Opinion ID: 469097
Heading Depth: 2
Heading Rank: 2

Heading: the function and operation of the fdic

Text: Literally since the formation of the government of the United States, a strong national currency and a safe and sound banking system have been the keys to stability of the nation. Absent the achievement of these goals, any nation's lifespan will be shortlived. The need to maintain a strong currency and banking system finally became so critical that the United States government developed over a period of years a comprehensive plan for economic regulation. This plan in part was generated by a plague of bank failures that affected the entire nation throughout the early years of the history of the United States. Several significant measures, including the creation of the Office of the Comptroller of the Currency and the Federal Reserve System, helped to alleviate the problem. But even as late as 1929, it became clear that the United States would have to initiate greater control to stabilize the nation's banks. The stock market crash of 1929 and the Great Depression of 1930 focused the attention of Congress upon the need for a solid means of regulation in insuring the nation's banking system. Congress established the Federal Deposit Insurance Corporation in 1933 as part of a system to restore public confidence and to safeguard bank deposits through a comprehensive deposit insurance program sponsored and regulated by the national government. FAIC Securities, Inc. v. United States, 768 F.2d 352, 354 (D.C.Cir.1985); Randall, The Federal Deposit Insurance Corporation; Regulatory Functions and Philosophy, 31 LAW & CONTEMPORARY PROBLEMS 696, 698 (1966) (hereinafter Randall, Regulatory Functions and Philosophy .) The role of the FDIC is to regulate banking practices and provide deposit insurance coverage. Although deposit insurance coverage is a function that ostensively could be handled by private enterprise, the United States also wanted to and did direct the FDIC to protect the public interest in the banking system in the United States. See, Randall, Regulatory Functions and Philosophy at 699; Skillern, Federal Deposit Insurance Corporation and the Failed Bank: The Past Decade (Part 1), 99 BANKING LAW JOURNAL 233 (1982) (hereinafter referred to as Skillern, FDIC and the Failed Bank (Part I)). The function of the FDIC is to help maintain the system by providing regulatory supervision over banks which it insures and by providing deposit insurance on a consistent nationwide basis. In this manner, the United States acts through the FDIC to achieve the government's goals of providing a safe and sound banking system to foster a healthy economic environment. When faced with a potential troublesome bank, the FDIC, by Congressional authority, is not limited merely to allowing the bank to fail, paying the depositors their insured amounts and liquidating the remaining assets. Prior to the declaration of insolvency, the FDIC may conduct an examination of the bank. It may issue cease and desist orders to prevent shoddy banking practices, and it may render direct financial assistance to the troubled bank. 12 U.S.C. Sec. 1823(c). In recognition of the important governmental functions it performs, the Federal Courts have been quick to recognize the FDIC as an agency of the United States in order to provide it with additional protections. For instance, it is now undisputed that the FDIC is not subject to the individual state's statute of limitations. The relevant statute of limitations which applies to the United States provides in part that every action for money damages brought by the United States or an officer or agency thereof ... shall be barred unless the complaint is filed within six years ... 28 U.S.C. Sec. 2415(a). This statute of limitations applies to the FDIC. Federal Deposit Insurance Corporation v. Petersen, 770 F.2d 141 (10th Cir.1985); Federal Deposit Insurance Corporation v. Haines Pipeline Construction, Inc., 617 F.Supp. 61 (W.D.Okla.1985); and Federal Deposit Insurance Corporation v. Marco Discount House, Inc., 575 F.Supp. 730 (D.P.R. 2983). Finally, it is clear that the FDIC in acting in its Corporate capacity is entitled to the benefit of application of the Federal Tort Claims Act. See Safeway Portland Employees' Federal Credit Union v. Federal Deposit Insurance Corporation, 506 F.2d 1213 (9th Cir.1974).