Each depositor insured to at least $250,000 per insured bank

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1000 - Federal Deposit Insurance Act


SEC. 5.  DEPOSIT INSURANCE.

(a)  APPLICATION TO CORPORATION REQUIRED.--

(1)  IN GENERAL.--Except as provided in paragraphs (2) and (3), any depository institution which is engaged in the business of receiving deposits other than trust funds (as defined in section 3(p)), upon application to and examination by the Corporation and approval by the Board of Directors, may become an insured depository institution.

(2)  INTERIM DEPOSITORY INSTITUTIONS.--In the case of any interim Federal depository institution that is chartered by the appropriate Federal banking agency and will not open for business, the depository institution shall be an insured depository institution upon the issuance of the institution's charter by the agency.

(3)  APPLICATION AND APPROVAL NOT REQUIRED IN CASES OF CONTINUED INSURANCE.--Paragraph (1) shall not apply in the case of any depository institution whose insured status is continued pursuant to section 4.

(4)  REVIEW REQUIREMENTS.--In reviewing any application under this subsection, the Board of Directors shall consider the factors described in section 6 in determining whether to approve the application for insurance.

(5)  NOTICE OF DENIAL OF APPLICATION FOR INSURANCE.--If the Board of Directors votes to deny any application for insurance by any depository institution, the Board of Directors shall promptly notify the appropriate Federal banking agency and, in the case of any State depository institution, the appropriate State banking supervisor of the denial of such application, giving specific reasons in writing for the Board of Directors' determination with reference to the factors described in section 6.

(6)  NONDELEGATION REQUIREMENT.--The authority of the Board of Directors to make any determination to deny any application under this subsection may not be delegated by the Board of Directors.

[Codified to 12 U.S.C. 1815(a)]

[Source:  Section 2[5(a)] of the Act of September 21, 1950 (Pub. L. No. 797; 64 Stat. 876), effective September 21, 1950, as amended by section 6(c)(7) of the Act of September 17, 1978 (Pub. L. No. 95--369; 92 Stat. 616), effective September 17, 1978; section 703(c) of title VII of the Act of October 15, 1982 (Pub. L. No. 97--320; 96 Stat. 1539), effective October 15, 1982; and sections 201(a) and 206(a)(1)--(4) of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103 Stat. 195), effective August 9, 1989; section 115(a) of title I of the Act of December 19, 1991 (Pub. L. No. 102--242; 105 Stat. 2249), effective December 19, 1991]

(b)  FOREIGN BRANCH NONMEMBER BANKS; MATTERS CONSIDERED.--Subject to the provisions of this Act and to such terms and conditions as the Board of Directors may impose, any branch of a foreign bank, upon application by the bank to the Corporation, and examination by the Corporation of the branch, and approval by the Board of Directors, may become an insured branch. Before approving any such application, the Board of Directors shall give consideration to--

(1)  the financial history and condition of the bank,

(2)  the adequacy of its capital structure,

(3)  its future earnings prospects,

(4)  the general character and fitness of its management, including but not limited to the management of the branch proposed to be insured,

(5)  the risk presented to the Deposit Insurance Fund

(6)  the convenience and needs of the community to be served by the branch,

(7)  whether or not its corporate powers, insofar as they will be exercised through the proposed insured branch, are consistent with the purposes of this Act, and

(8)  the probable adequacy and reliability of information supplied and to be supplied by the bank to the Corporation to enable it to carry out its functions under this Act.

[Codified to 12 U.S.C. 1815(b)]

[Source:  Section 2[5(b)] of the Act of September 21, 1950 (Pub. L. No. 797), effective September 21, 1950, as added by section 6(c)(7) of the Act of September 17, 1978 (Pub. L. No. 95--369; 92 Stat. 616), effective September 17, 1978, and as amended by section 206(a)(6) of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103 Stat. 196), effective August 9, 1989; section 602(a)(2) of title VI of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2288), effective September 23, 1994; section 8(a)(2) of the Act of February 15, 2006 (Pub. L. No. 109--173; 119 Stat. 3610), effective date shall take effect on the day of the merger of the Bank Insurance Fund and the Savings Association Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of 2005]

(c)  PROTECTION TO DEPOSIT INSURANCE FUND; SURETY BOND PLEDGE OF ASSETS, ETC.; INJUNCTION.--(1)  Before any branch of a foreign bank becomes an insured branch, the bank shall deliver to the Corporation or as the Corporation may direct a surety bond, a pledge of assets, or both, in such amounts and of such types as the Corporation may require or approve, for the purpose set forth in paragraph (4) of this subsection.

