Full opinion text
OPINION OF THE COURT HUTCHINSON, Circuit Judge. In these consolidated cases, Lawrence Seidman (“Seidman”) and John Bailey (“Bailey”) petition for review of the order of the Director (“Director”) of the Office of Thrift Supervision (“OTS”) subjecting them to administrative sanctions for their part in a loan transaction Crestmont Federal Savings and Loan (“Crestmont”) considered while Seid-man was Chairman of Crestmont’s Board of Directors (“Board”) and Bailey was one of its officers. Specifically, Bailey petitions for review of that portion of the Director’s order publicly directing him to cease and desist from participating in unsafe and unsound lending practices. Seidman’s petition seeks review of that portion of the Director’s order removing him from his office at Crestmont and banning him from further participation in the banking industry. When the Director issued the order against Seidman and Bailey, he remanded the case to an administrative law judge (“ALJ”) to determine their ability to pay civil monetary penalties because the ALJ who had heard the case failed to assess a civil penalty against Bailey and to properly document Seidman’s ability to pay the $930,000 civil penalty the ALJ had recommended. The remand order raises a question of finality that we must consider before deciding whether we have jurisdiction to review Bailey’s and Seidman’s petitions. We conclude in Part II that we do have jurisdiction. In the administrative proceeding, the Director found Bailey approved a commitment for a purchase money mortgage to a real estate buyer who was buying property from a seller in which Seidman had an interest. The Director concluded that approval of this commitment was an unsafe and unsound lending practice justifying a cease and desist order against Bailey under section 1818(b) of the Federal Deposit Insurance Act (“FDIA”), 12 U.S.C.A. §§ 1811-1833 (West 1989 & Supp.1994), as amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), P.L. No. 101-73, 103 Stat. 183 (1989). The Director concluded that Seidman’s conduct required him to issue a prohibition and removal order in accord with 12 U.S.C.A. § 1818(e). To support this ultimate administrative sanction the Director found Seidman impermissibly used his position at Crestmont for his own benefit in order to obtain a release from his personal guarantee of a loan; this loan had been made by another lending institution to a real estate partnership from which Seidman was in the process of withdrawing; Seidman’s withdrawal from the partnership was being negotiated at the same time that Bailey made the loan commitment for a purchase from the partnership, resulting in the Director’s cease and desist order against him. As additional support for his order removing Seidman from Crest-mont’s Board of Directors and banning him from banking for life, the Director also found that Seidman failed to renotify Crestmont’s Board or Senior Loan Committee of his continuing interest in the real estate partnership he was withdrawing from while they were considering the loan OTS objected to and that Seidman later attempted to hinder the ensuing OTS investigation by covering up his part in preparing a memo in support of his request for the release. The Director concluded that each of these findings warranted Seidman’s removal as Chairman of Crest-mont’s Board and required him to be permanently barred from banking. We believe the Director 'erred in concluding Bailey’s issuance of a purchase money loan commitment to a buyer from the real estate development partnership from which Seidman was in the final stages of withdrawing exposed Crestmont to the serious, abnormal risk that constitutes an unsafe or unsound practice. Therefore, we will grant Bailey’s petition for review and vacate that part of the Director’s order commanding Bailey to cease and desist from such practices. We reject Seidman’s preliminary argument that 12 U.S.C.A. § 1818(e) violates due process because it fails to afford him a trial before a fair and unbiased tribunal. We conclude, however, that the Director’s findings that Seidman violated 12 U.S.C.A. § 1818(e)(1) when he sought to utilize his position at Crestmont to obtain a release from his guarantee and when he failed to remind Crestmont’s Board or Senior Loan Committee of his interest in the real estate partnership are not supported by substantial evidence. Though the Director properly determined that Seidman engaged in an unsafe or unsound practice when he attempted to hinder the OTS investigation, we conclude that there is no evidence to support the Director’s finding that this act of Seidman resulted in his receipt of an actual benefit meeting section 1818(e)(l)(B)(iii)’s condition of an untoward or prohibited effect. Accordingly, we will grant Seidman’s petition for review and vacate that part of the Director’s order permanently removing him from his job at Crestmont and banning him from banking. Nevertheless, because of our conclusion that Seidman did commit an unsafe or unsound practice when he unsuccessfully attempted to hinder the OTS investigation in his dealings with his former partners and their lender, we will remand the case to OTS for the Director to consider entering a cease and desist order and civil monetary penalties against Seidman as authorized by section 1818(b). Our disposition of the merits of Seidman’s petition requires us to vacate the OTS preliminary suspension order for the reasons given in Part VII of this opinion. Therefore, we find it unnecessary to consider Seidman’s appeal of the district court’s order dismissing, for lack of jurisdiction, his action to enjoin the preliminary suspension order. I. Factual and Procedural History A. Seidman’s Business Dealings Lawrence Seidman is an attorney in his mid-forties who has been engaged in the practice of banking and securities law for twenty years. During the past decade he has specialized in real estate investments and begun to pursue a career in banking. In 1989, he headed a group of investors who purchased stock in Crestmont, a thrift institution in Edison, New Jersey. Seidman became a director of Crestmont and, in November 1989, was named Chairman of its Board of Directors. In 1986, before he became a Crestmont director, Seidman formed a partnership, Fulton Street Associates (“FSA”), with James Zorlas (“Zorlas”) and Lawrence Rappaport (“Rappaport”) to purchase and develop industrial condominiums on a piece of commercial property (“Boonton Project”). FSA’s partners made substantial capital contributions to the Boonton Project and obtained additional financing from United Jersey Bank (“UJB”), secured in part by all the partners’ personal guarantees. Seidman listed his affiliation with FSA on conflict disclosure forms he filed with Crestmont when he became a director. In mid-1990, Seidman decided to focus his business activities on Crestmont. Recognizing that his outside business ventures could create conflicts that would prevent Crest-mont from making otherwise desirable loans, Seidman advised the Board that he had begun to withdraw from his outside business ventures and started disposing of various business interests to his former partners. Rappaport agreed to acquire Seidman’s interest in FSA, promising to indemnify Seid-man against any continuing obligation on FSA’s loan from UJB without any further consideration flowing to Seidman. On June 1, 1991, Seidman’s