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. National Bank

    In the United States, a commercial bank chartered by the comptroller ...
  4. Federal Deposit Insurance Corporation ...

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

    A situation that occurs when a large number of bank or other ...
  6. Debit Card

    An electronic card issued by a bank which allows bank clients ...
Related Articles
  1. Retirement

    Tired Of Banks? Try A Credit Union

    These nonprofit organizations can provide a range of services for lower fees.
  2. Savings

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  3. Credit & Loans

    An In-Depth Look At The Credit Crisis

    The credit crisis reshaped the financial landscape and changed Wall Street forever. Find out how it happened.
  4. Retirement

    Alternative Investments In Your IRA

    If you stray off the beaten path when investing your IRA assets, you'll find new potential pitfalls and rewards.
  5. Savings

    How Foreign Transaction Fees Work

    Using a credit card when you travel can be costly. Here's what you need to know about foreign transaction fees – plus tips on making purchases abroad.
  6. Savings

    Where To Get A Mortgage If You Have Bad Credit

    Here's where to go if you have a low credit score and still want a mortgage.
  7. Credit & Loans

    5 Ways To Get The Best Mortgage Rates

    A mortgage is the biggest loan most people have. Be sure you get the best possible terms – you'll be paying it off for years.
  8. Savings

    Picking A Lender: Quicken Loans Or A Local Bank?

    Online mortgage lender Quicken Loans has become known for its convenience and customer service. But brick-and-mortar banks offer benefits of their own.
  9. Savings

    Quicken Loans Vs. Other Mortgage Sources

    By allowing customers to initiate and manage the mortgage process online, Quicken Loans may appeal to borrowers who value convenience.
  10. Savings

    What US banks offer the best savings accounts?

    Explore the best savings accounts offered by national banks comparing annual yield and other factors. Learn why the highest-yield accounts are offered online.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center