(2)  After any branch of a foreign bank becomes an insured branch, the bank shall maintain on deposit with the Corporation, or as the Corporation may direct, surety bonds or assets or both, in such amounts and of such types as shall be determined from time to time in accordance with such regulations as the Board of Directors may prescribe. Such regulations may impose differing requirements on the basis of any factors which in the judgment of the Board of Directors are reasonably related to the purpose set forth in paragraph (4).

(3)  The Corporation may require of any given bank larger deposits of bonds and assets than required under paragraph (2) of this subsection if, in the judgment of the Corporation, the situation of that bank or any branch thereof is or becomes such that the deposits of bonds and assets otherwise required under this section would not adequately fulfill the purpose set forth in paragraph (4). The imposition of any such additional requirements may be without notice or opportunity for hearing, but the Corporation shall afford an opportunity to any such bank to apply for a reduction or removal of any such additional requirements so imposed.

(4)  The purpose of the surety bonds and pledges of assets required under this subsection is to provide protection to the Deposit Insurance Fund against the risks entailed in insuring the domestic deposits of a foreign bank whose activities, assets, and personnel are in large part outside the jurisdiction of the United States. In the implementation of its authority under this subsection, however, the Corporation shall endeavor to avoid imposing requirements on such banks which would unnecessarily place them at a competitive disadvantage in relation to domestically incorporated banks.

(5)  In the case of any failure or threatened failure of a foreign bank to comply with any requirement imposed under this subsection (c), the Corporation, in addition to all other administrative and judicial remedies, may apply to any United States district court, or United States court of any territory, within the jurisdiction of which any branch of the bank is located, for an injunction to compel such bank and any officer, employee, or agent thereof, or any other person having custody or control of any of its assets, to deliver to the Corporation such assets as may be necessary to meet such requirement, and to take any other action necessary to vest the Corporation with control of assets so delivered. If the court shall determine that there has been any such failure or threatened failure to comply with any such requirement, it shall be the duty of the court to issue such injunction. The propriety of the requirement may be litigated only as provided in chapter 7 of title 5 of the United States Code, and may not be made an issue in an action for an injunction under this paragraph.

[Codified to 12 U.S.C. 1815(c)]

[Source:  Section 2[5(c)] of the Act of September 21, 1950 (Pub. L. No. 797), effective September 21, 1950, as added by section 6(c)(7) of the Act of September 17, 1978 (Pub. L. No. 95--369; 92 Stat. 616), effective September 17, 1978; section 8(a)(3) of the Act of February 15, 2006 (Pub. L. No. 109--173; 119 Stat. 3610), effective date shall take effect on the day of the merger of the Bank Insurance Fund and the Savings Association Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of 2005]

(d)  INSURANCE FEES--

(1)  IN GENERAL.--Any institution that becomes insured by the Corporation, and any noninsured branch that becomes insured by the Corporation, shall pay the Corporation any fee which the Corporation may by regulation prescribe, after giving due consideration to the need to establish and maintain the reserve ratio of the Deposit Insurance Fund.

(2)  FEE CREDITED TO THE DEPOSIT INSURANCE FUND.--The fee paid by the depository institution under paragraph (1) shall be credited to the Deposit Insurance Fund.

(3)  EXCEPTION FOR CERTAIN DEPOSITORY INSTITUTIONS.--Any depository institution that becomes an insured depository institution by operation of section 4(a) shall not pay any fee.

