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4000 - Advisory Opinions

Savings and Loan Associations: Backed by the Full Faith and Credit of the United States


December 6, 1989

Roger A. Hood, Assistant General Counsel

The Office of Thrift Supervision has referred your September 22 letter *** to this office and has requested that we respond to your seventh and eighth questions which relate to the insurance of deposits of *** , because the insurance of deposits in that institution was transferred from the Federal Savings and Loan Insurance Corporation to the Federal Deposit Insurance Corporation by the Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub. Law 101-73 ("FIRREA"). The questions and my responses are set out below.

7.  Are deposits with U.S. savings and loan associations by non-U.S. citizens or residents abroad covered by the $100,000 deposit guarantee?

Response--The Federal Deposit Insurance Act does not contain any citizenship or residency requirements with respect to the insurance of deposits in U.S. banks or savings and loan associations. Accordingly, deposits by Dutch citizens or residents in *** would be insured to the same extent and in the same amount as deposits of any U.S. citizen or resident in similar circumstances.

8.  Is there a full guarantee, laid down by statute, in the U.S. Government, to provide additional funds should the Savings Association Insurance Fund be depleted, in order that all claims may be met, to a maximum of $100,000--per claim, per customer?

Response--Subsection 901(b) of the Competitive Equality Banking Act of 1987, Pub. Law. 100-86, provides as follows:

(b)  Sense of Congress.--In view of the findings and declarations contained in subsection (a), it is the sense of the Congress that it should reaffirm that deposits up to the statutorily prescribed amount in federally insured depository institutions are backed by the full faith and credit of the United States.

Referring to this language, the United States District Court for the District of Columbia in Massachusetts Credit Union Share Ins. Corp. v. NCUA, 693 F.Supp. 1225 (D.D.C. 1988) said:

The Court concludes that it was the clear and unambiguous intention of the Congress to guarantee the resources of federal depository institutions with the full faith and credit of the United States. Having explicitly done so, it need not either authorize or appropriate funds for this purpose until it deems it necessary.

FIRREA, enacted into law on August 9, 1989, is ample evidence of the intent of the U.S. Government to assure that depositors in federally insured depository institutions will be protected to the extent provided by law against the loss of their deposits caused by the default of any insured depository institution.

If I can be of further assistance in this matter, do not hesitate to contact me at (202) 898-3681.

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