1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

11-9-1994

Seklua v. FDIC, Inc.

Precedential or Non-Precedential:

Docket 93-3596

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1994

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1994 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Seklua v. FDIC, Inc." (1994). 1994 Decisions. Paper 180.

http://digitalcommons.law.villanova.edu/thirdcircuit_1994/180
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 ___________ 

 No. 93-3596 

 ___________ 

 RAYMOND SEKULA and L. KATHLEEN SEKULA 

v. 

 FEDERAL DEPOSIT INSURANCE CORPORATION; 

 RESOLUTION TRUST CORPORATION 

 Raymond F. Sekula and 

 L. Kathleen Sekula, 

 Appellants 

 _______________________________________________ 

 On Appeal from the United States District Court 

 for the Western District of Pennsylvania 

 (D.C. Civil Action No. 93-cv-00073) 

 ___________________ 

 Argued June 1, 1994 

 Before: SCIRICA, NYGAARD and ALDISERT, Circuit Judges

 (Filed November 9, 1994) 

 S. MICHAEL STREIB, ESQUIRE (Argued) 

 Grant Building, Suite 230 

 Pittsburgh, Pennsylvania 15219 

 Attorney for Appellants 

 Z. SCOTT BIRDWELL, ESQUIRE (Argued) 

 Federal Deposit Insurance Corporation 

 550 17th Street, N.W. 

 Washington, D.C. 20429 

 Attorney for Appellee, 

 Federal Deposit Insurance Corporation 

 PATRICIA A. TRUJILLO, ESQUIRE 

 Saul, Ewing, Remick & Saul 

 3800 Centre Square West 

 Philadelphia, Pennsylvania 19102 

 MITCHELL PLAVE, ESQUIRE 

 Resolution Trust Corporation 

 550 17th Street, N.W. 

 Washington, D.C. 20429 

 Attorneys for Appellee, 

 Resolution Trust Corporation 

 __________________ 

 OPINION OF THE COURT 

 __________________ 

SCIRICA, Circuit Judge. 

 This is a dispute over the interpretation of a 

regulation governing the amount of insurance coverage provided 

for federally insured joint accounts in a failed savings and loan 

association. At issue is whether the funds in joint accounts are 

insured as a single unit or as multiple units and, specifically, 

whether the two holders of several joint accounts are insured for 

up to $100,000 or for up to $200,000. Plaintiffs, Raymond and 

Kathleen Sekula, contend the regulation provides that each of 

them is insured for up to $100,000 for funds held in their joint 

accounts and that together they are insured for up to $200,000. 

Defendants, the Federal Deposit Insurance Corporation ("FDIC") 

and the Resolution Trust Corporation ("RTC"), maintain the 

regulation limits the insurance to an aggregated $100,000 

maximum. The district court agreed with the FDIC/RTC (hereafter 
RTC), and granted summary judgment to the agency.1 The Sekulas 

appealed. We will affirm the district court. 

 

1. The district court granted summary judgment to the RTC, 

holding that five of the Sekulas' six accounts should be 

aggregated and insured to a total of $100,000. The court denied 

summary judgment with respect to the sixth account, a certificate 

of deposit, directing the appellees to hold a hearing as to the 

ownership of that account. Disposition of that dispute is not 

relevant to our interpretation of the regulation. 

I. 
 On November 15, 1991, the Office of Thrift Supervision 

declared Atlantic Financial Savings, F.A. insolvent and appointed 

the RTC as receiver. The RTC has the responsibility for 

resolving the financial affairs of failed savings and loan 

institutions. 12 U.S.C. § 1441a(b)(3) (Supp. V 1993). In 

carrying out its duties, the RTC has the same powers the FDIC has 

under the Federal Deposit Insurance Act ("the Act"), 12 U.S.C. § 

1821 (Supp. V 1993).2 It can approve or reject claims for 

insured deposits and determine the amount of insurance to which 

depositors are entitled under the Act. Under that authority, the 

RTC identified the eligible insured accounts at Atlantic 

Financial on the date it failed and paid insurance on what it 

calculated to be the insured portion of the accounts. 

 The Sekulas held six accounts at Atlantic Financial 

when the institution was declared insolvent. Each contained a 

signature card designated in the name of "Raymond F. Sekula or L. 

