It was a juggling act. Some UP Council members wanted to shut the Legion down "for their own good" others fought to keep things going on as usual, the only compromise they could manage was a bar on recruitment. (Luckily, the wording of that was only in regards to people within the UP. Otherdimensional people? Loophole).

And it's pretty much to destroy the Legion. I'm not really convinced it was truly a "compromise." I think some smart councilmembers realized keeping them active but putting sanctions in place on recruiting was the best way to truly destroy them and got the pro-Legion Council members to agree to it thinking it was the best they could do to prevent the organization from getting shut down.

Disbar them and they'll work in secret like they did before. Leave them working at half capacity, unable to recruit new help and they'll die. And then there'll be no more Legion of Superheroes.

As for why, there are countless reasons why. Politicians are corrupt, greedy sprocks and what organization kept overturning every log and overthrowing every corrupt administration the UP's ever had? They're doing shady things and if the Legion's broken or dead they won't be there to stop the corruption in the UP government in the future like they've done in the past.

i.s. Some of the UP Council wants the Legion destroyed or weakened to hide their own dirty dealings better.