Under the purchase-and-assumption method of dealing with a failed bank, the FDIC:
A)Finds another bank to take over the insolvent bank
B)Takes over the day to day management of the bank
C)Sells the failed bank to the Federal Reserve
D)Sells off the profitable loans of the failed bank in an open auction

Question

Quizplus · Accepted Answer

Under the purchase-and-assumption method, the FDIC seeks a healthy bank to take over the operations of the failed bank, including its deposits and loans. This is the most common resolution method used by the FDIC. B, C, and D are not accurate options.

Under the Purchase-And-Assumption Method of Dealing with a Failed Bank