 

2. Congress enacted the Financial Institutions Reform and 

Recovery Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 

183 (1989) (codified at various locations in 12 U.S.C.) as a 

response to the crisis in the savings and loan industry that drew 

so much public attention in recent years. It was designed to 

improve the existing regulatory scheme and one of its purposes 

was to establish a new corporation, the RTC, to contain, manage, 

and resolve failed savings associations. The RTC in large part 

took over the former role of the FDIC which, in turn, took on new 

duties, including the functions of the Federal Savings and Loan 

Deposit Insurance Corporation, which was ended. See Rosa v. 

Resolution Trust Corp., 938 F.2d 383, 388 (3d Cir.), cert.

denied, 112 S. Ct. 582 (1991); 1 Gregory Pulles et al., Firrea, 

Introduction (Supp. 1993). At oral argument, counsel for 

appellees stated that the RTC and the FDIC spoke with one voice 

on the issues in this case. 
Kathleen Sekula" or "L. Kathleen Sekula or Raymond F. Sekula." 

No other persons had ownership interests in the accounts. The 

total amount in the six accounts was $169,717.52, distributed as 

follows: 

 Number Balance 

 00000132006597 $ 2,015.48 

 00000357968841 32,691.51 

 00000354131716 12,147.83 

 00000357236116 15,174.67 

 00000357658160 50,105.82 

 90000356560995 57,582.21

 Total 169,717.52 

The RTC maintained that only $100,000 of the total $169,717.52 

was insured, and that Raymond and Kathleen were therefore 

entitled to $100,000 in the aggregate, which it paid them. The 

Sekulas contended the entire amount was insured because they each 

were entitled to receive up to $100,000 for their loss from the 

insured accounts -- up to an aggregate of $200,000.3 

II. 

 On the date Atlantic Financial was declared insolvent, 

the relevant statute on aggregating deposits provided: 

 

3. The RTC initially treated all six accounts as joint accounts, 

although the Sekulas claimed two of the accounts were actually 

single ownership accounts, one belonging to Raymond Sekula and 

one to Kathleen Sekula. They contended those two accounts should 

have been insured separately for up to $100,000 each. The matter 

was unresolved at the time of appeal, but a hearing had been 

scheduled. At oral argument, counsel for the Sekulas informed 

the court that the amount in dispute in this appeal had been 

reduced to $13,000 as a result of the hearing. We shall proceed, 

however, as if all the accounts were joint accounts; the amount 

in dispute does not affect our interpretation of the regulation. 
[I]n determining the amount due to any 

depositor there shall be added together all 

deposits in the depository institution 

maintained in the same capacity and the same 

right for his benefit either in his own name 

or in the names of others . . . . 

12 U.S.C. § 1813(m)(1) (1988).4 Congress gave the FDIC the power 

to promulgate regulations governing the determination of net 

amounts due to depositors for deposits in insured depository 

institutions: 

For the purpose of clarifying and defining 

the insurance coverage under this subsection 

and subsection (i) of section 1817 . . . the 

[FDIC] is authorized to define, with such 

classifications and exceptions as it may 

prescribe, terms used in those subsections . 

. . and the extent of insurance coverage 

resulting therefrom. 

12 U.S.C. § 1813(m)(1) (1988). Accordingly, Congress delegated 

authority to the FDIC (and its successor the RTC) to define the 

Act in promulgating the regulations and to apply them. The RTC's 

determination of the Sekulas' deposit insurance coverage is 

 

4. The current version of the Federal Deposit Insurance Act 

provides: 

 For the purpose of determining the net 

amount due to any depositor under [12 U.S.C. 

§ 1821(a)(1)(B)], the Corporation shall 

aggregate the amounts of all deposits in the 

insured depository institution which are 

maintained by a depositor in the same 

capacity and the same right for the benefit 

of the depositor . . . . 

12 U.S.C. § 1821(a)(1)(C) (Supp. V 1993). 
governed by those regulations promulgated by the FDIC pursuant to 

12 U.S.C. § 1813(m)(1) (1988)5 and set forth in 12 C.F.R. Part 

330. 

 The regulation in question, 12 C.F.R. § 330.7(b) 

(1991), directs how insurance is to be calculated for joint 

accounts. It provides: 

 (b) Determination of insurance coverage. All 

qualifying joint accounts owned by the same 

combination of individuals shall first be 

added together and insured up to $100,000 in 

the aggregate. The interests of each coowner in all qualifying joint accounts, 

whether owned by the same or different 

combinations of persons, shall then be added 

together and the total shall be insured up to 

$100,000. 

12 C.F.R. § 330.7(b) (1991).6 The RTC interpreted this 

regulation to limit the Sekulas' insured aggregate to $100,000. 

