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

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4000 - Advisory Opinions

Voluntary Termination of FSLIC Status Under the CEBA


October 27, 1987

Roger A. Hood, Assistant General Counsel

This responds to your letters of September 1 and 4, 1987, regarding the application of *** for FDIC insurance. Based on the facts available to us, and after consultation with the Federal Home Loan Bank Board, we are of the opinion that *** does not qualify for the grandfather provisions of the Competitive Equality Banking Act of 1987 ("CEBA") that would exempt it from the one-year moratorium prohibiting the voluntary termination of its status as an institution insured by the Federal Savings and Loan Insurance Corporation ("FSLIC"). Accordingly, it is our opinion that *** may not convert from FSLIC insurance to FDIC insurance until the expiration of the moratorium.

CEBA exempts from the one-year moratorium any FSLIC-insured institution that, on or before March 31, 1987, had "entered into a letter of intent or a written memorandum of understanding, pursuant to a transaction which [would] result in the termination of the institution's status as an [FSLIC-]insured institution in connection with its conversion into . . . an [FDIC-insured institution]." However, our review of the statute in question leads us to conclude that the minutes of *** February 10, 1987 board of directors' meeting, which reflect that the board "authorized management to begin taking the necessary steps to apply for F.D.I.C. insurance [,]" do not constitute a "letter of intent or a written memorandum of understanding" that would qualify for the exemption.

A separate exemption is available to an FSLIC-insured institution that filed an application for FDIC insurance on or before March 31, 1987; however, *** filed its application on July 31, 1987, and so does not qualify for this exemption. Your letter reflects a misunderstanding of the trigger date for this exemption.

Finally, we take no position on the issue of exit fees and defer to the Federal Home Loan Bank Board on that question.

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