Federal · Title 12 — Banks and Banking
12 U.S.C. § 4401: Findings and purpose
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many financial institutions engage daily in thousands of transactions with other financial institutions directly and through clearing organizations; the efficient processing of such transactions is essential to a smoothly functioning economy; such transactions can be processed most efficiently if, consistent with applicable contractual terms, obligations among financial institutions are netted; such netting procedures would reduce the systemic risk within the banking system and financial markets; and the effectiveness of such netting procedures can be assured only if they are recognized as valid and legally binding in the event of the closing of a financial institution participating in the netting procedures.
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