Renasant v. Landcastle

Summary of Argument

Renasant Bank’s petition raises an unsettled issue of national importance that has divided district courts in this Circuit and merits this Court’s review. The D’Oench doctrine has wide-ranging application and major precedential importance in the financial-services industry. Under that doctrine, the FDIC as receiver (FDIC R) and private successors are entitled to rely on a failed bank’s files in evaluating the bank’s assets and liabilities without fear that an undisclosed condition or defense will impair its rights. Those protections are important to ensure that financial institutions are able and willing to assume a failing bank’s assets and liabilities.
The district court’s novel exception to that longstanding doctrine is inconsistent with existing case law and casts doubt on countless loan transactions assumed by private bank bidders across the country. The uncertainty created by the district court’s opinion threatens to destabilize the longstanding federal banking policy allowing the FDIC-R and acquiring banks to rely on a failed bank’s records without fear of being blindsided by unwritten conditions or defenses on a seemingly unencumbered loan. 

If left unresolved, this uncertainty will deter healthy banks from acquiring failed bank assets, particularly in this Circuit, thereby undermining the viability of an important feature of the federal banking system. Without healthy banks stepping in, the FDIC-R would have to liquidate the failing bank’s assets on its own, which would strain federal banking insurance funds and put depositors’ uninsured deposits at risk. 

Amici urge this Court to grant review and resolve the conflicting authority on this important issue. Doing so, the Court should hold that the D’Oench doctrine protects acquiring banks from undisclosed claims that a borrower lacked authority to enter into a loan transaction.

Download the amicus brief to read the full text.