BANK OF BOULDER, PETITIONER V. FEDERAL DEPOSIT INSURANCE
   CORPORATION

   No. 90-853

   In The Supreme Court Of The United States

   October Term, 1990

   On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Tenth Circuit

   Brief For The Respondent In Opposition

            TABLE OF CONTENTS
   Question Presented
   Opinions below
   Jurisdiction
   Statement
   Argument
   Conclusion

                            OPINIONS BELOW

   The opinion of the en banc court of appeals (Pet. App. 1a-32a) is
reported at 911 F.2d 1466.  The opinion of the court of appeals panel
(Pet. App. 33a-65a) is reported at 865 F.2d 1134.  The opinion of the
district court (Pet. App. 66a-69a) is reported at 622 F. Supp. 288.

                             JURISDICTION

   The judgment of the en banc court of appeals was entered on August
20, 1990.  The petition for a writ of certiorari was filed on November
16, 1990.  The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).

                          QUESTION PRESENTED

   Whether the Federal Deposit Insurance Corporation (FDIC), acting as
the receiver for a failed bank, may transfer a standby letter of
credit to the FDIC in its corporate capacity to facilitate a purchase
and assumption transaction involving the failed bank.

                               STATEMENT

   The Federal Deposit Insurance Corporation (FDIC), acting as
receiver of Dominion Bank of Denver (Dominion), transferred a portion
of Dominion's assets, including a standby letter of credit, to the
FDIC in its corporate capacity as part of a purchase and assumption
transaction involving Dominion.  Petitioner Bank of Boulder (Boulder),
which issued the standby letter of credit, refused the FDIC's demand
for payment on the ground that the letter was issued as a
non-transferable obligation.  The FDIC sued for payment, and the
district court granted Boulder's motion to dismiss.  Pet. App.
66a-69a.  A court of appeals panel (id. at 33a-65a) and the en banc
court of appeals (id. at 1a-32a) reversed the district court's
decision, holding that the FDIC could transfer the obligation in the
course of a purchase and assumption transaction.

   1. The Dominion Bank of Denver and Bank of Boulder are federally
insured, state-chartered banks.  In 1982, Dominion made a loan to an
individual secured by Boulder's standby letter of credit payable to
Dominion in the amount of $27,000.  The letter of credit did not
contain express terms as to transferability.  The letter stated,
however, that it was subject to the Uniform Customs and Practice for
Documentary Credits (UCP), International Chamber of Commerce Pub. No.
290 (rev. 1974), which states that "(a) credit can be transferred only
if it is expressly designated as 'transferable' by the issuing bank"
(id. at art. 46(b)).  Pet. App. 1a, 16a-17a, 26a, 68a.

   On September 30, 1983, the Colorado State Banking Commissioner
declared Dominion insolvent, closed the institution, and tendered an
appointment to the FDIC as receiver (FDIC/Receiver).  See Colo. Rev.
Stat. Sections 11-5-102, 11-5-105 (Supp. 1989).  The FDIC accepted the
appointment, see 12 U.S.C. 1821(e), and consummated a purchase and
assumption (P & A) transaction pursuant to 12 U.S.C. 1823(c)(2)(A).
/1/ Under the P & A transaction, FDIC/Receiver sold certain assets and
all liabilities of Dominion to a healthy bank and sold remaining
assets, including the Dominion letter of credit, to the FDIC in its
corporate capacity (FDIC/Corporate).  FDIC/Receiver applied the
proceeds from the sale of assets to FDIC/Corporate to pay the healthy
bank for the difference between the assets the bank purchased and the
liabilities it assumed.  On September 30, 1983, the entire transaction
was approved by the District Court for the City and County of Denver.
Pet. App. 1a-2a.

   On October 5, 1984, FDIC/Corporate attempted to draw on the letter
of credit.  Boulder twice refused to honor FDIC/Corporate's demand for
payment, and FDIC/Corporate then brought this suit against Boulder in
federal district court to obtain payment.  Boulder responded that
FDIC/Corporate was not entitled to payment because the transfer from
FDIC/Receiver to FDIC/Corporate was invalid and that the court lacked
subject matter jurisdiction to determine whether FDIC/Receiver was
entitled to payment under 12 U.S.C. 1819 (Fourth).  /2/ The district
court agreed with Boulder and dismissed the action.  Pet. App.
68a-69a.

