I agree with the FDIC, for each of the asserted reasons, that the Complaint fails to state a tort claim against the FDIC for which relief may be granted.
C. The Equal Protection Claim Against the FDIC
The Second Count of the Complaint briefly alleges an equal protection claim. Complaint P16.
Although this claim is not fleshed out in the Complaint, it appears to assert that when the FDIC resolves a bank insolvency, under some circumstances it reimburses depositors to the full extent of their deposits, while in other circumstances, such as in this case, it reimburses depositors only up to the $ 100,000 guaranteed by FDIC insurance. This disparate treatment of depositors is alleged to violate equal protection of the laws.
The statutory basis for FDIC's authority to offer financial assistance to an insolvent bank in the form of contributions of funds, as well as loans, deposits, and purchase of assets and assumption of liabilities, is 12 U.S.C. § 1823(c)(1). This provision states that the FDIC may, "in its sole discretion," give an insured bank financial assistance to prevent the default of the bank, to restore a closed bank, or,
when severe financial conditions exist which threaten the stability of a significant number of insured depository institutions or of insured depository institutions possessing significant financial resources, such action is taken in order to lessen the risk to the risk to the [FDIC] posed by such insured [bank] under such threat of instability.
12 U.S.C. § 1823(c)(1)(C). The cost of this assistance may not exceed the cost of liquidating the institution unless the "continued operation of such insured depository institution is essential to provide adequate depository services in its community." 12 U.S.C. § 1823(c)(4)(A).
The grant of financial assistance to a failing bank is but one option open to the FDIC to resolve a bank's insolvency. The FDIC contends that the preferred way of resolving a bank insolvency is by finding a buyer who will purchase the bank's assets and assume its liabilities. However, when no buyer is available, the FDIC may offer financial assistance to a bank under 12 U.S.C. § 1823(c)(1)(C) in order to facilitate a purchase and assumption transaction or to restore the institution's solvency. This latter option may require that the FDIC protect all depositors to the full extent of their deposits and is justified as a means of preventing a significant disruption of the financial system.
The appropriate standard of judicial review for economic or social legislation enacted by Congress that is challenged on equal protection grounds is the highly deferential rational-basis test. See U.S.R.R. Retirement Bd. v. Fritz, 449 U.S. 166, 175, 66 L. Ed. 2d 368, 101 S. Ct. 453 (1980), reh'g denied, 450 U.S. 960, 67 L. Ed. 2d 385, 101 S. Ct. 1421 (1981). Under this standard, a classification will be upheld as constitutional if it bears a rational relationship to a legitimate state purpose. The FDIC contends persuasively that the option of giving financial assistance to an insolvent bank pursuant to 12 U.S.C. § 1823(c)(1)(C) survives this test. Certainly, the resolution of bank insolvencies in a cost-effective manner and the prevention of harmful disruptions of the nation's financial system are legitimate state purposes. The grant of authority to give financial assistance to an insolvent bank in some instances but not others, seeks to achieve those purposes "in a manner that is not patently arbitrary or irrational. . . ." U.S. R.R. Retirement Bd, 449 U.S. at 177. The statutory provisions giving the FDIC discretion to reimburse depositors up to the full amount of their deposits in some instances and not others does not constitute a denial of equal protection.
III. Claims Asserted Against Freedom Alleged to Create Liability of the FDIC as Receiver
This leaves the issue of claims of tort on the part of Freedom which are asserted to create liability on the part of the FDIC as Freedom's receiver. The FDIC demonstrates persuasively that these claims are moot. Each depositor already has a valid claim against the receivership for the pro rata share of the full amount of its deposit in excess of $ 100,000. Those claims are in no way enhanced by basing them on tortious conduct by Freedom. Any judgment would simply entitle plaintiff to a pro rata share of the receivership estate which is equal to the right it already has. Accordingly, that claim is dismissed.
The Comptroller's motion to dismiss is granted.
The FDIC's motion to dismiss is granted.
Dated: New York, N.Y.
March 17, 1992
Pierre N. Leval, U.S.D.J.