Judge Upholds FDIC's $200M Levy On Thrifts to Service Bailout Bonds

A federal judge has ruled that the Federal Deposit Insurance Corp. need not refund $200 million collected from thrifts in late 1996.

Rejecting a claim by America's Community Bankers, U.S. District Court Judge Louis F. Oberdorfer ruled that the FDIC was within its rights when it collected $200 million from the Savings Association Insurance Fund's nearly 2,000 members. The money was used to service bonds floated in the late 1980s to recapitalize the predecessor insurance fund, the Federal Savings and Loan Insurance Corp.

The thrift group argued that the FDIC's statutory authority to levy the assessment had expired when SAIF reached full funding on Oct. 1, 1996.

ACB general counsel Dawn Causey said the judge's Nov. 24 order largely ignored her group's reasoning. "There's very little discussion in the order on ACB's arguments," she said. The thrift group has until Jan. 24 to appeal and has not yet decided whether to do so, she said.

Separately, the Equal Employment Opportunity Commission has ruled against the FDIC in a case involving discrimination at the defunct Resolution Trust Corp.

Administrative Judge Marcy Louza ruled Sept. 22 that the RTC unlawfully discriminated against seven white men and one African-American woman in 1995 when deciding whether to extend their temporary employment. The FDIC must pay each person one year's wages plus interest and an undetermined amount for pain and suffering.