Opinion ID: 2253153
Heading Depth: 1
Heading Rank: 6

Heading: Constitutionality of Section 1823(e)

Text: O'Malley argues that the lower courts erred in requiring strict compliance with section 1823(e). He contends that those courts should have required only substantial compliance. We find this argument contrary to established law. O'Malley argues that the release substantially complied with section 1823(e). In this case, the circuit court found that the purported release was not approved by the Bank's board of directors or loan committee and was not reflected in the minutes. O'Malley argues that it should be enough that Geary's authority to issue the release is part of the board minutes. This specific argument has been rejected., Gardner, 606 F.Supp. 1484 (agreement between bank president and note makers was not valid because the agreement was not specifically approved by the board of directors or the loan committee even though the president had the authority to make such an agreement). In addition, the Supreme Court has emphasized that courts must strictly construe the statute. ( Langley, 484 U.S. at 95, 108 S.Ct. at 403, 98 L.Ed.2d at 349.) The equities favor the FDIC and depositors, and Congress has erred on the side of certainty. ( Langley, 484 U.S. at 94-95, 108 S.Ct. at 403, 98 L.Ed.2d at 349; see also Wright, 942 F.2d at 1101; Federal Deposit Insurance Corp. v. Caporale (1st Cir.1991), 931 F.2d 1, 2 (As among borrowers, thrift regulators, depositors, and creditors, the borrower is in the best position to protect himself and must therefore suffer the risk of loss if he fails to ensure that his agreement is properly recorded).) As the appellate court noted, we are not at liberty to rewrite the plain terms of the statute. O'Malley next contends that section 1823(e), if literally applied, is unconstitutional. O'Malley argues that the statute violates due process, equal protection, and impairs contractual rights. O'Malley, however, provides little support for these arguments and little authority for his reasoning. Courts have consistently rejected similar arguments. Chatham Ventures, Inc. v. Federal Deposit Insurance Corp. (5th Cir.1981), 651 F.2d 355, 362-63; Beighley v. Federal Deposit Insurance Corp. (N.D.Tex.1987), 676 F.Supp. 130, 132-33; Resolution Trust Corp. v. Daddona (3d Cir.1993), 9 F.3d 312, 320-21; Campbell Leasing, Inc. v. Federal Deposit Insurance Corp. (5th Cir.1990), 901 F.2d 1244, 1248; see generally S. Lake, Banking Law: The D'Oench Doctrine and 12 U.S.C. § 1823(e): Overextended, but Not Unconstitutional, 43 Okla.L.Rev. 315 (1990) (discussing constitutional challenges based on taking of property without just compensation, procedural and substantive due process, and right to trial by jury).