   2. A divided panel of the court of appeals reversed, concluding
that FDIC/Receiver properly transferred the letter of credit to
FDIC/Corporate pursuant to 12 U.S.C. 1823(c)(2)(A) and federal common
law, and that subject matter jurisdiction therefore existed to
determine the claim.  Pet. App. 33a-48a.  The court of appeals granted
Boulder's petition for rehearing and suggestion for rehearing en banc
and likewise reversed the district court.  Id. at 1a-21a, 64a-65a.
The en banc court observed that although the state law on
transferability was unclear, id. at 9a-10, two independent federal law
grounds authorized the transfer of the letter of credit regardless of
any state law restrictions.  Id. at 10a-21a.  /3/

   First, the en banc court found that Section 1823(c)(2)(A) clearly
authorized the transfer of the letter of credit to FDIC/Corporate and
preempted any state law that restricted the transfer.  Pet. App.
10a-14a.  It noted that there was no dispute that FDIC/Receiver had
validly obtained possession of the letter of credit from the failed
bank by operation of law.  The only issue was whether the letter of
credit was lawfully transferred from FDIC/Receiver to FDIC/Corporate
in the course of the Dominion P & A transaction.  Id. at 10a.  The
court observed that Section 1823(c)(2)(A) authorizes FDIC/Corporate to
purchase "any" assets of a failed bank to facilitate such
transactions, 12 U.S.C. 1823(c)(2)(A), and that this authorization
overrides state law limitations on the transferability of such assets.
 Pet. App. 11a-12a.  The en banc court also noted that other federal
courts had routinely permitted the transfer of other assets,
nontransferable under state law, from FDIC/Receiver to FDIC/Corporate.
 Id. at 12a-14a.

   As an independent, alternative basis for its decision, the en banc
court held that, in the absence of Section 1823(c)(2)(A), federal
common law would provide a uniform rule permitting the transfer of
letters of credit to FDIC/Corporate in the course of P & A
transactions.  Pet. App. 15a.  The court relied on the reasoning of
United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979), which
identifies as relevant considerations whether a federal rule is
necessary to protect federal programs that "by their nature are and
must be uniform in character throughout the Nation," whether the
application of state law "would frustrate specific objectives of the
federal programs," and "the extent to which application of a federal
rule would disrupt commercial relationships predicated on state law"
(id. at 728-729).  Pet. App. 15a.

   The court concluded that a uniform federal rule as to
transferability of a failed bank's assets is necessary for
FDIC/Corporate to make a prompt and reasoned decision whether to
finance a P & A transaction.  The court explained that if there were
no uniform rule of transferability, FDIC/Corporate would be forced to
examine in detail every asset of a failed bank to determine whether
state law restricted transferability or whether the asset itself
contains such a restriction.  Pet. App. 16a-17a.  /4/ The court next
concluded that application of state law rules as to transferability of
a failed bank's assets would frustrate the FDIC's program for
resolution of failed institutions through cost-efficient P & A
transactions.  Id. at 18a-19a.  /5/ Finally, the court concluded that
a uniform federal rule permitting the transfer of letters of credit
would not disrupt commercial relationships predicated on state law
because the rule would become effective only upon failure of an
insured bank, at which point the parties could not reasonably expect
the continuation of customary commercial relationships.  Id. at
19a-20a.

   Judge Logan concurred on the basis that Colo. Rev. Stat. Sections
11-5-105 and 11-5-106 (Supp. 1989) allowed the transfer of the letter
of credit to FDIC/Corporate.  Pet. App. 21a.  Judge Baldock, joined by
two other members of the court, concurred in part and dissented in
part.  Id. at 21a-32a.  /6/

                               ARGUMENT

   The court of appeals correctly concluded that FDIC, acting as a
receiver, could transfer a standby letter of credit held by a failed
bank -- even if that asset were non-transferable under state law -- to
FDIC acting in its corporate capacity to facilitate a P & A
transaction.  The court of appeals applied settled principles of law
in deciding this case, and its holding does not conflict with any
decision of this Court or any other court of appeals.  Further review
is therefore not warranted.

   1. Petitioner contends (Pet. 7-12) that the court of appeals'
interpretation of 12 U.S.C. 1823(c)(2)(A) conflicts with other
provisions of the Federal Deposit Insurance Act, specifically 12
U.S.C. 1819 (Fourth), 12 U.S.C. 1821(d) and 12 U.S.C. 1823(d).  Those
provisions, however, simply recognize that the FDIC, acting as
receiver, is subject in various circumstances to state law.  They do
not stand for the proposition that FDIC/Receiver is subject in all
circumstances to state law, nor do they address the specific question
at issue here:  whether FDIC/Receiver may sell a letter of credit to
FDIC/Corporate to facilitate a purchase and assumption of a failed
bank.  Section 1823(c)(2)(A) does address that issue, and its plain
terms authorize the sale.  See 12 U.S.C. 1823(c)(2)(A).  Thus,
petitioners' invocation of other, irrelevant sections of federal
banking law provides no basis for this Court's review.  /7/

   2. Petitioner also incorrectly asserts (Pet. App. 13-15) that the
lower court's decision conflicts with 12 U.S.C. 1823(e).  As this
Court explained in Langley v. FDIC, 484 U.S. 86 (1987), Section
1823(e) provides that no agreement that tends to defeat FDIC's
interests is valid against FDIC unless the agreement, among other
things, is in writing, properly executed and approved, and kept as an
official bank record.  12 U.S.C. 1823(e).  Petitioner contends that
the letter of credit contains a restriction on transfer that met the
requirements of Section 1823(e) and argues, by negative implication,
that the agreement must therefore be enforceable against the FDIC.
Pet. 13-16.

