Federal standard.
feat_title: Lending Enhancement Through Necessary Due Process Act