§1825 — Title 12 Banks and Banking | U.S. Code

Summary

Notes, bonds, and similar debts the Corporation issues are free from almost all federal, state, and local taxes on their principal and interest, except for estate and inheritance taxes. The Corporation itself — its charter, capital, reserves, surplus, and income — is also tax-exempt, but any real estate it owns must pay property taxes like other real estate. Interest or other income from those debts, and gains from selling them, do not get special federal income tax breaks, and losses do not get special treatment. When the Corporation acts as a receiver, its property is protected from seizure, liens, or forced sale without its consent. It is not liable for penalties tied to others’ unpaid taxes or fees, and it cannot be prosecuted for crimes allegedly committed before it became receiver. After August 9, 1989, the Corporation must estimate and report the cost of past and new obligations and the market value of assets it holds, updating those estimates at least quarterly. The Corporation may not take on new obligations if that would make total Deposit Insurance Fund obligations exceed (A) cash on hand, plus (B) 90 percent of its estimate of asset value (other than cash), plus (C) amounts it is allowed to borrow from the Treasury under section 1824(a). For obligations issued after August 9, 1989, the United States pledges its full faith and credit to pay them if the obligation states the principal and the maturity date.

Title 12, §1825

Banks and Banking — Source: USLM XML via OLRC

(a)All notes, debentures, bonds, or other such obligations issued by the Corporation shall be exempt, both as to principal and interest, from all taxation (except estate and inheritance taxes) now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority: Provided, That interest upon or any income from any such obligations and gain from the sale or other disposition of such obligations shall not have any exemption, as such, and loss from the sale or other disposition of such obligations shall not have any special treatment, as such, under the Internal Revenue Code, or laws amendatory or supplementary thereto. The Corporation, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, Territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.

(b)When acting as a receiver, the following provisions shall apply with respect to the Corporation:

(1)The Corporation including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation imposed by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed, except that, notwithstanding the failure of any person to challenge an assessment under State law of such property’s value, such value, and the tax thereon, shall be determined as of the period for which such tax is imposed.

(2)No property of the Corporation shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation, nor shall any involuntary lien attach to the property of the Corporation.

(3)The Corporation shall not be liable for any amounts in the nature of penalties or fines, including those arising from the failure of any person to pay any real property, personal property, probate, or recording tax or any recording or filing fees when due.

(4)The Corporation shall be exempt from all prosecution by the United States or any State, county, municipality, or local authority for any criminal offense arising under Federal, State, county, municipal, or local law, which was allegedly committed by the institution, or persons acting on behalf of the institution, prior to the appointment of the Corporation as receiver.

(c)(1)As soon as practicable after August 9, 1989, the Corporation shall estimate the aggregate cost to the Corporation for all outstanding obligations and guarantees of the Corporation which were issued, and all outstanding liabilities which were incurred, by the Corporation before August 9, 1989.

(2)Before issuing an obligation or making a guarantee, the Corporation shall estimate the cost of such obligations or guarantees.

(3)The Corporation shall—

(A)reflect in its financial statements the estimates made by the Corporation under paragraphs (1) and (2) of the aggregate amount of the costs to the Corporation for outstanding obligations and other liabilities, and

(B)make such adjustments as are appropriate in the estimate of such aggregate amount not less frequently than quarterly.

(4)The Corporation shall—

(A)estimate the market value of assets held by it as a result of case resolution activities, with a reduction for expenses expected to be incurred by the Corporation in connection with the management and sale of such assets;

(B)reflect the amounts so estimated in its financial statements; and

(C)make such adjustments as are appropriate of such market value not less than quarterly.

(5)Notwithstanding any other provisions of this chapter, the Corporation may not issue or incur any obligation, if, after issuing or incurring the obligation, the aggregate amount of obligations of the Deposit Insurance Fund, outstanding would exceed the sum of—

(A)the amount of cash or the equivalent of cash held by the Deposit Insurance Fund;

(B)the amount which is equal to 90 percent of the Corporation’s estimate of the fair market value of assets held by the Deposit Insurance Fund, other than assets described in subparagraph (A); and

(C)the total of the amounts authorized to be borrowed from the Secretary of the Treasury pursuant to section 1824(a) of this title.

(6)(A)For purposes of paragraph (5), the term “obligation” includes—

(i)any guarantee issued by the Corporation, other than deposit guarantees;

(ii)any amount borrowed pursuant to section 1824 of this title; and

(iii)any other obligation for which the Corporation has a direct or contingent liability to pay any amount.

