Considering the methods available to the FDIC for dealing with a failed bank, the depositors of the failed bank should:
A)Be indifferent between the two since it really does not matter to them which method is used
B)Prefer the purchase and assumption method since the deposits over $250,000 will also be protected
C)Prefer the payoff method because they will have access to their funds earlier
D)Prefer the payoff method since a lot less paperwork is involved for the depositor

Question

Quizplus · Accepted Answer

The purchase and assumption method is preferable for depositors because it ensures that their deposits over $250,000 will also be protected. This method involves the FDIC selling the failed bank's assets and liabilities to a healthy bank, which allows depositors to have uninterrupted access to their funds. The payoff method, on the other hand, involves depositors waiting for a longer period to receive their funds and may result in them losing some of their deposits if they are over the FDIC insurance limit. Indifference or preferring the payoff method due to paperwork is not a sound decision for depositors.

Considering the Methods Available to the FDIC for Dealing with a Failed