Federal Deposit Insurance Corp. cannot seize a healthy affiliate of a failed institution if the sister bank operated independently, a federal judge has ruled.

Striking down a key power the agency received in the 1989 thrift bailout law, Court of Federal Claims Judge Christine Cook Nettesheim said the statute's cross-guarantee provision violates the Fifth Amendment to the Constitution.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.