FDIC Law, Regulations, Related Acts
4000 - Advisory Opinions
Savings Association Right to Pledge Assets to Secure Deposits in Excess of the Federal Insurance Limit Under FIRREA
November 8, 1989
Pamela E. F. LeCren, Senior Attorney
Your October 2, 1989 letter to FDIC Dallas Regional Counsel, Judith Sinclair, was forwarded to the Washington, D.C. office of the FDIC's Legal Division for response. In your letter you inquire as to whether ***, a federally chartered member savings bank insured by the Savings Association Insurance Fund ("SAIF") may pledge assets to secure deposits in excess of the federal insurance limit. More specifically you indicate that you would like to confirm whether *** may continue to do so (*** has done so since 1984) given the passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") which placed formerly FSLIC insured institutions within SAIF (administered by the FDIC) and gave the FDIC certain oversight responsibility with respect to savings associations.
*** is primarily supervised by the Office of Thrift Supervision ("OTS"). Your letter encloses a communication from the *** principal supervisory agent indicating that, in the agent's opinion, the collateral security agreement does not violate any OTS regulations. At the suggestion of your principal supervisory agent you have inquired with the FDIC as to whether pledging securities to collateralize deposits in excess of the federal insurance limit would be in violation of any FDIC regulation or any statute administered by the FDIC.
Please be advised that the pledge of assets by a SAIF member savings bank to secure deposits in excess of the federal insurance limit would not violate per se any FDIC regulation or any statute administered by the FDIC as to SAIF member savings banks. Generally speaking the FDIC would not object to a pledge of assets to secure deposits assuming that the institution in question is authorized to pledge its assets in such a manner. The FDIC is not precluded, however, from prohibiting such a practice if it is determined that under all the facts and circumstances that the pledge of assets is an unsafe or unsound banking practice or it is necessary to prohibit the practice in order to prevent a serious threat to SAIF.