 

5. The Sekulas suggest that because this statute has been 

changed, the RTC's interpretation is entitled to no deference, 

but they do not say why and cite no authority. As the district 

court noted, the 1991 FDIC Improvement Act substantially 

reenacted the statutory scheme regarding the aggregation of a 

depositor's accounts for determining the net amount of insurance 

due each depositor. 12 U.S.C. § 1821(a)(1) (as amended 1991). 

We see no substantial change in the relevant statutory 

provisions. 

6. Subsection (a) of 12 C.F.R. § 330.7 describes the insurance 

coverage for qualifying joint accounts separately from that for 

individually held accounts. Subsection (c) discusses how 

accounts qualify, and (d) describes how joint accounts are 

treated if they do not qualify. Finally, subsection (e) deems 

the interests of co-owners of joint accounts to be equal unless 

otherwise stated in the insured depository institution's deposit 

account records. 

 The wording of the current edition of 12 C.F.R. § 330.7 is 

identical to that of the 1991 edition. 
 The Sekulas raise two principal issues on appeal. 

First, they contend the proper interpretation of the language of 

the regulation provides each of them up to $100,000 insurance 

coverage on their jointly held accounts -- and, consequently, 

that the entire amount on deposit in their joint accounts was 

insured. Second, they claim the RTC's interpretation of the 

regulation constitutes substantive rule-making and is invalid 

because it was not promulgated in accordance with the 

Administrative Procedures Act, 5 U.S.C. § 553(b) and (c) (1988). 

They also claim that promulgation of an alleged substantive 

change affecting their rights without affording them notice and 

an opportunity for comment as required by the APA denied them due 

process of law. 

 Neither in their notice of appeal nor in their brief 

have the Sekulas explicitly contested the RTC's interpretation of 

the statute requiring aggregation of deposits. What the Sekulas 

have expressly challenged is the fidelity of the RTC's method of 

calculation to the language of its regulation. Nevertheless, it 

is apparent from the thrust of their argument that they also 

implicitly challenge the RTC's implementation of its statutory 

directive. 

III. 

 A. Review of Agency's Regulation.

 When reviewing an agency's construction of a statute, 

if the intent of Congress is clear, then we must give effect to 
that intent. Chevron, U.S.A. v. Natural Resources Defense 

Council, Inc., 467 U.S. 837, 842-43 (1984). If the statute is 

silent or ambiguous with respect to a specific issue, then a 

deference standard applies, and the question for the court 

becomes whether the agency's answer is based on a reasonable 

construction of the statute. Chevron, 467 U.S. at 843. In 

determining whether an agency's regulation complies with its 

congressional mandate, we look to see whether the regulation 

harmonizes with the plain language of the statute, its origin, 

and its purpose. National Muffler Dealers Ass'n v. United 

States, 440 U.S. 472, 477 (1979). So long as the regulation 

bears a fair relationship to the language of the statute, 

reflects the views of those who sought its enactment, and matches 

the purpose they articulated, it will merit deference. National 

Muffler Dealers, 440 U.S. at 484. 

 The statute, 12 U.S.C. § 1813(m)(1), does not 

explicitly provide that joint deposit account holders are to be 

treated and limited as a single depositor. Accordingly, we must 

examine whether the agency's regulation, and its interpretation, 

comport with the general congressional directive. Because 

congressional intent to aggregate jointly held deposits and limit 

insurance of that aggregate is apparent from the legislative 

history behind the enactment, the RTC's interpretation is based 

on a reasonable construction of the statute.7

 

7. Although we believe the intent of Congress is clear, it also 

is true that Congress has not spoken to "the precise question at 
 12 U.S.C. § 1813(m)(1) directs the RTC to aggregate 

deposits: 

`insured deposit' [or] net amount due to any 

depositor . . . shall be determined 

according to such regulations as the [RTC] 

may prescribe, and in determining the amount 

due to any depositor there shall be added 

together all deposits in the depository 

institution maintained in the same capacity 

and the same right for his benefit either in 

his own name or in the names of others . . . 

. 

 

12 U.S.C. § 1813(m)(1) (1988). The legislative history behind 

the subsection reveals that the incorporation of section 

1813(m)(1) into the statute was intended to prevent a single 

depositor from exceeding the statutory ceiling on insurance 

coverage through other means. The notion that holders of a joint 

account would be insured as a single entity was integral to the 

deposit insurance scheme from the beginning.8 By the mid-1960s, 

however, there were significant problems with the administration 

of the federal bank deposit insurance program. Depositors were 

becoming increasingly adept at evading the limits Congress had 

set on deposit insurance.9 Accordingly, Congress overhauled the 

(..continued) 

issue." Chevron, 467 U.S. at 843. We normally grant deference 

to the agency's regulation where Congress has "left a gap for the 

agency to fill," by an express delegation of regulatory 

authority, Chevron 467 U.S. at 843-44. The problem here, 

however, as we shall see, is that the regulation itself is 

ambiguous. 

