Bank Failure

AAA

DEFINITION of 'Bank Failure'

The closing of an insolvent bank by a federal or state regulator. The comptroller of the currency has the power to close national banks; banking commissioners in the respective states close state-chartered banks. Banks close when they are unable to meet their obligations to depositors and others. When a bank fails, the Federal Deposit Insurance Corporation (FDIC) covers the insured portion of a depositors balance.

INVESTOPEDIA EXPLAINS 'Bank Failure'

During the financial crisis that started in 2007, the biggest bank failure in U.S. history occurred when Washington Mutual with $307 billion in assets closed its doors. Another large bank failure had occurred just a few months earlier, when IndyMac was seized.

The second all-time largest closure was $40 billion Continental Illinois in 1984.

RELATED TERMS
  1. Silent Bank Run

    A situation in which a bank's depositors withdraw funds en masse ...
  2. Availability Float

    The time period between when a deposit is made and when the funds ...
  3. Bank Run

    A situation that occurs when a large number of bank or other ...
  4. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank ...
  5. National Bank

    In the United States, a commercial bank chartered by the comptroller ...
  6. Average Revenue Per User (ARPU)

    A measure of how much income a business generates, given the ...
Related Articles
  1. Tired Of Banks? Try A Credit Union
    Retirement

    Tired Of Banks? Try A Credit Union

  2. Are Your Bank Deposits Insured?
    Savings

    Are Your Bank Deposits Insured?

  3. An In-Depth Look At The Credit Crisis
    Credit & Loans

    An In-Depth Look At The Credit Crisis

  4. Alternative Investments In Your IRA
    Retirement

    Alternative Investments In Your IRA

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center