201WK4 CLASS - “bank failure”

  BELOW RESPOND SEPARATELY IN 100 WORDS EACH TO THE FOLLOWING 2 CLASSMATES CAITLIN AND JEANETTE WHO ANSWERED THE DISCUSSION QUESTION BELOW. USE 1 REFERENCES FOR EACH CLASSMATE BUT THEY CAN NOT BE UK, LONDON OR BRITISH REFERENCES. WHEN RESPONDING, SPEAK DIRECTLY TO THE CLASSMATE AND DO NOT CRITICIZE BUT ADD SUBSTANTIVE TO THEIR POST. FOR EXAMPLE, HI (CLASSMATE NAME), YOUR PERSPECTIVE IS INSIGHTFUL…. FROM HERE ADD YOUR ANALYTICAL VIEW. DISCUSSION QUESTIONS THAT THE CLASSMATES ANSWERED: Despite the regulations that protect banks from failure, some do fail. Go to https://www.fdic.gov/bank/individual/failed/banklist.html. 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? How many banks failures occurred in the United States during the most recent complete calendar year? How many banks failures occurred in the United States during 2016? What were the total assets and total deposits held by the banks that failed during the most recent complete calendar year? How many banks failed in 1937? How it is possible to prevent bank failure? CAITLIN’S RESPONSE The definition of bank failure is the closing of an insolvent bank by a federal or state regulator. Banks close when they are unable to meet their obligations to depositors and others. When a bank fails, the FDIC covers the insured portion of a depositor’s balance. (Investopedia, n.d.)[i] The FDIC’s has two roles when it comes to banks failing. They make sure that the banks depositors get the money they had in their accounts, not exceeding $250,000. They also make sure all of the banks debts are paid off and sell the bank’s assets. There was a total of 8 bank failures in 2017. In 2016 there were 5. The total number of assets held in 2017 was $5,081,737.00 The total number of deposits held was $4,683,360.00. There were 75 bank failures in 1937. The FDIC monitors the bank industry’s performance but this just isn’t enough to prevent bank failures. Bank’s must be diligent in having more assets then they do liabilities that meet the demands of their depositors. ________________________________________ [i] Investopedia. Bank Failure. Retrieved from https://www.investopedia.com/terms/b/bank-failure.asp JEANETTE’S RESPONSE: 1. Bank failure occurs when a bank is unable to meet its monetary obligations to its depositors or creditors because it has become insolvent or too illiquid to meet it liabilities. A bank failure is essentially, the closing of a bank by a federal or state banking regulatory agency. The role of the FDIC in the case of bank failure is to: 1. As the insurer of the bank deposits, the FDIC pays insurance to the depositors up to the insurance limit. 2. The FDIC as the “Receiver” of the failed bank, assumes the task of selling/collecting the assets of the failed bank and settling its debt, including clams for deposits in excess of the insured limit. 2. There were eight bank failures during the most recent calendar year. 3. In 2016, there were five bank failures. 4. Bank Assets Unpaid Deposit Claims Washington Fed Bank For Savings $67,834.00 $137,239.00 The Farmers and Merchants State Bank $7,012.00 $6,825.00 Fayette County Bank $15,986.00 $24,094.00 Guaranty Bank $98,367.00 $230,804.00 First NBC Bank $301,535.00 $1,125,792.00 Proficio Bank $13,314.00 $21,511.00 Seaway Bank and Trust Company $16,763.00 $65,989.00 Harvest Community Bank $0.00 $0.00 5. 77 FDIC-insured banks failed in 1937. 6. The FDIC is in place to prevent bank failures by monitoring the industry’s performance and enforcing regulations intended to make sure financial institutions operate in a safe and sound manner. To avoid failure, banks must ensure they possess sufficient amount of liquid assets to meet the demands of depositors and abide by the FDIC guidelines and regulations. Sources: https://www.fdic.gov/bank/individual/failed/banklist.html https://www.fdic.gov/consumers/banking/facts/ https://www.fdic.gov/about/history/timeline/1930s.html https://en.wikipedia.org/wiki/Bank_failure https://www.fdic.gov/about/learn/learning/aboutfdic.html