transfer of Ms interest in FSA to Rappaport became the subject of a formal agreement. Seidman testified that he lost all of the $320,000 he had invested in FSA but that he thought Crestmont offered even greater potential for profit. Months before the June 1st agreement, however, UJB started to worry about its loan to FSA. On January 21,1991, it sent FSA a notice of default. UJB gave FSA a chance to cure the default, but FSA demed it was in default, contending any default would have been cured if an interest reserve fund had been properly credited against its debt. Though UJB then sent FSA a demand for immediate payment, negotiations between them continued. James Risko (“Risko”), a Poole & Co. commercial loan broker, handled negotiations to resolve the dispute between FSA and UJB. Poole & Co. was the commercial loan company that had placed the FSA loan with UJB. Roger Eberhardt (“Eberhardt”), chairman of UJB’s real estate management committee, and Thomas Stackhouse (“Stackhouse”), the UJB commercial lending officer assigned to the FSA loan, were key participants in the negotiations. Risko, Eberhardt and Stack-house all testified that the participants, including Seidman, discussed end-user financing for FSA’s Boonton condominiums. Crestmont was mentioned as a potential source of end-user loans, but no one testified that Seidman or Crestmont promised to make any loan. On May 20,1991, the parties agreed to restructure the UJB loan. As part of the restructuring, the FSA partners, including Seidman, signed personal guarantees covering $4.45 million. Seidman’s successful efforts to be released from the guarantee figure prominently in these proceedings, but other ongoing events also play a significant role. B. The Levine Loan John Bailey is the Executive Vice President of Crestmont. His responsibilities in-elude underwriting commercial loans, managing a commercial loan portfolio, producing new lending business and supervising Crest-mont’s loan officers. Bailey had authority to approve loans of less than $500,000 if they did not directly involve the interests of Crestmont’s directors but had no authority to approve loans in excess of $500,000 or loans in wMch Crestmont’s officers or directors had an interest. Loans over $500,000 went before a “SeMor Loan Committee” made up of Bailey, Seidman and Crestmont’s President, S. Griffin McClellan (“McClellan”). Commercial loans in which an officer or director had an interest were proMbited at Crestmont. In December of 1990, Steven Levme (“Levine”) of S & N Realty approached Bailey about end-user financing for a $466,000 office condomimum in FSA’s Boonton project. Levine, who had been referred to Crestmont and Bailey by Zorlas, sought $375,000. On December 18, 1990, Bailey contacted Zorlas, Rappaport and Seidman about Levine’s loan request and asked them how things stood on Seidman’s partnersMp interest in FSA. All three- FSA partners individually represented to Bailey that Seidman was in the process of withdrawing from the partnersMp and that the withdrawal would be completed “shortly.” Bailey Appendix (“Bailey App.”) at 319. Bailey memorialized this conversation and placed a memo about it in a file marked “Seidman Financial Associates.” Id. Rap-paport testified he told Bailey no loan could be made to Levine until Seidman was out of the partnersMp. Assured Seidman would soon be out of FSA, Bailey decided to get a head start on the Levine loan and assigned James Little (“Little”), a Crestmont loan officer, the task of writing it up. Little interviewed Levine and told him the loan could be approved but no other action could be taken on it until Seidman left FSA. Little became involved with other things and gave the paperwork on the loan back to Bailey to complete. Still assured that Seidman would soon be out of FSA, Bailey did extensive work on it. Bailey prepared a Credit Summary for the Levine loan on February 21, 1991. On March 19, 1991, Bailey and Little approved the loan and issued a commitment letter to Levine. Levine did not sign the commitment letter until May 30, 1991, when Bailey was given a check for $2,000 in exchange for the commitment. C. Crestmont’s Loan Policies Crestmont had a loan policy which Bailey had authored. It was based on OTS regulations and stated: The policy of the bank is to carefully administer extensions of credit which are subject to special reporting requirements. These loans include the following: —[L]oans to individuals or entities that conduct business or have conducted business with officers or directors of the bank. These situations are clearly described in the bank’s loan committee credit summary. They are presented to the bank’s Senior Loan Committee regardless of their size. Id. at 314. Crestmont had another policy, also based on OTS regulations, which forbade it from either directly or indirectly mak[ing] any loan to or purchase ... any loan made to any third party on the security of real property purchased from any affiliated person of the association unless the property was a single-family dwelling owned and occupied by the affiliated person as a permanent residence. OTS Appendix (“OTS App.”) at 96-97 (citing 12 C.F.R. § 563.43(c)(1)). Crestmont’s policies also put on its directors a fundamental duty to avoid placing themselves in any position which creates, leads to or could lead to a conflict of interest or even the appearance of such conflict of interest between the accomplishment of the purposes of the association and the personal financial interests of the directors, officers and other affiliated persons. Id. at 98-99 (citing 12 C.F.R. § 571.7). Specifically, Crestmont’s directors were supposed to avoid any transaction in which a third party purchaser seeks to obtain a loan from the association secured by real estate acquired from the affiliated partnership or as to which the affiliated partnership holds a security interest. Id. at 100. Bailey and Seidman were fully aware of these policies. D. The Garden Park Loan At the same time that Crestmont was negotiating the Levine loan, Seidman and OTS were engaged in a tense dialogue over property ovmed by Garden Park Associates (“Garden Park”), for which Seidman was attempting to arrange financing at Crestmont. Seidman had an interest in Garden Park and had also personally guaranteed the development loans for Garden Park. Seidman fully disclosed his interest in Garden Park to the Crestmont Board and Crestmont formally asked OTS to permit it to make the Garden Park loan. On May 23, 1991, OTS denied Crestmont’s request citing 12 C.F.R. § 563.43(c)(1) (1991) which forbade certain transactions with affiliated parties. Seid-man contacted OTS’s Chief Examiner in charge of Crestmont, Joseph Donohue (“Do-nohue”), for a further explanation of OTS’s position. Donohue told Seidman that OTS considered the Garden Park loan impermissible so long as Seidman remained a guarantor of Garden Park’s obligation. Seidman asked for reconsideration, but OTS still refused to allow the loan. E. Seidman’s Release from the UJB Guarantee Until his May 23, 1991, conversation with Donohue, Seidman seems to have believed that his withdrawal from FSA would permit Crestmont to make the Levine loan. After spéaking with Donohue about Garden Park, Seidman had second thoughts about his personal guarantee of FSA’s loan from UJB and began to wonder whether it would disqualify Crestmont from loaning money to Levine even after Seidman completed his withdrawal from FSA. Seidman turned to James Poole (“Poole”) of Poole & Co., who advised Seid-man to get a release from the UJB guarantee and to discuss this with Risko. Seidman did so and Risko approached Eberhardt. Risko told Eberhardt that the conflict between Seidman’s obligation on the guarantee and his fiduciary duties to Crestmont created problems in Crestmont’s providing end-user financing for the FSA project. Eberhardt told Risko to put a proposal for Seidman’s release in writing and UJB would consider it. Events now moved rapidly. On May 30, 1991, the day Levine signed the commitment lettér, Risko contacted Seidman and told him UJB would consider releasing Seidman. Risko suggested Seidman draft a letter asking for the release and that he, Risko, would sign a letter giving UJB the reasons for granting Seidman’s request. Risko testified Seidman and he agreed that Seidman would do an initial draft of both the request for release and Risko’s supporting letter. Risko testified he was only to approve and sign the supporting letter and that Seidman faxed him the draft. Seidman testified that Risko dictated the draft to Seidman’s secretary and she forwarded it to Risko for review. While drafts were being faxed back and forth between Risko and Seidman, OTS examiner Thomas Angstadt (“Angstadt”) was at Crestmont on other business. While using a Crestmont fax machine, Angstadt saw a copy of the draft of Risko’s letter lying on a desk. Angstadt secretly read and copied the draft. The, final version of Risko’s letter was identical with the draft except for one sentence that Risko added. Seidman had no objection to Risko’s addition. On June 7, 1991, UJB notified Seidman that it would release him from his guarantee of FSA’s loan. Eberhardt later testified UJB understood that the release did not obligate Crestmont to provide such financing, but he prepared a handwritten memo that indicated availability of end-user financing from Crestmont was a consideration in UJB’s decision to release Seidman. In the meantime, on June 3, 1991, OTS prohibited the Garden Park loan, and Seid-man again asked Donohue for an explanation. Donohue now told Seidman that OTS believed conflict of interest prevented a thrift from making a loan to an entity in which an officer or director of the thrift had had an interest, including liability on a guarantee, at any time within two years before the loan was made. Seidman protested that such a policy had no support in OTS regulations, but Donohue was not moved. Frustrated, Seidman ordered Bailey to stop considering commercial loans on projects in which Seidman had an interest either as a partner or guarantor. On June 4, 1991, Bailey sent both the Levine and the Garden Park loans to the Savings Bank of Rock-land. On June 5,1991, OTS issued a supervisory directive forbidding Crestmont from making any commercial loans and launched the investigation for “conflict of interest” that gave rise to the cases now before us. It is undisputed that Crestmont never made the loans OTS questioned. F. The OTS Investigation, Charges and Seidman’s District Court Action Though Crestmont had made no prohibited loan and now proposed none, OTS went on with its investigation into what it suspected were violations of OTS’s regulations on conflict of interest. On September 13, 1991, OTS deposed Seidman, focusing on the draft letter Seidman had faxed to Risko. Seidman never admitted writing the original draft of Risko’s letter. He said he believed that Ris-ko had dictated it over the phone to Seid-man’s secretary, Janet Greenhill (“Green-hill”). Greenhill testified she did not remember these details. Seidman admitted that he had approved the text of the letter as sent with the additional sentence stating it would be in UJB’s best interest to free him from the guarantee because that could open another source of end-user financing for FSA. After he was deposed, Seidman learned that Risko and Poole & Co.’s records had been subpoenaed by OTS and that Risko planned to testify on deposition without an attorney. Seidman called Risko to find out what Poole & Co.’s files contained concerning Seidman’s request for a release from his guarantee and asked whether he could review the file. Risko testified he told Seid-man that he had a fax of the initial draft along with the fax sheets showing it was transmitted from Crestmont. On September 16, 1991, before his OTS deposition, Risko met with Seidman. Seid-man testified Risko told him he was going to tell OTS the letter was Seidman’s idea. Seidman testified he told Risko this was a lie. Seidman said he reviewed the file and pulled out a number of documents relating to his request for a release. Risko testified Seid-man asked him to “make sure that [the documents] get thrown away” and asked Risko to do his “best to make sure [the documents were] not around.” Seidman Appendix (“Seidman App.”) at 347-48. Risko also testified that Seidman told him to forget the documents ever existed. Seidman emphatically denies ever saying this. Both Risko and Seidman agree that Seidman told Risko he should tell OTS the truth. Things grew tense. Risko left the room to speak with Poole. Seidman was left alone with the documents. Poole reentered the conference room, picked up the draft, crumpled it and left the room with it. Seidman followed Poole to his office where they had a heated exchange. Seidman grabbed the crumpled copy of the draft and tore it up. Seidman testified he did this “in a rage of anger” after learning Risko had made copies of all the relevant documents. Id. at 481-82. Risko testified he never informed Seidman that copies existed. On October 30, 1991, OTS filed notice of charges against Seidman and Bailey. On the same day, it issued a preliminary Order of Suspension removing Seidman from his posts at Crestmont without pay. From April 20, 1992, through May 1, 1992, Treasury Department ALJ Walter Alprin (“Alp-rin”) held hearings on the charges against Seidman and Bailey. On August 13, 1992, Alprin issued his decision recommending that the Director issue a Removal and Prohibition Order permanently barring Seidman from any work in the banking field and assessing $930,000 in civil penalties against him. Alp-rin also recommended an order directing Bailey to “cease and desist from engaging in any unsafe or unsound practices in conducting the business of any financial institu-tion_” Id. at 89. Alprin did not recommend any monetary penalty against Bailey. G. The Director’s Decision Seidman and Bailey sought the Director’s review of the ALJ’s recommended decision and asked for oral argument. The Director denied the request for argument and issued a decision on December 4,1992, finding against Seidman and issuing the Removal and Prohibition Order the ALJ had recommended. The Director determined, however, that the record was not sufficient to support the recommended civil penalty of $930,000 against Seidman and remanded the case to the ALJ to take further evidence concerning Seid-man’s ability to pay. The Director also agreed with the ALJ’s recommended findings of fact and conclusions of law as to Bailey and entered a Permanent Cease and Desist Order, but he disagreed with the ALJ’s conclusion that no civil penalties were warranted against Bailey and sent Bailey’s case back for further fact finding on money penalties. In support of his order removing Seidman and banning him