[Codified to 12 U.S.C. 1815(d)]

[Source:   Section 2[5(d)] of the Act of September 21, 1950 (Pub. L. No. 797), effective September 21, 1950, as added by section 206(a)(7) of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103 Stat. 196--201), effective August 9, 1989; as amended by section 302(e)(1) of title III of the Act of December 19, 1991 (Pub. L. No. 102--242; 105 Stat. 2349), effective the earlier of-- 1) 180 days after the date on which final regulations promulgated in accordance with section 302(c) of the Act become effective; or 2) January 1, 1994; section 501(a) of title V of the Act of December 19, 1991 (Pub. L. No. 102--242; 105 Stat. 2388), effective December 19, 1991; section 1607(a) of title XVI of the Act of October 28, 1992 (Pub. L. No. 102--550; 106 Stat. 4089), effective October 28, 1992; section 303(b)(6) of title III of the Act of October 28, 1992 (Pub. L. No. 102--558; 106 Stat. 4225), effective March 1, 1992; section 9 of the Act of December 17, 1993 (Pub. L. No. 103--204; 107 Stat. 2389), effective December 17, 1993; section 319(b) of title III of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2225), effective September 23, 1994; sections 2201(a) and 2702(i) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--403 and 3009--483, respectively), effective September 30, 1996; section 8(a)(4) and (5) of the Act of February 15, 2006 (Pub. L. No. 109--173; 119 Stat. 3610 and 3611), effective date shall take effect on the day of the merger of the Bank Insurance Fund and the Savings Association Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of 2005]

(e)  LIABILITY OF COMMONLY CONTROLLED DEPOSITORY INSTITUTIONS.--

(1)  IN GENERAL.--

(A)  LIABILITY ESTABLISHED.--Any insured depository institution shall be liable for any loss incurred by the Corporation, or any loss which the Corporation reasonably anticipates incurring, after [August 9, 1989], the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 in connection with--

(i)  the default of a commonly controlled insured depository institution; or

(ii)  any assistance provided by the Corporation to any commonly controlled insured depository institution in danger of default.

(B)  PAYMENT UPON NOTICE.--An insured depository institution shall pay the amount of any liability to the Corporation under subparagraph (A) upon receipt of written notice by the Corporation in accordance with this subsection.

(C)  NOTICE REQUIRED TO BE PROVIDED WITHIN 2 YEARS OF LOSS.--No insured depository institution shall be liable to the Corporation under subparagraph (A) if written notice with respect to such liability is not received by such institution before the end of the 2-year period beginning on the date the Corporation incurred the loss.

(2)  AMOUNT OF COMPENSATION; PROCEDURES.--

(A)  USE OF ESTIMATES.--When an insured depository institution is in default or requires assistance to prevent default, the Corporation shall--

(i)  in good faith, estimate the amount of the loss the Corporation will incur from such default or assistance;

(ii)  if, with respect to such insured depository institution, there is more than 1 commonly controlled insured depository institution, estimate the amount of each such commonly controlled depository institution's share of such liability; and

(iii)  advise each commonly controlled depository institution of the Corporation's estimate of the amount of such institution's liability for such losses.

(B)  PROCEDURES; IMMEDIATE PAYMENT.--The Corporation, after consultation with the appropriate Federal banking agency and the appropriate State chartering agency, shall--

(i)  on a case-by-case basis, establish the procedures and schedule under which any insured depository institution shall reimburse the Corporation for such institution's liability under paragraph (1) in connection with any commonly controlled insured depository institution; or

(ii)  require any insured depository institution to make immediate payment of the amount of such institution's liability under paragraph (1) in connection with any commonly controlled insured depository institution.

(C)  PRIORITY.--The liability of any insured depository institution under this subsection shall have priority with respect to other obligations and liabilities as follows:

(i)  SUPERIORITY.--The liability shall be superior to the following obligations and liabilities of the depository institution:

(I)  Any obligation to shareholders arising as a result of their status as shareholders (including any depository institution holding company or any shareholder or creditor of such company).

(II)  Any obligation or liability owed to any affiliate of the depository institution (including any other insured depository institution), other than any secured obligation which was secured as of May 1, 1989.

(ii)  SUBORDINATION.--The liability shall be subordinate in right and payment to the following obligations and liabilities of the depository institution:

(I)  Any deposit liability (which is not a liability described in clause (i)(II)).

