Bridge Bank

AAA

DEFINITION of 'Bridge Bank'

A bank authorized to hold the assets and liabilities of another bank, specifically an insolvent bank. A bridge bank is charged with continuing the operations of the insolvent bank until the bank becomes solvent through acquisition by another entity or through liquidation. A bridge bank can be a national bank or a federal savings association chartered or appointed by the Federal Deposit Insurance Corporation (FDIC).

INVESTOPEDIA EXPLAINS 'Bridge Bank'

The FDIC was given authority to charter these temporary banks by the Competitive Equality Banking Act of 1987. The FDIC has the authority, using a bridge bank, to operate a failed bank for up to three years until a buyer can be found.

RELATED TERMS
  1. Purchase And Assumption - P&A

    A transaction in which a healthy bank or thrift purchases assets ...
  2. One-Bank Holding Company

    A corporation that holds at least a quarter of the voting stock ...
  3. Customer Information File (CIF)

    A computerized file that stores all pertinent information about ...
  4. Bank

    A financial institution licensed as a receiver of deposits. There ...
  5. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank ...
  6. Insolvency

    When an individual or organization can no longer meet its financial ...
Related Articles
  1. Bankruptcy Protection For Your Accounts
    Retirement

    Bankruptcy Protection For Your Accounts

  2. Too Good To Be True: The Fall Of IndyMac
    Personal Finance

    Too Good To Be True: The Fall Of IndyMac

  3. An Overview Of Corporate Bankruptcy
    Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

  4. Who Backs Up The FDIC?
    Options & Futures

    Who Backs Up The FDIC?

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center