B-114831-O.M. July 28, 1975

B-114831-O.M. July 28, 1975

To: Regional Manager, Washington, R.O. Thru: Director, FOD

Indorsement

Returned. Title II of the Legislative Reorganization Act of 1970, 31 U.S.C. Secs. 1151-1176, was intended "to give Congress greater access to budgetary and fiscal information and data, and to analysis of such information data, so that Members and committee of the congress may make more rational judgments on budgetary and fiscal matters. H.R. Rep. No. 1215, 91st Cong., 2d Sess. 80 (1970).* Section 236 of the 1970 Act, 31 U.S.C. Sec. 1176 (1970), provides that:

"Whenever the General Accounting Office has made a report which contains recommendations tot he head of any Federal agency , such agency shall--

"(1) not later than sixty days after the date of such report, submit a written statement to the Committees on Government Operations of the House of Representatives and the Senate of the action taken by such agency with respect to such recommendations; and

"(2) in connection with the first request for appropriations for that agency submitted to the Congress more than sixty days after the date of such report, submit a written statement to the Committees on Appropriations of the House of Representatives and the Senate of the action taken by such agency with respect to such recommendation."

The term "Federal agency" as used in section 236 is defined in section 207, 31 U.S.C. Sec. 1157 (1970), to mean "any department, agency, wholly owned Government corporation, establishment, or instrumentality of the Government of the United States or the government of the District of Columbia."

The Federal Deposit Insurance Corporation (FDIC) is defined in section 201 of the Government Corporation Control Act, 31 U.S.C. Sec. 856 (Supp. III, 1973), as a "mixed-ownership Government corporation." The FDIC is not strictly of mixed-ownership, in the sense that it is not a corporation in which "part of the capital stock is owned by the United States and part by the borrowers or other private holders." See S. Rep. No. 694, 79th Cong., 1st Sess. 4 (1945), which accompanied H.R. 3660, the Chairman of the FDIC set forth reasons why it should nevertheless be so defined to avoid broad budgetary control by Congress.

"In its present form, the bill would make radical changes in the existing corporate powers of this Corporation which we believe may not be intended. If this Corporation has powers which Congress considers it desirable to recall or change, we believe it preferable to accomplish these changes by amendment of its organic statute rather than by an omnium gatherum bill. This would assure integration of the Corporation's organic law and avoid the strictures resulting from fitting the Corporation into a pattern not specially designed for its operations.

"Under section 101 of the bill, the Federal Deposit Insurance Corporation is designated as a 'wholly owned Government corporation.' This is the first time it has been so described. The Corporation was expressly characterized as a 'mixed ownership corporation' by the Joint Committee of Reduction of Nonessential Federal Expenditures (see committee report on August 1, 1944, S. Doc. No. 227, 78th Cong., at p. 20). The effect of the 'wholly owned' classification would be to subject to budgetary and audit control, funds of the Corporation which are nongovernmental in origin and which are dedicated to the protection of depositors of banks which have paid these funds as deposit insurance assessments. To treat the Corporation as a wholly owned Government corporation under the bill would deprive the Corporation of one of the chief advantages of its corporate status, a status which we believe Congress gave it deliberately in order that it might be free from undesirable restrictions and thereby enabled to operate more efficiently." (Footnote omitted.) H.R. Rep. No. 856, 79th Cong., 1st Sess. 64-65 (1945).

The Chairman noted that the General Accounting Office in its Reference Manual of Government Corporations characterized the FDIC as "partially Government-owned." Id. at 65, note 1.

Although the FDIC was not subjected to budgetary control in the Government Corporation Control Act, it is subjected to audit and report to Congress by the General Accounting Office, 31 U.S.C.A. Sec. 857(Fam. ed., February 1975); and this prevention is also set forth in the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1827 (Fam. ed., Feburary 1975). Title II of the 1970 Act does not provide for budgetary control, and it would have been reasonable to subject the FDIC to the information gathering previsions contained therein. However, use of the term "wholly owned Government corporations" in defining "Federal agency" for purposes of title II, must be construed to imply that "mixed-ownership Government corporations" were excluded, even though conceivably encompassed in such broad categories as "establishment, or instrumentality of the Government of the United States." See 2A Sutherland on Statutory Construction Sec. 47.23 (4th ed. 1973). We find nothing in the statutory history of the 1970 Act specifically referring to the FDIC or indicating that its characterization in a closely related statute as a "mixed-ownership Government corporation" was not intended.

Compare in this regard 38 Comp. Gen. 365 (1959), in which we held that the characterization of the Federal National Mortgage Association in the Government Corporation Control Act was not definitive in construing an unrelated statute where the actual organic structure of the corporation had changed after the Control Act had been passed.

Accordingly, it is our opinion that the FDIC is not subject to section 236 of the Legislative Reorganization Act of 1970. Of course, this conclusion does not limit the making of recommendations to the Corporation as such.

PAUL G. DEMBLING General Counsel

Attachment

* Various provisions of title II of the 1970 Act were recently amended by the Congressional Budget Act of 1974. See generally, 31 U.S.C.A. Sec. 1151 et seq. (Pocket pt. 1975).

General Counsel Thru: Director, FOD - J.E. Thornton Regional Manager - Washington R.O. - H.L. Krieger

Applicability of Section 236 of the Legislative Reorganization Act of 1970 to the Federal Deposit Insurance Corporation (Code 97550)

In our 1974 report to the Congress on the audit of the Federal Deposit Insurance Corporation, we are making a recommendation to the head of the Corporation. Our understanding is that under Section 236 of the Legislative Reorganization Acot of 1970, the head of an agency must submit written statements of the action taken, with respect to the recommendation, to the Committees on Government Operations and the Committees on Appropriations not later than 60 days after the date of the report. For the following reasons we request clarification as to whether the above provisions apply to the Federal Deposit Insurance Corporation.

1. The Government has no investment in the Corporation.

2. The Corporation receives no appropriation.

3. According to our Office of Congressional Relations and based on information obtained during our audits, the Corporation does not testify before or account to the Committees on Government Operations or the Committees on Appropriations. The respective legislative committees are the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Banking and Currency.

We contacted Corporation officials and were advised that they had developed no position on the applicability of Section 236. They are considering the question now and we will forward their views to you when we receive them.

Please advise us whether the Corporation is required to comply with Section 236 of the Legislative Reorganization Act. An early response would be appreciated as we are presently processing the report and would like to advise the Corporation if the requirement applies.