Considering the methods available to the FDIC for dealing with a failed bank, the depositors of the failed bank should:
A) be indifferent between the two since it really does not matter to them which method is used.
B) prefer the purchase and assumption method since the deposits over $250,000 will also be protected.
C) prefer the payoff method because they will have access to their funds earlier.
D) prefer the payoff method since a lot less paperwork is involved for the depositor.

Question

Quizplus · Accepted Answer

Depositors should prefer the purchase and assumption method since the FDIC will sell the failed bank to another bank who will assume its liabilities, including insured deposits. Deposits over $250,000 will also be protected in this process. This method ensures that depositors have access to their funds without any delay or inconvenience. The payoff method may be quicker, but it involves more paperwork for the depositor, and there is a possibility that not all deposits will be covered.

Considering the Methods Available to the FDIC for Dealing with a Failed