20-16 If an FI were closed by regulators before its economic net worth became zero,neither liability holders nor those regulators guaranteeing the claims of liability holders would stand to lose.

Question

Quizplus · Accepted Answer

If an FI is closed by regulators before its economic net worth becomes zero, the regulators would use the remaining assets of the FI to pay off the liability holders, and neither liability holders nor the regulators guaranteeing the claims of liability holders would stand to lose. This is because the economic net worth represents the value of the institution's assets minus its liabilities, and if the economic net worth is positive, there are still assets available to cover the liabilities.

20-16 If an FI Were Closed by Regulators Before Its