8. See K.E. Scott, Some Answers to Account Insurance Problems, 

23 The Business Lawyer 493 (1968). 

9. In one infamous case, the FSLIC discovered four husband-wife 

couples who had established 50 different accounts, each held by a 
statute, directing the bank insurance agencies to develop 

regulations that: 

would enable the insuring agencies to bar the 

use of devices such as numerous joint 

accounts in various combinations . . . to 

obtain insurance far in excess of the limits 

established by Congress. 

112 Cong. Rec. 26,472-73 (1966) (statement of Senator Robertson). 

See also 112 Cong. Rec. 25,007 (1966) (statement of Congressman 

Ashley) ("[T]he purpose of my amendment [subsection 1813(m)(1)] 

is to clarify the power of the insuring agencies to prevent the 

circumvention of the insurance limit by the device of multiple 

accounts in the same institution.") 

 The agency implemented its statutory directive by 

promulgating the regulatory scheme, establishing four categories 

of accounts: single deposit, testamentary, joint, and trust 

accounts. Within each of those categories, depositors' insurance 

coverage was capped at the statutory maximum. The regulations 

provide that in the joint account category any combination of 

individuals holding joint accounts is subject to the statutory 

limit and any individual participating in joint accounts with 

different combinations of individuals is likewise limited by the 

cap.10

(..continued) 

different combination of the eight people. Because eight people 

could generate 247 different combinations of joint accounts, it 

would have been possible for those four couples to insure over 

$3.7 million by use of joint accounts. Scott, supra, at 499. 

10. See Scott, supra, at 504-08. 
 Unfortunately, the RTC's regulation is marred by a 

textual ambiguity. There is more than one plausible reading of 

the regulation -- one offered by the RTC and another by the 

Sekulas -- and neither is immediately evident from the words 

themselves. Only the RTC's reading, however, is consistent with 

the intent and purpose of the statute, as revealed by the text 

and the legislative history. 

 The ambiguity arises because of the phrase "the same or 

different combinations of persons," in the second sentence of 

subsection (b) of the regulation. See 12 C.F.R. § 330.7(b) 

(1991). According to the RTC, subsection (b) provides insurance 

up to the maximum of $100,000 for the aggregate of deposits of 

joint account holders. Thus, the second sentence of the 

subsection recognizes that to prevent an individual exceeding the 

statutory limit in the joint account category, his interests in 

joint accounts held with different combinations of individuals 

must be aggregated and the total must be capped at $100,000. The 

Sekulas, on the other hand, contend that the use of the word 

"same" in the second sentence explicitly provides insurance 

coverage for their individual interests in all joint accounts in 

which they participate.11 

 B. Interpretation of the Regulation. 

 

11. The Sekulas have not addressed the problems raised by the 

inconsistency of their reading with the statute's mandate to 

aggregate. 
 Generally, we defer to an agency's consistent 

interpretation of its own regulation unless it is "plainly 

erroneous or inconsistent with the regulation." Bowles v. 

Seminole Rock and Sand Co., 325 U.S. 410, 414 (1945). 

Nevertheless, "this deference does not permit us to defer to an 

`interpretation' . . . that strains `the plain and natural 

meaning of words . . . ." Director, Office of Workers' 

Compensation Programs v. Mangifest, 826 F.2d 1318, 1324 (3d Cir. 

1987), and is "tempered by our duty to independently insure that 

the agency's interpretation comports with the language it has 

adopted." Director, Office of Workers' Compensation Programs v. 

Gardner, 882 F.2d 67, 70 (3d Cir. 1989). 

 The difficulty here is that the legislative regulation 

is ambiguous. If the regulation were clear and comported with 

the statutory directive, then, as a legislative rule, it would be 

entitled to deference. Chevron, 467 U.S. at 844. Because the 

regulation is unclear, however, we will look to the agency's 

interpretation of its regulation and ascertain whether it is 

compatible with the intent of Congress. We also will examine the 

regulation in view of the accepted standards of statutory 

construction.12 In reviewing an agency's interpretation of its 

 

12. See Chevron, 467 U.S. at 843 n.9 ("If a court, employing 

traditional tools of statutory construction, ascertains that 

Congress had an intention on the precise question at issue, that 

intention is the law and must be given effect.") 
ambiguously worded regulation, we grant less deference than 

otherwise.13

1. 