from banking, the Director found Seidman engaged in self-interested conduct by insinuating to UJB that a release from his FSA guarantee would cause Crest-mont to provide end-user financing for FSA’s Boonton project. The Director also found that Crestmont unlawfully made a loan commitment to Levine while Seidman was still a partner in FSA. Finding these acts of self-dealing were never disclosed to Crestmont’s Board or the Senior Loan Committee, the Director held Seidman breached his fiduciary duties to Crestmont. The Director also held Seidman violated OTS’s conflict of interest provision, 12 C.F.R. § 571.7(b), and sought to benefit personally from these acts through the release from his FSA guarantee. The Director independently held that Seid-man’s attempt to destroy evidence and coverup his activities during the investigation violated section 1818(e)(1). He found the attempted cover-up, which involved giving misleading testimony, destroying the original record of the fax of the early draft of Risko’s letter from Seidman to Risko and requesting that Risko forget about the letter, inter alia, constituted an unsafe or unsound practice. The Director concluded that these acts established personal dishonesty within the meaning of section 1818(e)(l)(C)(i) and conferred a personal benefit on Seidman within the meaning of section 1818(e)(l)(B)(iii). The Director also held Bailey had engaged in an unsafe and unsound banking practice. He found Bailey knew of Seidman’s interest in FSA, failed to disclose it to the Board of Directors or the Senior Loan Committee and issued a commitment letter for the Levine loan before Seidman withdrew from FSA. The Director concluded this created an “abnormal risk of loss” to Crestmont and that a cease and desist order was appropriate under section 1818(b). Seidman App. at 121. II. Jurisdiction The Director had jurisdiction over these proceedings pursuant to 12 U.S.C.A. § 1818(h)(1). Seidman and Bailey filed timely petitions for review pursuant to 12 U.S.C.A. § 1818(h)(2). Because of the Director’s remand to an ALJ for further findings on Seidman’s and Bailey’s ability to pay civil penalties, we must consider whether their petitions seek review of a final order. Generally, an order which decides all issues of liability but remands on issues of damages is not immediately appealable. See Teledyne Continental Motors v. United States, 906 F.2d 1579, 1582 (Fed.Cir.1990). Here the agency clearly contemplates further action concerning civil penalties. So long as the assessment of monetary penalties is pending, the full impact the Director’s decisions may have on either Seidman or Bailey is uncertain. Under FDIA, parties sanctioned by OTS may obtain a review of any order ... by the filing in the court of appeals of the United States for the circuit in which the home office of the depository institution is located ... within thirty days after the date of service of such order, a written petition praying that the order of the agency be modified, terminated, or set aside.... Upon the filing of such petition, such court shall have jurisdiction, which upon the filing of the record shall ... be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the agency. Review of such proceedings shall be had as provided in chapter 7 of Title 5. The judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari.... 12 U.S.C.A. § 1818(h)(2) (West 1989). Nothing in FDIA expressly states that the “order” must be a final one. We recognized in Shea v. OTS, 934 F.2d 41 (3d Cir.1991), however, “‘there is a strong presumption that judicial review is only available when an agency action becomes final....’” Id. at 44 (quoting Bell v. New Jersey, 461 U.S. 773, 778, 103 S.Ct. 2187, 2191, 76 L.Ed.2d 812 (1983)). This presumption recognizes that postponement of review until final action can sometimes avoid the inefficiency of piecemeal review and, in some cases, make any review unnecessary. CEC Energy Co. v. Public Serv. Comm., 891 F.2d 1107, 1112 (3d Cir.1989); see also Fidelity Television, Inc. v. Federal Communications Comm’n, 502 F.2d 443, 448 (D.C.Cir.1974) (quoting Chicago & Southern Air Lines v. Waterman S.S. Corp., 333 U.S. 103, 113, 68 S.Ct. 431, 437, 92 L.Ed. 568 (1948) and Isbrandtsen Co. v. United States, 211 F.2d 51, 55 & n. 24 (D.C.Cir.), cert. denied, 347 U.S. 990, 74 S.Ct. 852, 98 L.Ed. 1124 (1954)). In Shea we concluded, “in this Circuit, the finality of a disposition is determined by its consequences[,J” including “whether the OTS’s decision ‘imposes an obligation’ or ‘denies a right.’ ” Shea, 934 F.2d at 44-45. In CEC Energy we reasoned that “[ajpplication of the ripeness doctrine prevents the entanglement of the courts in administrative policy disagreements and protects the agencies from judicial interference until decisions are formalized and their effects felt in a concrete way.” CEC Energy Co., 891 F.2d at 1109 (citation omitted). We went on to state, “[t]he doctrine of ripeness requires an evaluation of the fitness of the challenged issue for review and the hardship to the parties of withholding judicial consideration.” Id. at 1109-10 (citation omitted); see also Federal Trade Comm’n. v. Standard Oil, Inc., 449 U.S. 232, 101 S.Ct. 488, 66 L.Ed.2d 416 (1980); Solar Turbines Inc. v. Seif, 879 F.2d 1073, 1080 (3d Cir.1989) (concluding Supreme Court’s finality standard incorporates ripeness standard). An important but not dis-positive factor is an agency’s classification of its order as final. Because finality is a pragmatic requirement informed but not decided by an agency classification of its decision, we looked at several other factors in CEC Energy: 1) whether the decision represents the agency’s definitive position on the question; 2) whether the decision has the status of law with the expectation of immediate compliance; 3) whether the decision has immediate impact on the day-to-day operations of the party seeking review; 4) whether the decision involves a pure question of law that does not require further factual development; and 5) whether immediate judicial review would speed enforcement of the relevant act. CEC Energy Co., 891 F.2d at 1110 (citing Solar Turbines Inc., 879 F.2d at 1080). Thus, we turn to the facts that are material to our jurisdiction over Seidman’s and Bailey’s petitions for review. Under the Director’s order, Seidman is permanently removed from, and prohibited from returning to, the banking industry. The order denies Seidman a right to pursue the trade he has chosen. It also firmly concludes that Seidman is not fit to be a banker and that Bailey should be publicly reprimanded. The order notifies Seidman and Bailey of their right to petition for judicial review and the agency states it is final. Most significantly, the order demands immediate compliance and impacts immediately on Seidman’s and Bailey’s day-to-day affairs. OTS is currently enforcing the order precluding Seidman from taking part in the business of banking, and it is clear the agency has definitely decided to ban Seidman from that industry. Although the consequences to Bailey are not as harsh as those visited upon Seidman, the agency has indicated that it will engage in no further factual development or reconsideration of its order publicly directing Bailey to cease and desist from unsafe practices. The order has a continuing effect on Bailey’s reputation and it too poses legal questions that can be fully reviewed at this time. In addition, Seid-man’s and Bailey’s petitions pose questions that are mainly legal in nature and judicial review now is likely to facilitate the appropriate enforcement of applicable law. Because assessment of any civil penalties hinges on the Director’s conclusion that Seid-man and Bailey violated FIRREA, we believe review at this juncture serves the interest of judicial economy. This case turns not on the civil penalties that are yet to be determined on the Director’s remand to an ALJ but on the legality of the decisions the Director has already made. The Director’s decision “ ‘imposes ... obligation^]’ ” and “ ‘denies ... right[s].’ ” Shea, 934 F.2d at 44-45. Therefore, we have jurisdiction under 12 U.S.C.A. § 1818(h)(2) to review the Director’s order removing Seidman from his position at Crestmont and banning him permanently from the thrift industry, and directing Bailey to stop engaging in unsafe or unsound practices. III. Standard of Review The Administrative Procedure Act (“APA”), 5 U.S.C.A. § 706(2) (West 1977), defines the scope of judicial review over the Director’s findings and conclusions of law. We must uphold the Director’s order against Bailey and Seidman unless we determine that the Director has made an error of law or that his findings are not supported by substantial evidence on the whole record. See Hoffman v. FDIC, 912 F.2d 1172, 1173-74 (9th Cir.1990). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938). Issues of law are subject to plenary review. Dill v. INS, 773 F.2d 25, 28 (3d Cir.1985). In deciding legal issues, we must defer to an agency’s consistent interpretation of the statute it administers unless it is “arbitrary and capricious,” Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984). Nevertheless, when “bizarre” interpretations of a statute are made out of “regulatory zeal,” deference is not appropriate. See Wachtel v. OTS, 982 F.2d 581, 585 (D.C.Cir.1993). Similarly, interpretations contrary to the plain meaning of the statute are unacceptable. Elliot Coal Mining Co., Inc. v. Director, OWCP, 17 F.3d 616, 629 (3d Cir.1994). Seidman’s due process attack on the statute in question, the merits issue to which we first turn, is subject to plenary review. United States v. Engler, 806 F.2d 425, 429 (1986). TV. Seidman’s Due Process Challenge to the Statute Seidman argues that 12 U.S.C.A. § 1818(e) violates due process because it fails to afford him a hearing before a fair and unbiased tribunal. He says a sanction so severe should not be entrusted to a person who has the combined functions of investigation, prosecution and adjudication. Although the Supreme Court has held that the Constitution requires administrative agencies to be fair and unbiased, see, In re Murchison, 349 U.S. 133, 135-36, 75 S.Ct. 623, 625, 99 L.Ed. 942 (1955), it has also held that the Constitution permits the investigative, prosecutorial and adjudicative roles to be combined in one agency. See Withrow v. Larkin, 421 U.S. 35, 46-47, 52-53, 95 S.Ct. 1456, 1464, 1467, 43 L.Ed.2d 712 (1975). Agency administrators are presumed to be “ ‘capable of judging a particular controversy fairly on the basis of its own circumstances.’ ” Id. at 55, 95 S.Ct. at 1468 (quoting United States v. Morgan, 313 U.S. 409, 421, 61 S.Ct. 999, 1004, 85 L.Ed. 1429 (1941)). Seidman argues With-row does not permit all three roles to be combined in one person who also has the power to find facts and judge credibility without even hearing the witnesses. The Director of OTS has the power to authorize an investigation, to determine whether charges should be brought, to issue notice of charges proffered and then to decide them as to law and fact. See 12 C.F.R. §§ 509.4, 509.18 (1993). Although OTS charges are usually heard by an ALJ, “[t]he Director may, at any time during the pendency of a proceeding perform, direct the performance of, or waive performance of, any act which could be done or ordered by the [ALJ].” Id. § 509.4. The ultimate decision is entirely the Director’s and he is free to disregard not only the ALJ’s legal conclusions but also the ALJ’s findings of fact, including findings on credibility. See id. § 509.5(b)(7) (“... only the Director shall have the power to grant any motion to dismiss the proceeding or to decide any other motion that results in a final determination of the merits of the proceeding....”); id. § 509.40 (1993). In Murchison, the Supreme Court held that a statutory scheme which gave a state judge power to sit as a grand jury, compel testimony, charge perjury and try and convict the persons charged violated due process. Murchison, 349 U.S. at 133-34, 75 S.Ct. at 624. In Withrow, however, the Court stated, “Murchison has not been understood to stand for the broad rule that the members of an administrative agency may not investigate the facts, institute proceedings, and then make the necessary adjudications.” Withrow, 421 U.S. at 53, 95 S.Ct. at 1467. In Withrow, the combination of functions under attack permitted Wisconsin’s state board for the examination of physicians to conduct investigative proceedings, institute charges, hold a hearing and adjudicate the charges. Id. at 54, 95 S.Ct. at 1468. The Supreme Court held that this combination of regulatory powers did not violate due process. It stated: “[TJhere was no more evidence of bias or the risk of bias or prejudgment than inhered in the very fact that the Board had investigated and would now adjudicate.” Id. (footnote omitted). The Supreme Court pointed out that the defendant and his counsel were permitted to be present throughout the investigation, counsel attended the hearings and counsel was aware of the facts presented to the board. Id. at 55, 95 S.Ct. at 1468. Ultimately, the Court required a showing of actual bias or at least a risk of bias and held neither was present under the Wisconsin scheme. Id. In United Retail & Wholesale Employees Teamsters Union Local No. 115 Pension Plan v. Yahn & McDonnell, Inc., 787 F.2d 128 (3d Cir.1986), aff'd by an equally divided court, 481 U.S. 735, 107 S.Ct. 2171, 95 L.Ed.2d 692 (1987), we held that the provisions of the Multiemployer Pension Plan Amendments Act of 1980 governing procedure in administrative adjudications were unconstitutional because bias or a likelihood of bias is present when an agency’s adjudicator has a fiduciary or fiscal stake in the decision. Id. at 139^0. But see Concrete Pipe & Prods, v. Construction Laborers Pension Trust for S. California, — U.S.-,- -, 113 S.Ct. 2264, 2276-78, 124 L.Ed.2d 539 (1993) (holding that even where an initial determination is made by a biased party, due process is met where there are provisions for a neutral de novo review and adjudication of all factual and legal issues). Consistent with Withrow’s, requirement of bias, we held that the presumption that administrative decision-makers are unbiased may be rebutted by a ‘“showing of conflict of interest or some other specific reason.’ ” Id. at 138 (quoting Schweiker v. McClure, 456 U.S. 188, 195, 102 S.Ct. 1665, 1670, 72 L.Ed.2d 1 (1982)). Seidman contends that Murchison, not Withrow, controls when the power of decision is vested in one individual instead of a multi-member board or commission. His argument implies that bias is inherent in such a process because it permits a single person to act as prosecutor, investigator and adjudicator as to the severe sanctions of section 1818(e). We think Withrow implies the contrary and actual bias or a likelihood of bias must appear if an otherwise valid administrative sanction is to be overturned because of a dénial of due process. Though in With-row, a board, not a single person, combined the functions which the Director of OTS possesses under section 1818(e)(1), we do not think that distinction is controlling. In With-row the Court stated: The risk of bias or prejudgment in this sequence of functions has not been considered to be intolerably high or to raise a sufficiently great possibility that the adjudicators would be so psychologically wedded to their complaints that they would consciously or unconsciously avoid the appearance of having erred or changed position. Indeed, just as there is no logical inconsistency between a finding of probable cause and an acquittal in a criminal proceeding, there is no incompatibility between the agency filing a complaint based on probable cause and a subsequent decision, when all the evidence is in, that there has been no violation of the statute.... The initial charge or determination of probable cause and the ultimate adjudication have different bases and purposes. The fact that the same agency makes them in tandem and that they relate to the same issues does not result in a procedural due process violation. Clearly, if the initial view of the facts based on the evidence derived from nonadversarial processes as a practical or legal matter foreclosed fair and effective consideration at a subsequent adversary hearing leading to the ultimate decision, a substantial due process question would be raised. But in our view, that is not this case. Withrow, 421 U.S. at 57-58, 95 S.Ct. at 1469-70 (footnote omitted). Any interest the Director might have in sustaining his own charges is no different than the board had in Withrow. Seidman has not shown bias or a likelihood of bias. His due process argument fails. We therefore turn to the substantive requirements of the statutes which Bailey and Seidman were charged with violating. We begin with the charges against Bailey because their consideration will require us to analyze some of the same concepts that underlie the more serious charges against Seidman. Y. The Charges Against Bailey Section 1818(b)(1) prohibits unsafe and unsound practices. OTS argues that Bailey’s commitment to the Levine loan conflicts with Crestmont’s policy of prohibiting purchase money loans on the security of real property in which a Crestmont officer or director had an interest. An officer’s violation of a banking institution’s policy, however, is not enough to justify a cease and desist order under section 1818(b)(1). While the statute gives the Director considerable discretion, it nevertheless requires substantial evidence showing that the violation of policy amounted to an unsafe and unsound practice. Section 1818(b)(1) provides: If, in the opinion of the appropriate Federal banking agency ... any institution-affiliated party ... has engaged, ... in an unsafe or unsound practice in conducting the business of [a] depository institution, ... the agency may issue and serve upon the ... party a notice of charges in respect thereof.... [I]f upon the record made at ... [a] hearing, the agency shall find that any ... unsafe or unsound practice specified in the notice of charges has been established, the agency may issue and serve upon ... the institution-affiliated party an order to cease and desist from any such ... practice. 12 U.S.C.A. § 1818(b)(1). Because the statute itself does not define an unsafe or unsound practice, courts have sought help in the legislative history. See, e.g., Northwest Nat’l Bank v. United States, 917 F.2d 1111, 1115 (8th Cir.1990); Gulf Federal Sav. & Loan Ass’n v. Federal Home Loan Bank Bd., 651 F.2d 259, 264 (5th Cir.1981), cert. denied, 458 U.S. 1121, 102 S.Ct. 3509, 73 L.Ed.2d 1383 (1982). In hearings before Congress prior to its adoption in the Financial Institutions Supervisory Act of 1966, Pub.L. No. 89-695 (1966) John Horne, Chairman of the Federal Home Loan Bank Board (“FLHBB”), OTS’s predecessor, testified: Generally speaking, an “unsafe or unsound practice” embraces any action, or lack of action, which is contrary to generally accepted standards of prudent operation, the possible consequences of which, if continued, would be abnormal risk or loss or damage to an institution, its shareholders, or the agencies administering the insurance funds. Financial Institutions Supervisory Act of 1966: Hearings on S. 3158 and S.3695 Before the House Committee on Banking and Currency, 89th Cong., 2d Sess. 49-50 (memorandum submitted by John Horne) (citations omitted). Thus, courts have generally interpreted the phrase “unsafe or unsound practice” as a flexible concept which gives the administering agency the ability to adapt to changing business problems and practices in the regulation of the banking industry. See Groos Nat’l Bank v. Comptroller of the Currency, 573 F.2d 889, 897 (5th Cir.1978) (“The phrase ‘unsafe or unsound banking practice’ is widely used in the regulatory statutes and in case law, and one of the purposes of the banking acts is clearly to commit the progressive definition and eradication of such practices to the expertise of the appropriate regulatory agencies.”). Among the specific acts that may constitute an unsafe and unsound practice are “paying excessive dividends, disregarding a borrower’s ability to repay, careless control of expenses, excessive advertising, and inadequate liquidity.” Gulf Federal Sav. & Loan Ass’n, 651 F.2d at 264. In Gulf Federal, the court had to decide whether a bank’s breach of contract was an unsafe or unsound practice that justified an FHLBB order to cease and desist. Id. at 262. The FHLBB concluded that the bank’s potential liability for breach and possible “loss of public confidence in the institution” meant the breach was an unsafe and unsound practice that authorized the agency to order the bank to perform its contract. Id. at 264. The court disagreed and held that a breach of contract is not an unsafe or unsound practice that threatens a bank’s financial soundness. Id. The court expressly rejected FHLBB’s conclusion that liability for breach and consequent loss of public confidence in the bank’s willingness to honor its commitments give rise to an unsafe or unsound practice that authorized a cease and desist order. Id. It stated: Such potential “risks” bear only the most remote relationship to [the bank’s] financial integrity and the government’s insurance risk.... We fail to see how the [FHLBB] can safeguard [the bank’s] finances by making definite and immediate an injury which is, at worst, contingent and remote. Approving intervention under the [FHLBB’s] “loss of public confidence” rationale would result in open-ended supervision .... The [FHLBB’s] rationale would permit it to decide, not that the public has lost confidence in [the bank’s] financial soundness, but that the public may lose confidence in the fairness of the association’s contracts with its customers. If the [FHLBB] can act to enforce the public’s standard of fairness in interpreting contracts, the [FHLBB] becomes the monitor of every activity of the association in its role of proctor for public opinion. This departs entirely from the congressional concept of acting to preserve the financial integrity of its members. Id. at 264-65 (footnote omitted). In Northwest National Bank the court upheld the Comptroller of the Currency’s (“Comptroller’s”) conclusion that evidence showing failure to maintain an adequate loan to loss reserve and inadequate capital, together with deficient loan administration, established unsafe or unsound banking practices. Northwest Nat’l Bank, 917 F.2d at 1113-14. The court agreed with FHLBB that the bank’s failure to maintain adequate reserves and capital was an unsafe or unsound practice. Id. at 1115. The court defined the phrase “unsafe and unsound banking practices” in general terms similar to those that appear in the legislative history: “Unsafe and unsound banking practices are ... ‘conduct deemed contrary to accepted standards of banking operations which might result in abnormal risk or loss to a banking institution or shareholder.’ ” Id. (quoting First Nat’l Bank of Eden v. Department of the Treasury, 568 F.2d 610, 611 n. 2 (8th Cir.1978) (per curiam)). The court in Northwest National Bank decided that the poor state of the bank’s loan portfolio and the insufficient level of its capital and reserves permitted an inference that unsafe lending practices had occurred. Id. Accordingly, it upheld the Comptroller’s finding that the bank had engaged in unsafe and unsound banking practices. Id. at 1115-16; see also First Nat’l Bank of Eden, 568 F.2d at 611 (upholding Comptroller’s issuance of cease and desist order for unsafe and unsound banking practices when record showed aecu-mulation of unsafe assets, inadequate internal controls and auditing procedures, lack of credit information on certain bank investments in violation of federal regulations and payment of excessive bonuses to bank officers). In MCorp Financial, Inc. v. Board of Governors, 900 F.2d 852 (5th Cir.1990), aff'd in part, rev’d in part on other grounds, — U.S. -, 112 S.Ct. 459, 116 L.Ed.2d 358 (1991), the Board of Governors of the Federal Reserve concluded that MCorp’s failure to provide capital to its subsidiary banks was an unsafe or unsound practice and entered a cease and desist order directing MCorp to transfer assets to its banking subsidiaries. MCorp Fin., Inc., 900 F.2d at 862. On review, the court of appeals concluded that Congress had failed to provide a clear definition of “unsafe or unsound practice.” Id. at 862. Limited by Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), but relying on Gulf Federal Savings & Loan Association, the court concluded that the Board of Governors’ order directing MCorp to transfer assets to its troubled subsidiaries was itself contrary to “ ‘generally accepted standard[ ] of prudent operation.’ ” Id. at 863 (quoting Gulf Federal Sav., 651 F.2d at 254). “Such a transfer of funds would require MCorp to disregard its own corporation’s separate status; it would amount to a wasting of the holding company’s assets in violation of its duty to its shareholders.” Id. We think at least one common element of an unsafe or unsound banking practice relating to the health of the institution can be deduced from these cases and the legislative history. The imprudent act must pose an abnormal risk to the financial stability of the banking institution. This is the standard that the case law and legislative history indicates we should apply in judging whether an unsafe or unsound practice has occurred. With this in mind, we turn to the specific imprudent acts OTS charges against Bailey. They are: (a) failing to disclose Seidman’s interest in Fulton Street Associates to the Senior Loan Committee ..., (b) approving the Levine Loan without presenting the loan for review to Crestmont’s Senior Loan Committee ..., and (c) approving the Levine Loan even though Bailey knew that Seidman had an interest in Fulton Street Associates. Bailey App. at 20. Only one of them has any potential for causing Crestmont loss — Bailey’s premature issuance of the commitment letter. When Bailey issued the commitment letter, he made Crestmont responsible for the Levine loan. He did this despite the fact that Seidman had not extricated himself from the FSA partnership or from the UJB guarantee. When Levine accepted the commitment, Crestmont remained ineligible to make the loan. Thus, Crestmont became responsible for the loan despite the potential illegal conflict. We think this act was imprudent. Although all parties testified that their understanding was that the loan would not go through absent Seidman’s complete withdrawal, Bailey had nevertheless obligated Crestmont to a loan it might not be able to make. Obligating one’s institution to transactions that might be illegal is not in accord with “generally accepted standards of prudent operation.” See MCorp Fin., Inc., 900 F.2d at 862. After Levine accepted the commitment letter, Crestmont either had to make the loan, breach the agreement to make it or place the loan with another institution regardless of Seidman’s position. Although, as it turned out, Crestmont was able to place the loan without incident or loss, we recognize that a risk was present when Bailey issued the commitment. Obliging an institution to choose between covering fluctuations in the interest rate, engaging in an illegal transaction or breaching a binding agreement is not prudent. Imprudence standing alone, however, is insufficient to constitute an unsafe or unsound practice. A cease and desist order is designed to prevent actions that if repeated would carry a potential for serious loss. Although issuance of even this single commitment exposed Crestmont to some potential risk of loss, that potential risk did not begin to approach the abnormal risk involved in Northwest National Bank, where the bank was exposed to a serious threat to financial stability by its general failure to monitor its loans adequately and to maintain adequate reserves and capital. The potential loss to which Bailey subjected Crestmont is rather like that present in Gulf Federal. Contingent, remote harms that could ultimately result in “minor financial loss[es]” to the institution are insufficient to pose the danger that warrants cease and desist proceedings. Gulf Fed. Sav. & Loan Ass’n, 651 F.2d at 264. Though it is not particularly onerous to require a loan officer to satisfy himself that the institution may legally make a loan before the commitment is issued, we cannot conclude that the commitment Bailey authorized posed such an abnormal risk that Crestmont’s financial stability was threatened. We hold that Bailey’s approval of the Levine loan and the commitment he issued on behalf of Crestmont in violation of its policies, while imprudent, did not pose an abnormal risk to Crestmont’s financial stability and therefore was not an unsafe or unsound practice within the meaning of section 1818(b). Accordingly, we will grant Bailey’s petition for review and vacate the part of the Director’s order pertaining to Bailey. VI. The Charges Against Seidman Courts have recognized that the power to remove a bank officer is an extraordinary power that should be carefully exercised in strict accordance with the law. Cf. Manges v. Camp, 474 F.2d 97, 100-01 (5th Cir.1978). Accordingly, we might expect that the statute under which OTS sought the far more serious sanction of Seidman’s removal from office and his permanent prohibition from participation in the thrift industry, 12 U.S.C.A. § 1818(e), requires elements additional to those that justify the lesser sanction of a cease and desist order. We