Despite the regulations that protect banks from failure, some do fail.
Go to
https://www.fdic.gov/bank/individual/failed/
In your initial response to the topic you have to answer all questions:
What does the term "bank failure" mean? What role does FDIC insurance play?
The term bank failure refers to the closing of a bank by a federal or state regulator. This occurs
when the bank can no longer meet its financial obligations to its customers. The FDIC acts as an
insurance safeguard to protect people in the event the bank cannot repay borrowers and lenders.
In addition to issuing insured repayments up to $250k, the FDIC will also try to sell the failed
bank or take over the operation itself.
How many banks failures occurred in the United States during the current calendar year?
As of 2022, the FDIC’s failed bank list reports zero failed banks for the current year.
How many banks failures occurred in the United States during 2020?
In 2020, there were approximately four bank failures.
How many banks failures occurred in the United States during 2018?
In 2018, there were approximately zero bank failures.
How many banks failures occurred in the United States during 2017?
In 2017, there were approximately eight bank failures.
What were the total assets and total deposits held by the banks that failed during 2019?
The total assets were $214.1 million and total deposits were 332.6 million.
How many banks failed in 1937?
The FDIC reported a total number of 77 bank failures in 1937.
How it is possible to prevent bank failure?
Some common issues which can lead to a bank failure are too many delinquent loans, lack of
lending safeguards, and an increase in withdrawals. Tighter lending regulations and federal
oversight are primary factors to combat the failure rate of most banks. A decade after the
depression in the years of 1942 to 1946, additional measures prevented further bank failures and
this was due to the highly liquid state of bank assets, the absence of deposit outflows, and
vigorous business activity. (FDIC, 2018).
Reflection
I found it very interesting reading through the website of the FDIC. I wasn’t exactly sure what
the FDIC’s role is outside of ensuring financial deposits. They have a complete publicly
available historical record outlining the banking industry before the FDIC and the decades since
its establishment. After reading about fractional reserve banking, how banks can “create money”
and the lessons learned to prevent another financial collapse, I feel more confident in
understanding how our money supply is structured.
References:
Managing the crisis: The FDIC and RTC experience - chronological overview. FDIC. (2018,
January 18). Retrieved April 9, 2022, from
https://www.fdic.gov/bank/historical/managing/chronological/1933-79.html
