Bridge Depository Institution Law and Legal Definition
A new national bank or federal savings association organized by the Federal Insurance Corporation is known as Bridge Depository Institution. [12 USCS § 1813]
A bridge depository institution is created on the default or in danger of default of an insured depositary institution, insured bank or insured savings association. All bridge depository institutions have all corporate powers of a national bank or federal savings association.
Upon receiving charter, a bridge depository institution assumes the following powers:
assume deposits of defaulted insured depository institution or institutions;
assume other liabilities of defaulted insured depository institution or institutions which they determine to be appropriate;
purchase assets of defaulted insured depository institution or institutions; and
perform other temporary function which the Federal Insurance Corporation prescribes.
A bridge depository institution shall have an interim board of directors consisting of not fewer than five and not more than ten members appointed by the Federal Insurance Corporation. Continued operation of a bridge depository institution chartered is essential to provide adequate banking services in the community where each such depository institution in default or in danger of default is located. Additionally, the continued operation of a bridge depository institution is chartered in the best interest of the depositors of such depository institution or institutions in default or in danger of default. A bridge depository institution is an insured depository institution from the time it is chartered as a national bank or Federal savings association. The board of directors of a bridge depository institution adopts bylaws approved by the Federal Insurance Corporation. The Federal Insurance Corporation can transfer assets and liabilities of a depository institution in default to a bridge depository institution. The trust business, including fiduciary appointments, of any insured depository institution in default is included among assets and liabilities. The transfer of any assets or liabilities shall be effective without any further approval under federal or state law, assignment, or consent. The Federal Insurance Corporation can remove interim directors and directors of a bridge depository institution. The Federal Insurance Corporation can fix the compensation of members of the interim board of directors and the board of directors and senior management.
A judicial action to which a bridge depository institution is a party by virtue of its acquisition of any assets or assumption of any liabilities of a depository institution in default can be stayed from further proceedings for a period of up to 45 days at the request of the bridge depository institution. A bridge depository institution is not an agency, establishment, or instrumentality of the U.S. The status of a bridge depository institution terminates at the end of the second year period following the date it was granted a charter. The board of directors can in its discretion extend the status of a bridge depository institution as such for three additional one-year periods. Early termination is possible by merger or consolidation. The Federal Insurance Corporation can also opt for an early termination.