(II)  Any secured obligation, other than any obligation owed to any affiliate of the depository institution (including any other insured depository institution) which was secured after May 1, 1989.

(III)  Any other general or senior liability (which is not a liability described in clause (i)).

(IV)  Any obligation subordinated to depositors or other general creditors (which is not an obligation described in clause (i)).

(D)  ADJUSTMENT OF ESTIMATED PAYMENT.--

(i)  OVERPAYMENT.--If the amount of compensation estimated by and paid to the Corporation by 1 or more such commonly controlled depository institutions is greater than the actual loss incurred by the Corporation, the Corporation shall reimburse each such commonly controlled depository institution its pro rata share of any overpayment.

(ii)  UNDERPAYMENT.--If the amount of compensation estimated by and paid to the Corporation by 1 or more such commonly controlled depository institutions is less than the actual loss incurred by the Corporation, the Corporation shall redetermine in its discretion the liability of each such commonly controlled depository institution to the Corporation and shall require each such commonly controlled depository institution to make payment of any additional liability to the Corporation.

(3)  REVIEW.--

(A)  JUDICIAL.--Actions of the Corporation shall be reviewable pursuant to chapter 7 of title 5, United States Code.

(B)  ADMINISTRATIVE.--The Corporation shall prescribe regulations and establish administrative procedures which provide for a hearing on the record for the review of--

(i)  the amount of any loss incurred by the Corporation in connection with any insured depository institution;

(ii)  the liability of individual commonly controlled depository institutions for the amount of such loss; and

(iii)  the schedule of payments to be made by such commonly controlled depository institutions.

(4)  LIMITATION ON RIGHTS OF PRIVATE PARTIES.--To the extent the exercise of any right or power of any person would impair the ability of any insured depository institution to perform such institution's obligations under this subsection--

(A)  the obligations of such insured depository institution shall supersede such right or power; and

(B)  no court may give effect to such right or power with respect to such insured depository institution.

(5)  WAIVER AUTHORITY.--

(A)  IN GENERAL.--The Corporation, in its discretion, may exempt any insured depository institution from the provisions of this subsection if the Corporation determines that such exemption is in the best interests of the Deposit Insurance Fund.

(B)  CONDITION.--During the period any exemption granted to any insured depository institution under subparagraph (A) or (C) is in effect, such insured depository institution and all other insured depository institution affiliates of such depository institution shall comply fully with the restrictions of sections 23A and 23B of the Federal Reserve Act without regard to section 23A(d)(1).

(C)  LIMITED PARTNERSHIPS.--

(i)  IN GENERAL.--The Corporation may, in its discretion, exempt any limited partnership and any affiliate of any limited partnership (other than any insured depository institution which is a majority owned subsidiary of such partnership) from the provisions of this subsection if such limited partnership or affiliate has filed a registration statement with the Securities and Exchange Commission on or before April 10, 1989, indicating that as of the date of such filing such partnership intended to acquire 1 or more insured depository institutions.

(ii)  REVIEW AND NOTICE.--Within 10 business days after the date of submission of any request for an exemption under this subparagraph together with such information as shall be reasonably requested by the Corporation, the Corporation shall make a determination on the request and shall so advise the applicant.

(6)  EXCLUSION FOR INSTITUTIONS ACQUIRED IN DEBT COLLECTIONS

Any depository institution shall not be treated as commonly controlled, for purposes of this subsection, during the 5-year period beginning on the date of an acquisition described in subparagraph (A) or such longer period as the Corporation may determine after written application by the acquirer, if--

(A)  1 depository institution controls another by virtue of ownership of voting shares acquired in securing or collecting a debt previously contracted in good faith; and

(B)  during the period beginning on August 9, 1989, and ending upon the expiration of the exclusion, the controlling bank and all other insured depository institution affiliates of such controlling bank comply fully with the restrictions of sections 371c and 371c-1 of this title, without regard to section 371c(d)(1) of this title, in transactions with the acquired insured depository institution.

