If the ratio of tangible equity capital to total assets is 2 percent or less,it is subject to being placed in conservatorship or receivership unless the institution's principal regulator and the FDIC determine that it would be in the public interest to allow the institution to continue under present ownership and management.

Question

Quizplus · Accepted Answer

This statement is correct as per the Federal Deposit Insurance Act (FDIA). According to Section 38 of the FDIA, if a financial institution's tangible equity capital to total assets ratio falls below 2 percent, the institution can be placed into conservatorship or receivership unless the principal regulator and the FDIC agree that it is in the public interest to allow the institution to continue operating under the existing ownership and management.

If the Ratio of Tangible Equity Capital to Total Assets