 In making its determination, the RTC applied its 

regulation as follows: implementing the first sentence, it added 

all the Sekulas' qualifying joint accounts and determined that 

the total was $169,717.52, of which only $100,000 was insured; 

there was no need to apply the second sentence because the funds 

here were held by the same combination of persons as in step one 

and neither co-owner had ownership interests in joint accounts 

involving third parties. There was no possibility that either of 

the Sekulas would exceed the statutory maximum in the joint 

account category. 

 By contrast, the Sekulas contend the proper application 

of the regulation is that, first, their joint accounts are 

totaled and insured in the amount of $100,000. Then, the 

interests each of them has in all joint qualifying accounts he or 

 

13. We noted in International Raw Materials v. Stauffer Chemical 

Co., 978 F.2d 1318, 1325 n.9 (3d Cir. 1992), cert. denied, 113 

S.Ct. 1588 (1993), that we had not decided whether Chevron, 467 

U.S. at 843-44, which counselled judicial deference to an 

agency's legislative rules, overruled General Elec. Co. v. 

Gilbert, 429 U.S. 125, 141-42 (1976), which held that an agency's 

interpretive decisions demanded less judicial deference. The 

distinction relates to agency interpretations which are not made 

in the context of legislative rule-making. See Cass R. Sunstein, 

Law and Administration after Chevron, 90 Colum. L. Rev. 2071, 

2093-94 (1990). Because the agency here made an interpretation 

in the context of legislative rule-making, we need not decide 

whether the Gilbert standard survives. Cf. Reich v. Local 30, 

Int'l Bhd. of Teamsters, 6 F.3d 978 (3d Cir. 1993). 
she holds are totaled and each person's cumulative interests also 

are insured in the amount of $100,000. The Sekulas claim this 

calculation recognizes that each of them has a half interest of 

$84,858.76 in their joint accounts (or a total of $167,717.52) 

and all of that amount is covered. The problem with this 

approach, however, is that it requires elision of part of the 

regulation and ignores the plain intent of the statutory 

directive. 

2. 

 The Sekulas claim to rely on the plain meaning rule in 

order to harvest the maximum coverage from the regulation.14 To 

reach their desired result they claim to give plain meaning to 

every word of the regulation's second sentence, which states, 

"the interests of each co-owner in all qualifying joint accounts, 

whether owned by the same or different combinations of persons," 

shall be added and insured up to $100,000.15 The Sekulas 

 

14. The plain meaning rule is the basic principle of statutory 

construction. "[T]he meaning of a statute must, in the first 

instance, be sought in the language in which the act is framed, 

and if that is plain, . . . the sole function of the courts is to 

enforce it according to its terms." Caminetti v. United States, 

242 U.S. 470, 485 (1917). While the rule is one of statutory 

construction, it also has been applied to agency regulations. 

See, e.g., Director, Office of Workers' Compensation Programs v. 

Mangifest, 826 F.2d 1318, 1324 (3d Cir. 1987); Bethlehem Steel 

Corp. v. Occupational Safety and Health Review Comm'n, 573 F.2d 

157, 161 (3d Cir. 1978). 

15. The interests to be totaled in this step are not explicitly 

identified as insured or uninsured interests, and the Sekulas 

contend that the word "interests" must therefore be taken to mean 

all the interests, without qualification, that each of them has 
particularly focus on the word "same" in this sentence. 

According to their reading, the word "same" compels the 

conclusion that the individual's interest in all joint accounts 

is insured for $100,000 and that the RTC's interpretation ignores 

this word. In contrast to their rigorous reading of the second 

sentence, however, the Sekulas ignore the first sentence of the 

regulation, which requires that "all joint deposit accounts owned 

by the same combination of individuals" shall be aggregated and 

insured only up to the statutory limit. 

 Another fundamental rule of construction is that effect 

must be given to every part of a statute or regulation, so that 

no part will be meaningless. One must look at the entire 

provision, rather than seize on one part in isolation.16

(..continued) 

in all qualifying joint accounts. The RTC contends that we must 

limit the interests included in the second step's calculation to 

those interests that would qualify for insurance under the first 

step. Although we believe that, in the context of the statute 

and of other parts of the regulations, step two does presume that 

the term "interests" means "insured interests," we need not rely 

on that factor because we agree with the RTC's interpretation on 

other grounds. 