are not disappointed. By requiring a three part conjunctive test in section 1818(e)(1), Congress has imposed significant additional conditions before a banker can be deprived of his office and permanently barred from banking. Thus, before an agency regulating a banking institution can impose this ultimate administrative sanction on any banker, it must show by substantial evidence that: (1) the banker has committed an unlawful act; (2) the act has either an adverse effect on the regulated institution or its depositors or confers a benefit on the actor and (3) the act is accompanied by a culpable state of mind. See Oberstar v. FDIC, 987 F.2d 494, 500 (8th Cir.1993). The acts come in three varieties. The effects also divide into three subclasses, but there are only two kinds of culpable mental states. Under section 1818(e)(1), at least one of the prohibited acts, accompanied by at least one of the three prohibited effects and at least one of the two specified culpable states of mind, must be established by substantial evidence on the whole record before the regulatory agency can properly remove a person from office and ban him from the banking or thrift industries. Id. The Director concluded five separate charges warranting the sanction of removal and prohibition were proven against Seid-man: (1) acting to gain release from the UJB loan; (2) failing to notify Crestmont’s Senior Loan committee of his interest in FSA and the Boonton project; (3) destroying material information during the investigation; (4) giving misleading testimony in a deposition; and (5) instructing a material witness to withhold evidence. We will examine the record as to each to see if the evidence relevant to each meets the statutory requirements we have just described. A. Seidman’s Release From His Guarantee on the UJB Loan 1. Did Seidman Violate “Any Law or Regulation” in Seeking the Release? On the first charge, we begin with the particular acts described in section 1818(e)(1)(A). If Seidman’s effort to secure a release from the UJB guarantee is not among the three kinds of acts section 1818(e)(1)(A) prohibits, we need not consider any of the particular effects section 1818(e)(1)(B) specifies or either of the culpable states of mind section 1818(e)(1)(C) describes because the elements of act, effect and state of mind are conjunctive. Oberstar, 987 F.2d at 500. Each must be established substantial evidence before the Director may issue an order of removal and prohibition under the statute. OTS contends Seidman acted in violation of “law or regulation” under section 1818(e)(l)(A)(i)(I) when he and Risko took steps to secure Seidman’s release from his guarantee of FSA’s indebtedness to UJB. The ALJ concluded that Seidman violated 12 C.F.R. § 563.43 in securing his release from the UJB guarantee. Section 563.43 made it improper for a savings association to “[m]ake any loan to ... any third party on the security of real property purchased from any affiliated person of such association, unless the property was a single-family dwelling owned and occupied by the affiliated person as his or her principal residence.” 12 C.F.R. § 563.43(c)(1) (1991) (since repealed). Seidman argues section 563.43(c)(1) does not apply because it expressly requires consummation of a loan, and Crestmont never granted any prohibited" loan. We agree with Seidman. The Director also held, however, that Seidman violated 12 C.F.R. § 571.7, and that violation met section 1818(e)(l)(A)(i)(I)’s requirement of a prohibited act because it was a violation of a “regulation.” Seidman argues that section 571.7 is a policy statement, not a regulation, and therefore any violation of it did not meet section 1818(e)(l)(A)(i)(I)’s requirement. Section 571.7 is expressly labeled a “Statement of Policy” and reads, in relevant part: [E]aeh director, officer, or other affiliated person of a savings association has a fundamental duty to avoid placing himself or herself in a position which creates, or which leads to or could lead to, a conflict of interest or appearance of a conflict of interest. ... 12 C.F.R. § 571.7(b) (1993). OTS’s predecessor, FHLBB, consistently drew a distinction between “general statements of policy” and substantive regulations. See 12 C.F.R. §§ 508.11, 508.12, 508.14 (1989). The enactment of FIRREA does not remove this distinction because the APA, 5 U.S.C.A. § 553(b)(A) (West 1977), requires more exacting procedures of notice and comment for the promulgation of rules that have the force of law than it does for statements of policy. A regulated person’s failure to follow the guidance of a policy statement is not sane-tionable under section 1818(e)(l)(A)(i)(I) unless it is also shown that the failure to follow the policy violated some specific statute, rule or regulation that has the force of law: [C]ourts are in general agreement that interpretive rules simply state what the administrative agency thinks the statute means, and only “remind” affected parties of existing duties. In contrast, a substantive or legislative rule, pursuant to properly delegated authority, has the force of law, and creates new law or imposes new rights or duties. Jerri’s Ceramic Arts, Inc. v. Consumer Prod. Safety Comm., 874 F.2d 205, 207 (4th Cir.1989) (citations omitted); see also FLRA v. Dep’t of the Navy, 966 F.2d 747, 762 (3d Cir.1992) (in banc); Northwest Nat’l Bank, 917 F.2d at 1117. The United States Court of Appeals for the District of Columbia has observed: A general statement of policy ... does not establish a binding norm. It is not finally determinative of the issues or rights to which it is addressed. When the agency applies the policy in a particular situation, it must be prepared to defend it, and cannot claim that the matter is foreclosed by the prior policy statement. Guardian Federal Sav. & Loan Ass’n v. FSLIC, 589 F.2d 658, 666 (D.C.Cir.1978) (internal quotation and citation omitted). FHLBB issued section 571.7 as a caution against the risk that is added when an affiliated person like Seidman has a personal stake in a business transaction his savings institution is considering, a risk inherent in self-dealing. See generally First Nat’l Bank v. Smith, 610 F.2d 1258, 1265 (5th Cir.1980). The FHLBB first announced section 571.7 in 1968 as a policy without giving interested persons any opportunity for comment. See 33 Fed.Reg. 16,382 (1968) (codified at 12 C.F.R. § 571.1). In 1975, the FHLBB published a request for comment on a number of conflict of interest proposals that had been adopted on November 19, 1970. It included section 571.7. See 35 Fed.Reg. 12,216, 18,038 (1975). Nevertheless, section 571.7 continued to appear in a section of C.F.R. entitled “Statements of Policy.” Accordingly, Seid-man argues it is wrong to take away a person’s livelihood under a provision promulgated, codified and described as a policy statement rather than as a rule or regulation having the force of law. In Northwest National Bank the bank was charged with violating 12 C.F.R. § 7.3025 (1987). Northwest Nat’l Bank, 917 F.2d at 1116. The court concluded that the rule was legislative in nature because it “clearly purports to create new substantive requirements.” Id. at 1117. It considered several factors, including the text of the rule and the procedure the agency had used to promulgate it, in deciding whether it was “interpretive” or “legislative” in nature. Id. at 1116-17. The rule’s classificatio