institution's status as an insured depository institution. 12 U.S.C. § 1818(q). Citibank-Cal contends that section 7(m)(4) simply presents FDIC with an alternative to the cash payment required in section 7(m)(5). Thus, if the FDIC decides not to pay the merged institution's pro rata share of the "secondary reserve" in cash, it "may provide for transfer of such pro rata share" to the surviving institution.
It is well settled that in construing a statute, the statute must be read as a whole. King v. St. Vincent's Hospital, 499 U.S. 917, 112 S. Ct. 570 (1991). Section 7(m)(4) thus can only be understood if it is read in conjunction with Section 7 (m)(5). This court finds that when read together, the reasonable meaning of sections 7(m)(4) and 7(m)(5) is that when an insured thrift institution merges into another, the FDIC must pay the acquired institution's interest in the "security reserve" in cash to the new entity, unless it has otherwise provided for transfer of the interest to the new entity. Paragraph (m) of section 7 of the FDIA was drafted to ensure that an insured institution whose status is terminated pursuant to a merger can receive its share of the secondary reserve either in cash or have it transferred to the new entity to be used as a credit against future insurance premiums.
At the time of the merger, Citibank-Ill and Citibank-D.C. had legal interests in the "secondary reserve" which were readily transferable pursuant to regulations drafted by the FDIC. After the merger and after Citibank-Cal took credit for the shares in the "secondary reserve" formerly held by Citibank-Ill and Citibank-D.C., the FDIC denied that the shares of the latter institutions were transferred to Citibank-Cal upon the merger. To bolster its position the FDIC relied on a fanciful interpretation of section 7(m) of the FDIA and on an invalid repeal of a critical regulation. This the FDIC cannot do. Its actions fly in the face of laws enacted by the Congress.
Taken as a whole, the defenses offered by the FDIC in response to Citibank-Cal's claims are hyper-technical. By granting FDIC's motion, this court would be perpetrating an injustice. The government in this case seeks a windfall at the expense of private parties. The plaintiff's predecessors paid to the government large sums of money over a number of years and they have a right under the law to reclaim these payments. The defendant seeks to extinguish the plaintiff's rights under a technical interpretation. It has provided no public policy arguments that would in any way support the inequities of the position it now asserts. The plaintiff's motion is granted and the defendant is ordered to credit the plaintiff the pro rata shares of the secondary reserve held by Citibank-D.C. and Citibank-Ill as of October 26, 1990 or to pay the plaintiff for those shares in cash, and to pay to the plaintiff the costs in bringing this law suit.
UNITED STATES DISTRICT JUDGE
ORDER - October 5, 1993, Filed
This matter is before the Court on plaintiff Citibank-Cal's Motion for Summary Judgment and Defendant Federal Deposit Insurance Corporation's Motion to Dismiss or, in the Alternative, for Partial Summary Judgment. This Court has considered the arguments put forth by both parties and has reviewed the entire record in this case. Accordingly, for the reasons stated above, it is this 5 day of October, 1993:
ORDERED that the plaintiff's Motion for Summary Judgment is granted and the defendant's Motion to Dismiss or, in the Alternative, for Partial Summary Judgment is denied;
ORDERED that the defendant is required to credit to the plaintiff the pro rata shares of the secondary reserve held by Citibank-D.C. and Citibank-Ill as of October 26, 1990, or to pay for those shares in cash; it is further
ORDERED that the defendant pay to the plaintiff the allowable costs incurred in bringing this action.
UNITED STATES DISTRICT JUDGE