(B)The Corporation shall value any contingent liability at its expected cost to the Corporation.

(d)The full faith and credit of the United States is pledged to the payment of any obligation issued after August 9, 1989, by the Corporation, with respect to both principal and interest, if—

(1)the principal amount of such obligation is stated in the obligation; and

(2)the term to maturity or the date of maturity of such obligation is stated in the obligation.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Internal Revenue Code, referred to in subsecs. (a) and (b), is classified to Title 26, Internal Revenue Code.

Prior Provisions

Section is derived from subsec. (p) of former section 264 of this title. See Codification note set out under section 1811 of this title.

Amendments

2006—Subsec. (b)(4). Pub. L. 109–351 added par. (4). Subsec. (c)(5). Pub. L. 109–173 substituted “the Deposit Insurance Fund” for “the Bank Insurance Fund or Savings Association Insurance Fund, respectively” in introductory provisions and in subpar. (A) and “the Deposit Insurance Fund” for “the Bank Insurance Fund or the Savings Association Insurance Fund, respectively” in subpar. (B). Pub. L. 109–171 repealed Pub. L. 104–208, § 2704(d)(14)(R). See 1996 Amendment note below. 1996—Subsec. (c)(5). Pub. L. 104–208, § 2704(D)(14)(R), which directed substitution of “the Deposit Insurance Fund” for “the Bank Insurance Fund or Savings Association Insurance Fund, respectively” in introductory provisions and in subpar. (A) and “the Deposit Insurance Fund” for “the Bank Insurance Fund or the Savings Association Insurance Fund, respectively” in subpar. (B), was repealed by Pub. L. 109–171. See

Effective Date

of 1996 Amendment note below and 2006 Amendment note above. 1994—Subsec. (c)(1). Pub. L. 103–325 substituted “obligations, guarantees, and liabilities” for “obligations liabilities” in heading. 1991—Subsec. (c)(5), (6). Pub. L. 102–242, § 102(a), added pars. (5) and (6) and struck out former par. (5) which provided for a 10-percent-minimum net worth requirement for Bank Insurance Fund or Savings Association Insurance Fund and former par. (6) which provided exception for up to $5,000,000,000 in additional liabilities beyond limitations of par. (5). Subsec. (c)(7). Pub. L. 102–242, § 102(c), struck out par. (7) which provided for calculation of net worth and asset valuation of Bank Insurance Fund and the Savings Association Insurance Fund for purposes of par. (5). 1989—Subsec. (a). Pub. L. 101–73 designated existing provision as subsec. (a), inserted heading, and added subsecs. (b) to (d).

Statutory Notes and Related Subsidiaries

Effective Date

of 2006 AmendmentAmendment by Pub. L. 109–173 effective Mar. 31, 2006, see section 8(b) of Pub. L. 109–173, set out as a note under section 1813 of this title. Amendment by Pub. L. 109–171 effective no later than the first day of the first calendar quarter that begins after the end of the 90-day period beginning Feb. 8, 2006, see section 2102(c) of Pub. L. 109–171, set out as a Merger of BIF and SAIF note under section 1821 of this title.

Effective Date

of 1996 AmendmentAmendment by Pub. L. 104–208 effective Jan. 1, 1999, if no insured depository institution is a savings association on that date, see section 2704(c) of Pub. L. 104–208, formerly set out as a note under section 1821 of this title. GAO Reports Pub. L. 102–242, title I, § 102(b), Dec. 19, 1991, 105 Stat. 2237, as amended by Pub. L. 103–325, title III, § 327, Sept. 23, 1994, 108 Stat. 2230; Pub. L. 104–66, title II, § 2061, Dec. 21, 1995, 109 Stat. 729, directed Comptroller General to submit report to congressional committees, not later than 90 days after end of any calendar quarter in which Federal Deposit Insurance Corporation had any outstanding obligations pursuant to section 1824 of this title, on Corporation’s compliance at the end of that quarter with subsec. (c) of this section, prior to repeal by Pub. L. 104–316, title I, § 106(c), Oct. 19, 1996, 110 Stat. 3831.

§1825 Issuance of Notes, Debentures, Bonds, and Other Obligations; Exemptions

Summary

Title 12, §1825

Notes & Related Subsidiaries

Editorial Notes

References in Text

Prior Provisions

Amendments

Effective Date

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata