Ideally, the purpose of providing funds to insolvent banks beyond required insurance payouts is to:
A) transfer funds from taxpayers to financial institutions.
B) give taxpayers ownership in a commercial bank.
C) reward political loyalty.
D) prevent bank failures from multiplying.

Question

Quizplus · Accepted Answer

Providing funds to insolvent banks beyond required insurance payouts is done to prevent bank failures from multiplying. If one bank fails, it can cause panic and lead to other banks failing as well. By providing funds to keep the bank afloat, it can prevent a chain reaction of failures throughout the financial system.

Ideally, the Purpose of Providing Funds to Insolvent Banks Beyond