Franklin Bank v. Federal Deposit Insurance

OPINION AND ORDER

In 1989, the Congress of the United States, reacting to the dramatic increase in bank failures, adopted the Financial Institutions Reform Recovery and Enforcement Act of 1989 (“FIRREA”), Pub.L. 101-73, § 212 (d) (codified as amended at the Federal Deposit Insurance Act, 12 U.S.C. § 1821 (d)).

This action brought by plaintiff, Franklin Bank (“Franklin”), an approved creditor of the receivership estate of Financial Center Bank, N.A. (“Financial Center”), against defendant, Federal Deposit Insurance Corporation (“FDIC”), in its capacity as receiver for Financial Center, raises a question not heretofore put to the Supreme Court or any United States Court of Appeals, namely: Does FIRREA give the FDIC power to make payment to an approved creditor of a failed bank by delivering a “Certificate of Award” rather than payment in cash? The parties pose this issue by cross-motions for summary judgment. In ruling that FIR-REA gives the FDIC power to make payment by a Certificate of Award, the Court, for the reasons hereinafter stated, grants FDIC’s motion for summary judgment and denies Franklin’s motion for summary judgment.

I.

A.

The facts are summarized as follows:

In…