Under the purchase-and-assumption method of dealing with a failed bank, the FDIC:
A) finds another bank to take over the insolvent bank.
B) takes over the day to day management of the bank.
C) sells the failed bank to the Federal Reserve.
D) sells off the profitable loans of the failed bank in an open auction.

Question

Quizplus · Accepted Answer

Under the purchase-and-assumption method, the FDIC finds another healthy bank to take over the operations and assets of the failed bank. This allows for the customers to continue with uninterrupted access to their deposits and loans.

Under the Purchase-And-Assumption Method of Dealing with a Failed Bank