- 16 -
default or in danger of default.7 A financial institution that
utilized this exception was required to pay an exit fee to the
fund that insured the assumed deposit liabilities before the
transaction and an entrance fee to the fund that insured the
assumed deposit liabilities after the transaction. See 12 U.S.C.
sec. 1815(d)(2)(C), (E) (1994). Congress provided explicitly
that the entrance fee was imposed to prevent dilution of the
reserves of the fund that began insuring the assumed deposit
liabilities as a result of the transaction. See H. Rept. 101-
54(I), at 325. The pertinent legislative history does not
contain an explicit explanation of Congress’ intent as to the
imposition of the exit fee.
Under the second exception to the moratorium, certain
conversion transactions could be consummated through a merger or
consolidation (collectively, merger). See 12 U.S.C.
sec. 1815(d)(3) (1994); see also FIRREA sec. 206(a)(7), 103 Stat.
196. Under this exception, which Metrobank could have utilized
to effect the transaction, but decided not to, a bank holding
company that controlled a SAIF-insured savings association could
generally merge the savings association’s assets and liabilities
with a BIF-insured subsidiary. Because the deposit liabilities
of the SAIF-insured institution and a certain percentage of
7 The subject transaction was consummated under this
exception.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011