U.S. Code » Title 12 » Chapter CHAPTER 16— FEDERAL DEPOSIT INSURANCE CORPORATION

12 U.S.C. § 1832

Withdrawals by negotiable or transferable instruments for transfers to third parties

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(a) Authority of depository institution; applicability(1) Notwithstanding any other provision of law but subject to paragraph (2), a depository institution is authorized to permit the owner of a deposit or account on which interest or dividends are paid to make withdrawals by negotiable or transferable instruments for the purpose of making transfers to third parties.(2) Paragraph (1) shall apply only with respect to deposits or accounts which consist solely of funds in which the entire beneficial interest is held by one or more individuals or by an organization which is operated primarily for religious, philanthropic, charitable, educational, political, or other similar purposes and which is not operated for profit, and with respect to deposits of public funds by an officer, employee, or agent of the United States, any State, county, municipality, or political subdivision thereof, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, any territory or possession of the United States, or any political subdivision thereof.(b) “Depository institution” definedFor purposes of this section, the term “depository institution” means—(1) any insured bank as defined in section 1813 of this title;(2) any State bank as defined in section 1813 of this title;(3) any mutual savings bank as defined in section 1813 of this title;(4) any savings bank as defined in section 1813 of this title;(5) any insured institution as defined in section 1724 11 See References in Text note below. of this title; and(6) any building and loan association or savings and loan association organized and operated according to the laws of the State in which it is chartered or organized; and, for purposes of this paragraph, the term “State” means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands.(c) Fine

Any depository institution which violates this section shall be fined $1,000 for each violation.

(Pub. L. 93–100, § 2, Aug. 16, 1973, 87 Stat. 342; Pub. L. 94–222, § 2, Feb. 27, 1976, 90 Stat. 197; Pub. L. 95–630, title XIII, § 1301, Nov. 10, 1978, 92 Stat. 3712; Pub. L. 96–161, title I, § 106, Dec. 28, 1979, 93 Stat. 1235; Pub. L. 96–221, title III, § 303, Mar. 31, 1980, 94 Stat. 146; Pub. L. 97–320, title VII, § 706(a), Oct. 15, 1982, 96 Stat. 1540; Pub. L. 100–86, title I, § 109, Aug. 10, 1987, 101 Stat. 579.)Editorial NotesReferences in Text

Section 1724 of this title, referred to in subsec. (b)(5), was repealed by Pub. L. 101–73, title IV, § 407, Aug. 9, 1989, 103 Stat. 363.

Codification

Section was not enacted as part of the Federal Deposit Insurance Act which comprises this chapter.

Amendments

1987—Subsec. (a)(2). Pub. L. 100–86 inserted “political,” after “educational,”.

1982—Subsec. (a)(2). Pub. L. 97–320 inserted provisions relating to deposits of public funds.

1980—Subsec. (a). Pub. L. 96–221 designated existing provisions as par. (1) inserted provisions expanding authorization for withdrawals from selected States to the entire United States, and added par. (2).

1979—Subsec. (a). Pub. L. 96–161 inserted “New Jersey,” after “New York,”.

1978—Subsec. (a). Pub. L. 95–630 inserted “New York,” after “Vermont,”.

1976—Subsec. (a). Pub. L. 94–222 authorized withdrawals by negotiable or transferable instruments in the States of Connecticut, Rhode Island, Maine, and Vermont.

Statutory Notes and Related SubsidiariesEffective Date of 1980 Amendment

Amendment by Pub. L. 96–221 effective Dec. 31, 1980, see section 306 of Pub. L. 96–221, set out as a note under section 1464 of this title.

Effective Date of 1978 Amendment

Pub. L. 95–630, title XIII, § 1302, Nov. 10, 1978, 92 Stat. 3712, provided that: “This title [amending this section] shall take effect upon enactment [Nov. 10, 1978].”

Effective Date

Section effective on thirtieth day after Aug. 16, 1973, see section 8 of Pub. L. 93–100, set out as a note under section 1469 of this title.

Notes of Decisions
Cited in 29 cases, 1976–2014 · leading case: Phillips v. Washington Legal Found., 524 U.S. 156 (1998).
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Phillips v. Washington Legal Found., 524 U.S. 156 (1998). · cites it 4× “146 , as amended, 12 U. S. C. § 1832 . NOW accounts are permitted only for deposits that "consist solely of funds in which the entire beneficial interest is held by one or more individuals or by an organization which is operated primarily for religious, philanthropic,…”
Otero Sav. & Loan Ass'n, a Colorado Corp. v. Fed. Home Loan Bank Bd. & Fed. Sav. & Loan Ins. Corp., 665 F.2d 279 (10th Cir. 1981). · cites it 13× “I LOGAN, Circuit Judge: THE LEGALITY OF OTERO’S CHECK-IN PROGRAM UNDER 12 U.S.C. § 1832 Because its accounts are insured by the FSLIC, Otero is deemed an “insured institution” within the meaning of 12 U.”
Brown v. Legal Found. of Washington, 538 U.S. 216 (2003). · cites it 2× “342 , 12 U.S.C. § 1832 . This category includes deposits made by individuals and charitable organizations, but does not include those made by for-profit corporations or partnerships unless the deposits are made pursuant to a program under which charitable organizations have "the…”
Washington Legal Found. v. Texas Equal Access to Just. Found., 86 F. Supp. 2d 624 (W.D. Tex. 2000). · cites it 4× “12 U.S.C. § 1832 . Absent an agreement with the client, Texas ethical rules require lawyers to keep client funds separate from the attorney’s funds and that these funds be available to the client upon demand.”
Hirsch v. Bank of Am., 132 Cal. Rptr. 2d 220 (Cal. Ct. App. 2003). “2 (b)(3)(ii) (2002); see also 12 U.S.C. § 1832 (a).) This argument goes nowhere because the title companies are not obligated to open up NOW accounts.”
Washington Legal Found. v. Texas Equal Access to Just. Found., 270 F.3d 180 (5th Cir. 2001). · cites it 2× “132 , 146 (codified as amended at 12 U.S.C. § 1832 ). In general, NOW accounts allow attorneys to *183 pool client-funds in an interest-bearing trust account.”
The Hondo Nat'l Bank v. Gill Sav. Ass'n, 696 F.2d 1095 (5th Cir. 1983). · cites it 3× “HIGGINBOTHAM, Circuit Judge: Hondo National Bank appeals from dismissal of its suit against Gill Savings Association and the Texas Savings and Loan Commissioner seeking injunctive relief and damages for a state claim of libel and an alleged violation of 12 U.S.C. § 1832 (a),…”
Otero Sav. & Loan Ass'n v. Fed. Reserve Bank, 665 F.2d 275 (10th Cir. 1981). · cites it 4× “The Reserve Bank had given the Associations notice 2 that it would no longer process their checks and drafts after it independently had determined that the checks were issued under a program not authorized by 12 U.S.C.A. § 1832 (Supp. 1980) or Colorado Savings and Loan law.”
Wilshire Oil Co. of Texas v. Bd. of Governors of the Fed. Reserve Sys., 668 F.2d 732 (3rd Cir. 1982). · cites it 2× “1981), a case involving the interpretation of another frequently amended federal banking statute, 12 U.S.C. § 1832 (a) (concerning interest-bearing checking accounts).”
United States League of Sav. Ass'n v. Bd. of Governors of the Fed. Reserve Sys., 463 F. Supp. 342 (D.D.C. 1978). · cites it 3× “In addressing the argument that the amendments violated the prohibition of 12 U.S.C. § 1832 against negotiable orders or third-party payments from savings accounts, the Board concluded that the new regulations provide a withdrawal service that is “identical in its essential…”
Wisconsin Bankers Ass'n v. Mut. Sav. & Loan Ass'n, 275 N.W.2d 130 (Wis. Ct. App. 1978). · cites it 2× “Note: 12 U.S.C. §1832 (1976) subjects any depository institution outside of New England to a $1,000 fine per violation for allowing account owners to make withdrawals by negotiable or transferrable instruments for the purpose of making transfers to third parties from “a deposit…”
United States v. First Nat'l State Bancorporation, 499 F. Supp. 793 (D.N.J. 1980). · cites it 2× “12 U.S.C. § 1832 (a), as amended by P.L. No.”
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