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4000 - Advisory Opinions


Handling of Claims Where Depositor Alleges That Balance of Account is Less Than It Should Be Due to Negligence or Willful Wrongdoing of Employee of Insured Depository Institution

FDIC-91-70 August 8, 1991 Roger A. Hood, Assistant General Counsel

This is in response to your memorandum of July 3 seeking our views on the handling of claims in cases in which a depositor in a failed insured depository institution alleges that, due to the negligence or willful wrongdoing of an employee of the institution, the depositor's account balance, as shown on the failed institution's records, is less than it should be. Our comments reflect an FDIC point of view and are offered for informational purposes only.

In my opinion, money belonging to a depositor that is tendered to, and received by, an insured institution for deposit, but that is not credited to the depositor's account, due to the negligence or willful wrongdoing of an employee of the institution, should be treated as a deposit in fact. Similarly, money belonging to a depositor that is so tendered and received and properly credited to the depositor's account, but that is improperly deducted from that account, due to the negligence or willful wrongdoing of an employee of the institution, should be treated as remaining in the account. However, a mere allegation of negligence or willful wrongdoing should not be accepted for these purposes. Rather, there should be convincing evidence to support the allegation. Such evidence may be found, for example, in the records of the depository institution, in the records of the depositor, and perhaps on occasion in affidavits by reliable and knowledgeable disinterested persons. Of course, the burden would be on the depositor to produce the requisite evidence, but the FDIC, which would possess the institution's records, ought to be reasonably cooperative.

When there is convincing evidence that, due to the negligence or willful wrongdoing of an employee of a failed insured institution, a depositor's account balance, as shown on the institution's records, is less than it should be, then the precepts of equity require, I think, that the depositor should be permitted to include the amount of the deficiency in a claim for deposit insurance. This would leave the FDIC, as (insurer and) subrogee, to seek reimbursement for the insurance payment from the receivership, which presumably would ordinarily have a bond claim based on the misconduct of the failed institution's employee. The deposit holder would have no need or right to file a claim against the receiver except for the portion of the deposit account, adjusted for the deficiency, in excess of the insured amount, if any.

When there is a lack of convincing evidence to support the allegation by a depositor that, due to the negligence or willful misconduct of an employee of a failed institution, the depositor's account balance is less than it should be, then the depositor should be permitted to file a claim in the amount which the depositor maintains is the true balance of the account. The claim will be allowed only in the amount recognized by the insurer as the proper balance. The disputed difference would not be recognized as a deposit for insurance or receivership purposes until the parties reached agreement or the issue was determined by a court. Because the insurance claim exists only if there is a deposit liability owed by the institution, the insurance claim should suffice for both purposes.

I offer the following comments with respect to the two specific examples cited in your letter.

The first involves an unauthorized withdrawal from an account of a decedent. The attorney representing the estate was reluctant to file a receivership claim, but apparently did so, and also filed a claim as an insured depositor. If the questioned withdrawal was, in fact, unauthorized and the savings and loan association was negligent in permitting it, the association's deposit liability would not have been discharged and the withdrawn amount should still be considered to be part of the deposit. The claim for deposit insurance would constitute a claim against the receivership to which FDIC would be subrogated to the extent of the insurance payment, and retained by the depositor to the extent the amount was in excess of the insured amount. The one claim serves both purposes and a separate claim is not required. In the event the withdrawn amount is found to have been authorized, or caused by the negligence of the depositor, the amount would not represent a deposit liability of the institution, and would not be insured. In this case, the claim would be approved and paid in the amount found to be due to the depositor and the withdrawn amount would not be recognized as a claim against the receivership.

Your second example involves an account opened with minimal funds, increased by a forged instrument and then reduced by a withdrawal by the forgers. The account holder claims insured deposit status in the amount withdrawn by the forgers. I assume that the amount in question consists of the "funds" deposited in the form of the forged instrument. The forged instrument does not constitute "money or its equivalent" as that term is used in Section 3 (l) of the FDI Act (12 U.S.C. 1813(l)). Accordingly, that part of the deposit balance attributable to it would not be recognized as a deposit insurance claim of the account holder, nor would it represent a claim against the receivership.

If the facts of these two examples are different from my understanding of them, I would be glad to discuss these matters further with you. My telephone number is (202) 898-3681.


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