If the government guarantees not only the deposits but also the other liabilities of a failing bank, the government usually:
A)temporarily takes over the bank but then reprivatizes it as soon as possible.
B)merges it with the Treasury.
C)merges it with the Federal Reserve.
D)closes the bank permanently.

Question

Quizplus · Accepted Answer

By temporarily taking over the failing bank, the government has a chance to restructure the institution and sell it to private investors. This is usually the preferred approach as it avoids the permanent loss of jobs and banking services in the affected community.

If the Government Guarantees Not Only the Deposits but Also