   As an initial matter, it is not clear that the letter of credit
contains a restriction on transfer that meets Section 1823(e)'s
requirements.  /8/ In any event, the mere fact that an agreement meets
those requirements does not automatically make the agreement
enforceable against FDIC or immunize the agreement from the effects of
positive law.  See United States Trust Co. v. New Jersey, 431 U.S. 1,
22 (1977).  In this case, the relevant federal statute, 12 U.S.C.
1823(c)(2)(A), authorizes FDIC/Corporate to purchase "any" assets of a
failed bank to facilitate a P & A transaction.  Dominion and Boulder
could not insulate their letter of credit from that power by a private
agreement restricting the transferability of the asset.  See United
States Trust Co., 431 U.S. at 22;  Home Building & Loan Ass'n v.
Blaisdell, 290 U.S. 398, 437-438 (1934);  Hudson Water Co. v.
McCarter, 209 U.S. 349, 357 (1908).

   3. Petitioner next contends (Pet. 17-18, 24-30) that the lower
court's alternative basis for its decision -- that federal common law
requires a uniform rule of transferability of letters of credit in the
course of P & A transactions -- conflicts with opinions of this Court
in D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942) and Langley.  In
D'Oench, this Court fashioned a federal common law rule that, like its
statutory counterpart (12 U.S.C. 1823(e)) discussed in Langley,
protects the FDIC from a bank's inaccurate representations as to its
assets and from unrecorded side agreements that are not reflected in a
bank's records.  315 U.S. at 457.  Neither D'Oench nor Langley,
however, addresses the issue involved in this case -- whether
FDIC/Corporate may purchase a failed bank's letter of credit despite
state law transfer restrictions.

   Petitioner also asserts (Pet. 18-24) that even if the lower court's
ruling on federal common law is not inconsistent with Langley, the
court erred in assuming "legislative facts" from Langley and other
cases which were not part of the evidence in this case.  See Pet. App.
6a & n.3.  Petitioner has not shown, however, that this Court or the
court of appeals has misconceived the nature of P & A transactions.
The lower court properly took into account factors, such as the need
for prompt consummation of the transaction, in concluding that, if
Section 1823(c)(2)(A) did not exist, it would be appropriate under
Kimbell Foods to fashion a uniform rule to ensure the transferability
of assets from FDIC/Receiver to FDIC/Corporate.

   4. Petitioner fails to identify any conflict among the courts of
appeals on the particular statutory issue in this case -- whether
Section 1823(c)(2)(A), which authorizes FDIC/Corporate to purchase
"any" assets of a failed bank to facilitate a P & A transaction,
includes assets that are nontransferable under state law.  As the
court of appeals explained, its affirmative resolution of the issue is
consistent with the decisions of other courts holding that assets such
as tort claims and fiduciary obligations, which are not transferable
under state law, are transferable in the course of a FDIC-facilitated
P & A transaction.  Pet. App. 13a-14a & n.4.

   In an event, the decision in this case has limited future
importance.  The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73, 103 Stat. 188,
clarified existing law by expressly providing that the FDIC, acting as
receiver, may "transfer any asset or liability of the institution in
default * * * without any approval, assignment, or consent to such
transfer." FIRREA Section 212, 103 Stat. 226-227 (to be codified at 12
U.S.C. 1821(d)(2)(G)).  Thus, Congress has resolved the issue
prospectively and no further review is necessary.

                              CONCLUSION

   The petition for a writ of certiorari should be denied

   Respectfully submitted.

   KENNETH W. STARR

      Solicitor General

   MARK I. ROSEN

      Deputy General Counsel

   DOROTHY L. NICHOLS

      Associate General Counsel

   ANN S. DUROSS

      Assistant General Counsel

   COLLEEN B. BOMBARDIER

      Senior Counsel

   GREGORY E. GORE

      Counsel Federal Deposit Insurance Corporation

   FEBRUARY 1991

   /1/ Section 1823(c)(2)(A) of the Federal Deposit Insurance Act, 12
U.S.C. 1823(c)(2)(A), provides in relevant part:

      In order to facilitate a merger or consolidation of an insured
      bank * * * with an insured institution or the sale of assets of
      such insured bank and the assumption of such insured bank's
      liabilities by an insured institution, * * * the Corporation is
      authorized, in its sole discretion and upon such terms and
      conditions as the Board of Directors (of the FDIC) may prescribe
      -- (i) to purchase any such assets or assume any such
      liabilities;  * * *.

