In Brief: Top Court Lets FDIC Void Oral Agreements

The Supreme Court on Monday let stand a decision allow ing the Federal Deposit Insurance Corp. to void oral agreements made by banks that subsequently failed.

Without comment, the Justices rejected Motorcity of Jacksonville's claim that Congress eliminated this authority-known as the D'Oench Duhme doctrine-when it passed the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

The decision not to hear Motorcity v. Southeast Bank was surprising because federal appeals courts are split on whether the FDIC may use the D'Oench Duhme doctrine. The FDIC issued a policy statement last year saying it would rely on new powers included in the act rather than on D'Oench Duhme to void oral agreements entered into after 1989 by banks that subsequently fail.