In the 1941 case D'Oench, Duhme & Co., Inc. v. Federal Deposit Insurance Corporation (FDIC), the U.S Supreme Court ruled in favor of FDIC, establishing a significant precedent for banking law and federal regulation of financial institutions. The dispute arose when FDIC took over an insolvent bank that had made a loan to D'Oench, Duhme & Co., which was secured by bonds that were essentially worthless. When FDIC attempted to collect on this loan, the company argued they were not liable as there was an oral agreement with the bank's president that they would never have to repay it. However, Justice Reed delivered the unanimous decision stating such secret agreements are void under Section 12B of the Federal Reserve Act because they could deceive regulators about a bank’s true financial condition.

In the dissenting opinion for D'Oench, Duhme & Co., Inc. v. Federal Deposit Insurance Corporation (FDIC), Justice Robert H. Jackson argued that the majority's decision to protect FDIC from a secret agreement was an overreach of judicial power and created a new rule not found in any statute or precedent. He contended that this ruling could potentially shield FDIC from all sorts of frauds committed by banks it insures, which is beyond what Congress intended when creating the corporation. Furthermore, he expressed concern about denying relief to parties who were defrauded by insured banks on grounds they should have known better than dealing with such institutions secretly; stating it was unfair and against public policy considerations.