The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA), Pub. L. No. 101-73, 103 Stat. 188, makes several
non-pertinent changes to the language of this provision.  See FIRREA
Section 271, 103 Stat. 254-261.

   /2/ Prior to the enactment of FIRREA, Section 1819 (Fourth)
deprived federal courts of subject matter jurisdiction over "any such
suit to which the Corporation is a party in its capacity as receiver
of a state bank and which involves only the rights or obligations of
depositors, creditors, stockholders, and such State bank under State
law." 12 U.S.C. 1819 (Fourth).  In FIRREA, Congress limited that
provision to those cases in which the FDIC is not present as a
plaintiff;  only the preclosing rights of, or obligations owing to,
depositors, creditors or shareholders of a state-chartered institution
are involved;  and the interpretation only of state law is implicated.
 See FIRREA Section 209, 103 Stat. 216-217 (to be codified at 12
U.S.C. 1819(b)(2)(D)).

   /3/ As to Colorado law, the court observed that it "specifically
provides that a letter of credit is not normally assignable." Pet.
App. 9a, citing Colo. Rev. Stat Section 4-5-116(1) (1973).  The court
also noted, however, that Colo. Rev. Stat. Section 11-5-106(1) (Supp.
1989), which provides that "(a)ll or any part of the assets of a
(failed bank) may be sold to the corporation by the * * * liquidator,"
arguably authorizes FDIC/Receiver to transfer any asset of a failed
institution to FDIC/Corporate.  Pet. App. 10a.

   /4/ The court noted that here the letter of credit did not indicate
on its face that it was nontransferable.  Therefore, without a uniform
federal rule, FDIC/Corporate would be required to review and interpret
state law and the UCP to determine whether the asset could be
transferred.  Pet. App. 16a-17a.

   /5/ The court explained that the application of state law, with all
of its uncertainties, would create an insuperable administrative
burden and effectively foreclose the availability of the expedited P &
A transaction as an option for bank regulators when a bank is declared
insolvent.  Pet. App. 17a-18a.

   /6/ Judge Baldock believed that Colorado law did not make the
letter of credit transferable and that the court had jurisdiction over
the matter.  He disagreed with the court's decision that the
FDIC/Corporate had the right to draw on the letter of credit.  Judge
Baldock stated that it was improper to fashion a federal common law
rule when the court had decided the issue on preemption grounds.  Pet.
App. 23a.  Additionally, he stated that the court's holding on
preemption subjects the bank that had issued the letter of credit to
unanticipated risk and adversely affects state commercial laws
concerning letters of credit.  Id. at 29a-30a.  Finally, he stated
that there was no need for a federal common law rule because both
Article 5 of the Uniform Commercial Code (1985) and the UCP are in use
in all 50 states.  Pet. App. 31a-32a.

   /7/ Petitioner also argues (Pet. 10-11, 12) that the court of
appeals' decision conflicts with Trigo v. FDIC, 847 F.2d 1499,
1502-1503 n.4 (11th Cir. 1988), and FDIC v. Sumner Financial Corp.,
602 F.2d 670, 683 (5th Cir. 1979).  Petitioner relies on a footnote in
Trigo and a passage in Sumner that simply note that when FDIC is
acting as a receiver, it is generally subject to state law.  Neither
of those decisions interprets Section 1823(c)(2)(A) or addresses the
transferability of an asset from FDIC/Receiver to FDIC/Corporate.  To
the extent that petitioner challenges FDIC/Receiver's power to sell
such assets as distinct from FDIC/Corporate's power to purchase them,
Congress has eliminated any doubt that those powers are coextensive.
Section 217 of FIRREA states that FDIC, acting as receiver, "shall be
entitled to offer the assets of (a failed) depository institution for
sale to the Corporation." 103 Stat. 256 (to be codified at 12 U.S.C.
1823(d)(1)).  That provision, which mirrors FDIC/Corporate's
authorization to purchase such assets (103 Stat. 256, to be codified
as 12 U.S.C. 1823(d)(4)), confirms that the FDIC's power to sell and
its power to purchase a fail bank's assets are governed by federal
law.

   /8/ The court of appeals concluded that nothing on the face of the
letter of credit indicated that it could not be transferred.  Pet.
App. 16a.  The court of appeals also concluded that state law did not
definitively answer whether FDIC/Receiver could transfer a letter of
credit to the FDIC/Corporate.  Id. at 10a, 17a.  Although the letter
of credit indicated that it was subject to the UCP, as the court
explained, the UCP does not address the transferability of a letter of
credit from the FDIC/Receiver to the FDIC/Corporate;  it simply
contains a general restriction on transfer.  Id. at 17a.