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NORWEST BANK MINNESOTA, N.A. v. F.D.I.C.

July 5, 2001

NORWEST BANK MINNESOTA, N.A., PLAINTIFF,
V.
FEDERAL DEPOSIT INSURANCE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Huvelle, District Judge.

  MEMORANDUM OPINION

Before the Court are plaintiffs motion for summary judgment, defendant's cross-motion for summary judgment, and both parties' oppositions and replies. Having considered the pleadings and the entire record herein, the Court concludes that the Federal Deposit Insurance Corporation's ("FDIC") implementation of Section 501(b) of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") violates the plain meaning of the Act and that remand to determine whether plaintiff can realize "negative growth" for assessment purposes would be an unnecessary formality. The Court, however, remands to the FDIC only for a determination of the amount of the refund owed to plaintiff.

BACKGROUND

I. Statutory Background

This case arises under the Federal Deposit Insurance Act, 12 U.S.C. § 1811 ("FDIA"). In 1989, Congress passed the Financial Institution Reform, Recovery, and Enforcement Act, Pub.L. 101-73 (August 9, 1989) ("FIRREA"), which made the FDIC responsible for insuring both banks and savings associations. The FDIC was directed to maintain two separate funds for those purposes: the Bank Insurance Fund ("BIF") and the Savings Association Insurance Fund ("SAIF"). Under FIRREA, banks and savings associations were assessed insurance funds which had to be paid to the FDIC and deposited into the BIF and the SAIF, respectively. 12 U.S.C. § 1817(b). The FIRREA also permitted banks to acquire savings associations without the payment of the entrance and exit fees associated with such transactions. These mergers are known as "Oakar transactions."

Under federal law at the time of the events in question, when a bank acquired a savings association, the bank was required, for FDIC assessment purposes, to treat a portion of its total deposits as insured by the SAIF. The amount required to be treated as SAIF-insured was called the "adjusted attributable deposit amount" ("AADA"). The FDIC required the Oakar institution to pay its insurance assessment on its AADA at a rate equivalent to that applicable to SAIF institutions.

The FIRREA specified that the AADA for any semiannual period be calculated by adding three components:

(i) the amount of any deposits acquired by such [Oakar institution] in connection with any [Oakar] transaction . . .;
(ii) the total of the amounts determined under clause (iii) for semiannual periods preceding the semiannual period for which the determination is being made under this subparagraph; and
(iii) the amount by which the sum of the amounts described in clauses (i) and (ii) would have increased during the preceding semiannual period (other than any semiannual period beginning before the date of such transaction) if such increase occurred at a rate equal to the greater of —

(I) an annual rate of 7 percent; or

(II) the annual rate of growth of deposits of such [Oakar institution]. . . .

12 U.S.C. § 1815(d)(3)(C).

In 1991, Congress amended Subparagraph (iii) by removing the reference to a 7% growth rate. The new language provides that the growth increment is:

(iii) the amount by which the sum of the amounts described in (i) and (ii) would have increased during the preceding semiannual period . . . if such increase occurred at a rate equal to the annual rate of growth of deposits of the [Oakar institution]. . . .

12 U.S.C. ยง 1815(d)(3)(C). Moreover, this amendment to Subparagraph (iii) "shall apply with respect to semiannual periods beginning after the date of the enactment of this ...


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