16. "Words . . . have only a communal existence; . . . the 

meaning of each interpenetrate[s] the other, . . ." National 

Labor Relations Bd. v. Federbush Co., 121 F.2d 954, 957 (2d Cir. 

1941); see also King v. St. Vincent's Hosp., 112 S. Ct. 570, 574 

(1991) ("the meaning of statutory language, plain or not, depends 

on context"); Pennsylvania Dep't of Public Welfare v. United 

States Dep't of Health and Human Services, 928 F.2d 1378, 1385 

(3d Cir. 1991) (courts should avoid a construction that renders 

any provision superfluous) (citing United States v. Menasche, 348 

U.S. 528, 538-39 (1955)). When possible, every word should be 

given effect "so that no part will be inoperative or superfluous, 

void or insignificant." Pennsylvania Dep't of Public Welfare, 

928 F.2d at 1385 (quoting Norman J. Singer, 2A Sutherland 

Statutory Construction, § 46.06 (5th Ed. 1992)). 
Our task is to give effect to all parts of the regulation, 

without trampling on the plain meaning of the words. Under the 

Sekulas' interpretation, the first sentence of the regulation 

would serve no purpose and the determination under that sentence 

that all joint accounts owned by them are aggregated and insured 

up to $100,000 would be inconsequential. According to the 

Sekulas, the second sentence requires the RTC to insure each of 

them for $100,000 for their individual interests in their joint 

accounts. By that reading, either the second sentence supplants 

insurance coverage calculated under the first sentence or it 

gives holders of joint accounts multiple insurance coverage on 

those accounts. Neither alternative is reasonable. The first 

alternative would collapse into one step what is clearly meant to 

be a two-step process under the regulation. The second 

alternative would violate the clear intent of the regulatory 

scheme: to limit the insurable interests of holders of joint 

accounts. We cannot find a way to give meaning to the first step 

of the regulation other than by limiting the application of step 

two to individuals who hold joint accounts with different 

combinations of persons. 

 In fact, the word "same," in the second sentence, was 

only inserted in the 1991 edition of the regulation. The second 

sentence of the prior regulation referred only to accounts owned 

by "different combinations of individuals."17 The RTC points out 

 

17. The pre-1991 regulation, 12 C.F.R. § 330.9, which first 

appeared in the 1988 C.F.R., used two sub-sections to describe 
the word was inserted merely to state the existing rule more 

clearly -- that a person's insured interests in joint accounts 

owned with the "same" combination of persons as in step one are, 

in step two, aggregated with the insured interests in any joint 

accounts he or she holds with different combinations of persons. 

The individual's insurable interest in this aggregate is likewise 

limited by the statutory cap. Thus, no individual may receive 

more than $100,000 of insurance coverage in the joint account 

category. Although we recognize the ambiguity the word "same" 

creates, we believe that the addition was a technical change that 

clarified the existing rule, but did not change insurance 

coverage.18 We are convinced that rather than change the meaning 

(..continued) 

the two-step process that is described in one sub-section in the 

later version of the regulation. Subsections (d) and (e) state: 

 (d) Same combination of individuals. 

All joint deposit accounts owned by the same 

combination of individuals shall first be 

added together and insured up to $100,000 in 

the aggregate. 

 (e) Interest of each coowner. The 

interest of each coowner in all joint deposit 

accounts owned by different combinations of 

individuals shall then be added together and 

insured up to $100,000 in the aggregate. 

12 C.F.R. § 330.9(d) and (e) (1990). 

18. The RTC's interpretation was promulgated under the prior 

version. Thus, the Sekulas argue that the interpretation is now 

invalid. Because we do not believe that the addition of the word 

"same" changed the meaning of the regulation, we do not find that 

it compromises the RTC's interpretation. 
of the regulation, the addition of the word "same" was meant to 

cause the wording of the regulation to reflect more clearly the 

RTC's longstanding interpretation of the way the insurance on 

joint accounts is to be calculated. 

3. 

 The FDIC and RTC have consistently applied the joint 

account regulation in the manner they describe. Since 

promulgation of the regulatory scheme, the RTC and its 

predecessors have interpreted the regulations to require the 

aggregate of all accounts held jointly by the same two persons to 

be insured to the same extent as the aggregate of all accounts 

held by a single person. See Mahoney v. Federal Sav. and Loan 

Ins. Corp., 393 F.2d 156 (7th Cir.), cert. denied, 393 U.S. 837 

(1968). Indeed, all the published cases, advisory opinions, and 

published examples are in accord with the RTC's interpretation 

and demonstrate a consistent application of the joint account 

regulation. 

