Legal Definitions - D'Oench Duhme doctrine

The D'Oench Duhme doctrine is a legal rule that prevents a borrower from making a claim or defense against a federal successor to a failed financial institution if the claim or defense is based on a side or secret agreement or representation. This rule applies unless the agreements or representations have been:

1. Put into writing
2. Executed by the financial institution and borrower when the loan was issued
3. Approved by the financial institution's board of directors or loan committee
4. Made a permanent part of the financial institution's records

For example, if a borrower had an agreement with a failed bank that they would not have to pay back their loan if they lost their job, they cannot use this as a defense against a federal successor to the bank unless the agreement meets the four requirements listed above.

The D'Oench Duhme doctrine was established in the case of D'Oench, Duhme & Co. v. FDIC in 1942 and is now partially codified at 12 USCA § 1823(e). However, its standing has been questioned in light of the O'Melveny & Myers v. FDIC case in 1994.