Wells Fargo Bank, N.A. v. F.D.I.C., No. 01-5280.

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtTatel
Citation310 F.3d 202
Docket NumberNo. 01-5280.
Decision Date15 November 2002
PartiesWELLS FARGO BANK, N.A., Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Appellee.
310 F.3d 202
WELLS FARGO BANK, N.A., Appellant,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, Appellee.
No. 01-5280.
United States Court of Appeals, District of Columbia Circuit.
Argued October 15, 2002.
Decided November 15, 2002.

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Appeal from the United States District Court for the District of Columbia (No. 00cv01251).

Mary Ellen Hennessy, pro hac vice, argued the cause for appellant. With her on the briefs was Gloria B. Solomon.

Lawrence H. Richmond, Counsel, FDIC, argued the cause for appellee. With him on the brief was Colleen J. Boles, Senior Counsel. Ann S. DuRoss, Assistant General Counsel, entered an appearance.

Before: EDWARDS, RANDOLPH and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:


In this case, we must decide whether Federal Deposit Insurance Act requirements applicable to banks that acquire savings associations continue to apply when such banks are in turn acquired by other banks. The Federal Deposit Insurance Corporation, which is charged with enforcement of the statute, concluded that these "second generation" transactions are subject to the Act's restrictions. The district court agreed. Because we find the statute ambiguous on this issue and the FDIC's interpretation consistent with congressional purpose, we affirm.

I.

Following widespread failures of savings and loan associations in the 1980s, Congress restructured the federal depository insurance system in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Pub.L. No. 101-73, 103 Stat. 183 (codified as amended in scattered sections of 12 U.S.C.). Known as FIRREA, the Act abolished the insolvent Federal Savings and Loan Insurance Corporation and shifted its responsibilities to the Federal Deposit Insurance Corporation. The Act also created an independent Bank Insurance Fund (known as BIF) to cover deposits of commercial banks and a Savings Association Insurance Fund (known as SAIF) to cover deposits of savings and loan associations. SAIF's premiums were significantly higher than BIF's because SAIF needed to build reserves and to cover additional thrift failures.

Because Congress worried that SAIF's capitalization could be jeopardized if healthy savings associations, in order to take advantage of BIF's lower premiums, converted to banks or transferred their deposits to banks, FIRREA also amended the Federal Deposit Insurance Act to impose entrance and exit fees on so-called

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conversion transactions that effectively transfer deposits between BIF members and SAIF members. 12 U.S.C. § 1815(d)(2)(B), (E), (F). FIRREA also imposed a five-year moratorium (later extended to 1996) on such transactions. Id. § 1815(d)(2)(A)(ii).

One of the few exceptions to the moratorium and fees is contained in the so-called Oakar Amendment, which allows certain mergers and deposit transfers as long as participants obtain regulatory approval and the acquiring institutions continue paying proportional assessments to BIF and SAIF. Id. § 1815(d)(3). If the acquiring bank is a BIF-insured institution (an "Oakar bank"), for instance, it pays BIF assessments on its original deposits and SAIF assessments on the "adjusted attributable deposit amount" (AADA) — the proportion of deposits obtained from savings associations, adjusted for subsequent growth. Id. § 1815(d)(3)(B)(i). The Oakar bank's AADA premiums are deposited in SAIF, and SAIF bears a proportional share of any costs incurred by the FDIC if the bank later fails. Id. § 1815(d)(3)(D)(i), (G).

In 1990, the FDIC issued an advisory opinion — the Rankin Letter — explaining how it would treat situations in which an Oakar bank merges with or is acquired by a normal BIF member. FDIC Advisory Op. No. 90-22 (June 15, 1990). Although nothing in FIRREA explicitly addresses this question, the FDIC said that it would consider such "second generation" or "downstream" purchases to be conversion transactions. Accordingly, the acquiring BIF member would be subject either to the moratorium and fee provisions or to the Oakar Amendment's proportional assessments rule. The FDIC later reaffirmed this position in a December 1996 rulemaking. 12 C.F.R. § 327.37; 61 Fed.Reg. 64,960, 64,962-64 (Dec. 10, 1996).

In April 1996, after the issuance of the Rankin Letter but before the 1996 regulations, appellant Wells Fargo, a BIF member, acquired and merged with First Interstate Bancorp and seven of its subsidiaries, including three Oakar banks that had acquired savings association deposits in prior transactions. Over the next several years, the FDIC assessed SAIF premiums on a portion of Wells Fargo's new deposits.

Arguing that its purchase of the Oakar banks was not a conversion transaction, Wells Fargo filed suit in the United States District Court for the District of Columbia seeking a $23 million refund of SAIF premiums and other charges that it had paid because a portion of its deposits were treated as being insured by SAIF. The district court, applying Chevron's two-part analysis, Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984), found the statute silent as to the treatment of transactions between Oakar banks and normal BIF members and the FDIC's interpretation both reasonable and consistent with congressional intent. Wells Fargo Bank, N.A. v. FDIC, No. 00-1251, slip op. at 7, 9-12 (D.D.C. June 15, 2001). The court therefore granted the FDIC's motion to dismiss for failure to state a claim upon which relief can be granted. Id. at 12. Our review is de novo. Cummings v. Dep't of the Navy, 279 F.3d 1051, 1053 (D.C.Cir.2002).

II.

We start our analysis, as always, by asking whether Congress has spoken to "the precise question at issue." Chevron, 467 U.S. at 842, 104 S.Ct. at 2781. If it has, both we and the agency must give effect to Congress's unambiguously expressed intent. Id. at 842-43, 104 S.Ct. at 2781-82. Because the judiciary functions as the final authority on issues of statutory

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construction, "[a]n agency is given no deference at all on the question whether a statute is ambiguous." Cajun Elec. Power Coop., Inc. v. FERC, 924 F.2d 1132, 1136 (D.C.Cir.1991); see also SBC Communications Inc. v. FCC, 138 F.3d 410, 418 (D.C.Cir.1998) (stating that a court must determine whether a statute is ambiguous on its own, without regard to an agency's reasoning). We consider the provisions at issue in context, using traditional tools of statutory construction and legislative history. Nat'l Rifle Ass'n of Am., Inc. v. Reno, 216 F.3d 122, 127 (D.C.Cir.2000).

Under the Federal Deposit Insurance Act as amended by FIRREA, mergers or consolidations between two financial institutions are "conversion transactions" only if they involve a "Bank Insurance Fund member" on one side and a "Savings Association Insurance Fund member" on the other. 12 U.S.C. § 1815(d)(2)(B)(ii). The Act then defines these two terms: A "Bank Insurance Fund member" is "any depository institution the deposits of which are insured by the [BIF]," and a "Savings Association Insurance Fund member" is "any depository institution...

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