 Furthermore, this interpretation is consistent with the 

general principle that joint accounts are considered to be owned 

collectively and insured as a single unit. This principle is 

enunciated in the regulations, at 12 C.F.R. § 330.3(a) (1991): 

The insurance coverage provided by the Act 

and the regulations in this part is based 

upon the ownership rights and capacities in 

which deposit accounts are maintained at 

insured depository institutions. All 

deposits in an insured depository institution 

which are maintained in the same right and 

capacity (by or for the benefit of a 

particular depositor or depositors) shall be 
added together and insured in accordance with 

the regulations in this part. Deposits 

maintained in different rights and 

capacities, as recognized under this part, 

shall be insured separately from each other. 

Indeed, since the inception of the deposit insurance program, 

joint accounts have been considered to be owned collectively and 

insured as a single unit.19 Other federal courts have recognized 

and upheld the principle as axiomatic to the federal deposit 

insurance scheme. See, e.g., Kershaw v. Resolution Trust Corp., 

987 F.2d 1206, 1208-09 (5th Cir. 1993) (rejecting as unsupported 

by 12 C.F.R. § 330.7 argument of husband and wife jointly holding 

three CD's totalling more than $150,000 that regulation should be 

construed to insure interests of each spouse up to $100,000); 

Mahoney, 393 F.2d at 158 (joint accounts "constituted a single 

'member' entity, so that the $10,000 maximum applied to the 

aggregate of the three accounts."). 

 We find it particularly significant that the agency's 

interpretation of the regulation is contained in a question-andanswer booklet they disseminated to financial institutions for 

 

19. See, e.g., testimony of Judge L.E. Birdzell, General Counsel 

for the FDIC, testifying before the House Banking and Currency 

Committee in 1935: "as long as the account is in the name of the 

husband and wife, no matter what the amount is, it is treated as 

one deposit . . . ." Hearings on the Banking Act of 1935, H.R. 

5357: A Bill to Provide for the Sound, Effective, and 

Uninterrupted Operation of the Banking System, and for Other 

Purposes, Before the Committee on Banking and Currency, House of 

Representatives, 74th Cong., 1st Sess. 26-27 (1935). See also

Scott, supra. 
distribution to the public.20 The passage quoted below dates 

prior to the 1991 insertion of the word "same." It was used by 

the FDIC's predecessor, the Federal Savings and Loan Insurance 

Corporation, to explain a prior regulation on joint accounts, 12 

C.F.R. § 564.9(d) and (e) (1987); it was used to explain the 1988 

version, quoted above; and it is used today to explain the 

version that appeared in the 1991 edition of the C.F.R. The RTC 

claims the booklet passage has not changed because the prior 

versions of the regulation are identical in meaning to the 

present version. 

 The passage paraphrases the steps for determining 

deposit insurance for multiple joint accounts in answer to the 

question "How are joint accounts insured?": 

 1. First, all joint accounts that are 

identically owned (i.e. held by the same 

combination of individuals) are added 

together and the combined total is insurable 

up to the $100,000 maximum. 

 2. After step one has been completed, joint 

accounts involving different combinations of 

individuals are reviewed to determine the 

amount of each person's insurable interest 

(or share) in all joint accounts. Each 

owner's insurable interest in all joint 

accounts is added together and the total is 

 

20. The booklet, which has appeared under various titles, 

including "Your Insured Deposit," answers the question "How are 

joint accounts insured?" It states the two steps are applied so 

that "(1) no one joint account can be insured for over $100,000, 

(2) multiple joint accounts with identical ownership cannot be 

insured for over $100,000 in the aggregate, and (3) no one 

person's insured interest in the joint account category can 

exceed $100,000." Federal Deposit Insurance Corporation, Your 

Insured Deposit (1993) (emphasis added). 
insured up to the $100,000 maximum. Each 

person's interest in a joint account is 

deemed equal unless otherwise stated on the 

deposit account records. 

Federal Deposit Insurance Corporation, Your Insured Deposit

(1993). In the booklet's example, A and B share joint accounts 

with each other and separately have interests in joint accounts 

held with other individuals. Step one regards A and B as one 

depositor, entitled to a maximum of $100,000 insurance on 

deposits held in those joint accounts. Then, in step two, A's 

and B's individual interests in that insured amount are broken 

out. These interests -- which may total $50,000 apiece -- are 

added to A's and B's insured interests in joint accounts held 

with other people. This step assures that for each individual 

that aggregate of insured interests may not exceed the $100,000 

maximum. 

