The D'Oench Doctrine
The federal common law D'Oench doctrine, first set forth by the Supreme Court in D'Oench, Duhme & Co. v. FDIC (315 U.S. 447, 62 S. Ct. 676, 86 LEd 956 ), and codified in 12 USC 1823, "prohibits claims based upon agreements which are not properly reflected in the official books or records of a failed bank or thrift." Section 1823(e), which codifies the D'Oench doctrine, states:
No agreement which tends to diminish or defeat the interest of the Corporation in any asset acquired by it under this section or section 1821 of this title, either as security for a loan or by purchase or as receiver of any insured depository institution, shall be valid against the Corporation unless such agreement
(A) is in writing,
(B) was executed by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the depository institution,
(C) was approved by the board of directors of the depository institution or its loan committee, which approval shall be reflected in the minutes of said board or committee, and
(D) has been, continuously, from the time of its execution, an official record of the depository institution.
In D'Oench, the FDIC sued the maker of a demand note payable to Bellville Bank and Trust Company, a failed institution. The maker defended against the claim by presenting receipts for the notes which indicated an agreement between the maker and bank that the bank would not call the notes for repayment.
In concluding that the maker could not raise a "secret" agreement with the bank to defend against the FDIC's suit, the Court recognized a "federal policy to protect [the FDIC] and the public funds which it administers against misrepresentations as to the securities or other assets in the portfolios of the banks which [it] insures or to which it makes loans." D'Oench, 315 US at 457.