it finds that institution engaging in unsafe and unsound practices. Here, the Rule "requires Board supervision of the exercise of those powers, with input from state authorities, only when the level of investment may pose significant risk to the FSLIC fund or may be detrimental to, or incompatible with, economical home financing." 52 Fed. Reg. 8188 (1987). This is not an unreasonable intrusion upon the exercise of state granted powers by state-chartered, federally-insured thrifts. The concept of dual regulation simply does not require the Board to abdicate its responsibility to carry out the purposes that Congress intended in creating an insurance-of-accounts system; rather, it requires proper respect for state regulatory autonomy within the framework, purposes, and objectives of the system.
Lincoln, however, wants more than a functioning system of home financing that properly respects state regulatory autonomy. It seeks to have the best of both worlds. On the one hand, it wants to be governed solely by California regulations which permit it unlimited direct investment without regard to the risk. On the other hand, it wants the FSLIC as a safety-net in case its direct investment ventures go awry -- even if it means impairment of the fund.
Obviously, this is not the system of dual banking regulation that Congress intended. The insurance-of-accounts system was created to deal with emergency conditions existing at the time and such threatening conditions as might arise in the future. Congress intended the Board to function as a permanent institution carrying out the purposes for which it was created: the maintenance of a sound and economical means of home financing and the concomitant protection of the FSLIC fund. The Federal Home Loan Bank Board is fully authorized by statute to promulgate the Direct Investment Rule for protection of the FSLIC fund.
The remaining issue is whether the Rule in some respect is arbitrary, capricious and an abuse of discretion. Lincoln argues that the promulgation of the Rule was arbitrary and capricious because:
(1) the Board failed to consider the interaction between the Rule and the existing system of state regulation;
(2) the Board failed to draw a rational link between its factual conclusions and the Rule; and,
(3) the Board's factual conclusions are not supported by sufficient evidence to satisfy the arbitrary and capricious standard.
These contentions are wholly unsupported by the factual record. As already described, the rulemaking process was exhaustive and all the relevant factors necessary for an informed and reasoned decision were considered before the Board promulgated the Rule. In light of the fact that the Board considered these factors and arrived at a reasoned decision informed by its expertise, this Court finds, in applying the appropriate standard of review, that Lincoln's claim in this regard is also without merit. See Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. E.P.A., 247 U.S. App. D.C. 268, 768 F.2d 385, 389 n.6 (D.C. Cir.), cert. denied, American Methyl Corp. v. Motor Vehicle Mfrs. Ass'n of U.S., Inc., 474 U.S. 1082, 106 S. Ct. 852, 88 L. Ed. 2d 892 (1986) (court must engage in "searching and careful" review of facts and agency's reasoning to ensure agency's decision was "product of reasoned decisionmaking based upon a consideration of relevant factors").
Accordingly, the Board's motion for summary judgment is granted and Lincoln's motion for summary judgment is denied. The Clerk of Court shall enter judgment for the Board. The complaint is dismissed.
Upon consideration of plaintiff's and defendants' cross-motions for summary judgment, the replies and all additional materials filed by both parties, for the reasons set forth in the accompanying Memorandum, it is hereby
ORDERED that defendants' motion for summary judgment is granted, plaintiff's motion for summary judgment is denied and the complaint is dismissed.