The ability of the FDIC to place a bank into receivership even though the book value of capital remains positive is an attempt to institute increased stockholder discipline.

Question

Quizplus · Accepted Answer

The FDIC's ability to place a bank into receivership even if the book value of capital remains positive is intended to promote increased shareholder discipline by making it clear that if shareholder discipline is not upheld, the bank may still fail and investors may lose their money.

The Ability of the FDIC to Place a Bank into Receivership