(7)  EXCEPTION FOR CERTAIN FSLIC ASSISTED INSTITUTIONS

No depository institution shall have any liability to the Corporation under this subsection as the result of the default of, or assistance provided with respect to, an insured depository institution which is an affiliate of such depository institution if--

(A)  such affiliate was receiving cash payments from the Federal Savings and Loan Insurance Corporation under an assistance agreement or note entered into before August 9, 1989;

(B)  the Federal Savings and Loan Insurance Corporation, or such other entity which has succeeded to the payment obligations of such Corporation with respect to such assistance agreement or note, is unable to continue such payments; and

(C)  such affiliate--

(i)  is in default or in need of assistance solely as a result of the failure to meet the payment obligations referred to in subparagraph (B); and

(ii)  is not otherwise in breach of the terms of any assistance agreement or note which would authorize the Federal Savings and Loan Insurance Corporation or such other successor entity, pursuant to the terms of such assistance agreement or note, to refuse to make such payments.

(8)  COMMONLY CONTROLLED DEFINED.--For purposes of this subsection, depository institutions are commonly controlled if--

(A)  such institutions are controlled by the same company; or

(B)  1 depository institution is controlled by another depository institution.

[Codified to 12 U.S.C. 1815(e)]

[Source:  Section 2[5(e)] of the Act of September 21, 1950 (Pub. L. No. 797), effective September 21, 1950, as added by section 206(a)(7) of title II of the Act of August 9, 1989 (Pub. L. No. 101--73; 103 Stat. 201--205), effective August 9, 1989; section 602(a)(3) of title VI of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2288), effective September 23 1994; section 8(a)(6) of the Act of February 15, 2006 (Pub. L. No. 109--173; 119 Stat. 3611), effective date shall take effect on the day of the merger of the Bank Insurance Fund and the Savings Association Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of 2005; section 703 of title VII of the Act of October 13, 2006 (Pub. L. No. 109--351; 120 Stat. 1986), effective October 13, 2006]

NOTES

Derivation.  Section 5(a) derives from section 12B(f)(2) of the Federal Reserve Act, as added by section 101[12B(f)(2)] of title I of the Act of August 23, 1935 (Pub. L. No. 305; 49 Stat. 687), effective August 23, 1935 and as amended by section 703(c) of title VII of the Act of October 15, 1982 (Pub. L. No. 97--320; 96 Stat. 1539), effective October 15, 1982. By section 1 of the Act of September 21, 1950 (Pub. L. No. 797; 64 Stat. 873), effective September 21, 1950, section 12B of the Federal Reserve Act was withdrawn as a part of that Act and was made a separate act known as the "Federal Deposit Insurance Act."

Sections 5(b) and (c) were added by section 6(c)(7) of the Act of September 17, 1978 (Pub. L. No. 95--369; 92 Stat. 616), effective September 17, 1978. Sections 5(d) and (e) were added by section 206(a) of the Act of August 9, 1989 (Pub. L. No. 101--73; 103 Stat. 196), effective August 9, 1989.

FIRRE Act provision for newly insured thrifts. Section 206(b) of the Act of August 9, 1989 (Pub. L. 101--73; 103 Stat. 205) provides as follows:

(b)  NEWLY INSURED THRIFT PROVISION.--Any insured depository institution (as defined in section 3(c)(2) of the Federal Deposit Insurance Act, as added by section 204(c) of this Act)--

(1)  which was an insured institution (as defined in section 401(a) of the National Housing Act, as in effect before the date of the enactment of this Act) on the day before the date of the enactment of this Act;

(2)  the board of directors of which determined, before April 1, 1987, to terminate such association's status as an insured institution (as so defined) as evidenced in sworn minutes of the board of directors meeting held before such date;

(3)  had insured deposits of less than $11,000,000 on April 1, 1987; and

(4)  was an insured institution (as so defined) for less than 1 year as of April 1, 1987,

may cease to be a Savings Association Insurance Fund member and become a Bank Insurance Fund member at any time during the 2-year period beginning on the date of the enactment of this Act without the approval of the Federal Deposit Insurance Corporation under section 5(d)(2) of the Federal Deposit Insurance Act (as added by subsection (a) of this section) and without incurring any liability for any exit or entrance fee imposed under such section 5(d)(2).


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