12 USC § 4401 - Findings and purpose

---
identifier: "/us/usc/t12/s4401"
source: "usc"
legal_status: "official_prima_facie"
title: "12 USC § 4401 - Findings and purpose"
title_number: 12
title_name: "BANKS AND BANKING"
section_number: "4401"
section_name: "Findings and purpose"
chapter_number: 45
chapter_name: "PAYMENT SYSTEM RISK REDUCTION"
subchapter_number: "I"
subchapter_name: "BILATERAL AND CLEARING ORGANIZATION NETTING"
positive_law: false
currency: "119-84"
last_updated: "2026-04-17"
format_version: "1.1.0"
generator: "[email protected]"
source_credit: "(Pub. L. 102–242, title IV, § 401, Dec. 19, 1991, 105 Stat. 2371.)"
---


# § 4401. Findings and purpose

The Congress finds that—

**(1)** many financial institutions engage daily in thousands of transactions with other financial institutions directly and through clearing organizations;

**(2)** the efficient processing of such transactions is essential to a smoothly functioning economy;

**(3)** such transactions can be processed most efficiently if, consistent with applicable contractual terms, obligations among financial institutions are netted;

**(4)** such netting procedures would reduce the systemic risk within the banking system and financial markets; and

**(5)** 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.

---

**Source Credit**: (Pub. L. 102–242, title IV, § 401, Dec. 19, 1991, 105 Stat. 2371.)

## Statutory Notes and Related Subsidiaries

### Separability

If any provision of  or any application of any provision thereof to any person or circumstance is held invalid, the remainder of  and the application of any remaining provision of such Act to any other person or circumstance not to be affected by such holding, see , set out as a note under .