FDIC Law, Regulations, Related Acts
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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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