 As the district court found, these pamphlets were made 

available to the public. We agree that a person "proceeding in 

good faith should not be subjected to a trap brought about by an 

interpretation of a regulation hidden in the bosom of the 

agency." Gardner, 882 F.2d at 71 (quoting Mangifest, 826 F.2d at 

1325). But there is no "trap" when the agency's interpretation 

of a regulation is public and long-standing. 

 4. 

 We have consistently recognized that: 

The responsibility to promulgate clear and 

unambiguous standards is upon the Secretary. 

The test is not what he might possibly have 

intended, but what he said. If the language 
is faulty, the Secretary has the means and 

the obligation to amend. 

Bethlehem Steel v. Occupational Safety and Health Review Comm'n, 

573 F.2d 157, 161 (3d Cir. 1978); See also Mangifest, 826 F.2d 

at 1324. We agree the language of the regulation is ambiguous. 

Nevertheless, it has posed no trap for the unwary. The agency's 

interpretation and application have been consistent with the 

statute and the legislative purpose and joint account holders 

have not been misled about the impact of the regulation on their 

deposit insurance. Accordingly, because the regulation's meaning 

can be satisfactorily established by applying standard principles 

of statutory construction and by referring to the agency's 

interpretation, which is long-standing and consistent, we 

conclude that the regulation limits insurance for joint account 

deposits to a maximum of $100,000.21 

IV. 

 A. Rule-Making Procedures.

 The Sekulas contend the agency's interpretation of 12 

C.F.R. § 330.7(b) is itself a legislative or substantive rule and 

therefore is invalid because it was not promulgated in accordance 

with provisions of the APA requiring notice and an opportunity to 

comment, 5 U.S.C. § 553 (1988). But those procedures are 

 

21. While the meaning of the regulation is satisfactorily 

established by textual analysis and the agencies' long-standing 

application and interpretation of it, we hope in the future the 

RTC will be more careful in the language it adopts in its 

regulations. 
required only if a substantive change is proposed and do not 

apply to "interpretative rules, general statements of policy, or 

rules of agency organization, procedure, or practice." 5 U.S.C. 

§ 553(b)(A) (1988). Interpretive rules constitute a body of 

experience and informed judgment to which courts and litigants 

may properly resort for guidance. Interpretive rules are not 

intended to alter legal rights, but to state the agency's view of 

what existing law requires. Such rules "merely clarify or 

explain existing law or regulations." Southern California Edison 

Co. v. Federal Energy Regulatory Comm'n, 770 F.2d 779, 783 (9th 

Cir. 1985). "If the rule in question merely clarifies or 

explains existing law or regulations, it will be deemed 

interpretive." Bailey v. Sullivan, 885 F.2d 52, 62 (3d Cir. 

1989). 

 Section 330.7(b) was published by the FDIC pursuant to 

the notice and comment procedure. See 54 Fed. Reg. 52,399 (Dec. 

21, 1989); 55 Fed. Reg. 20,111 (May 15, 1990). The RTC contends 

its interpretation of the regulation merely clarified and 

explained it. The Sekulas claim the regulation was so changed by 

the RTC's interpretation that it amounted to a new rule and that 

the RTC engaged in rule-making. But we have found the 

interpretation did not change the meaning of the regulation: 

rather it merely explained and clarified it. Furthermore, agency 

manuals, guidelines, and memoranda are interpretive rules not 

subject to the APA. See Creighton Omaha Regional Health Care 
Corp. v. Bowen, 822 F.2d 785, 791 (8th Cir. 1987). The RTC's 

predecessor's publication of pamphlets describing its procedures 

for calculating insurance for joint accounts was clearly meant to 

interpret and clarify the insurance regulations, which have been 

applied consistently in accordance with the publications' 

descriptions. Because we find the RTC's interpretation of the 

regulation was not substantive rule-making, this claim must fail 

also. 

 B. Deprivation of Property Interest.

 The Sekulas' argument that they are being deprived of a 

protected property interest without due process is without merit. 

Congress gave the agency the authority to promulgate regulations 

defining the scope of its insurance coverage. 12 U.S.C. § 

1813(m)(1) (1988); Nimon v. Resolution Trust Corp., 975 F.2d 240, 

245 (5th Cir. 1992). The agency did so and provided notice to 

depositors. 

 V. 

 For the foregoing reasons, we will affirm the judgment 

of the district court.