DEFINITION of 'Modified Payoff'

The partial insurance reimbursement that is paid to depositors of failed banks. Customers who have lost money in excess of what is covered by FDIC insurance can expect to receive a modified payoff. Based on an FDIC estimate of what they could collect from liquidation, a dividend to uninsured depositors would be paid.

BREAKING DOWN 'Modified Payoff'

The FDIC instituted the modified payoff in the early 1980s. It was offered in response to a rash of bank failures that led to substantial customer losses.

RELATED TERMS
  1. Advance Dividend

    An estimate of the present value of an asset being liquidated ...
  2. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank ...
  3. Insured Financial Institution

    Any bank or savings institution that is covered by some form ...
  4. Bank Insurance

    A guarantee by the Federal Deposit Insurance Corporation (FDIC) ...
  5. Savings Association Insurance Fund ...

    A government insurance fund for savings and loans and thrift ...
  6. Assisted Merger

    The merger of two or more financial institutions undertaken with ...
Related Articles
  1. Investing

    Who Backs Up The FDIC?

    The FDIC insures depositors against loss, but what happens if it runs out of money?
  2. Insurance

    How the Federal Deposit Insurance Corporation (FDIC) Works

    Learn more about the Federal Deposit Insurance Corporation (FDIC) and what happens to your deposits over $250,000 if a member bank fails.
  3. Personal Finance

    The History Of The FDIC

    Find out why this corporation was developed and how it protects depositors from bank failure.
  4. Small Business

    A New Plan To Prevent Future Bailouts

    This new and innovative plan by the FDIC could help the government avoid the next bailout.
  5. Insurance

    Insurance Companies Vs. Banks: Separate And Not Equal

    Insurance companies and banks are both financial intermediaries. However, they don't always face the same risks and are regulated by different authorities.
  6. Personal Finance

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
  7. Insurance

    From Booms To Bailouts: The Banking Crisis Of The 1980s

    The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis.
  8. Investing

    What Does a Financial Intermediary Do?

    A financial intermediary is an institution that acts as a go-between in a financial transaction.
  9. Investing

    Explaining Term Deposits

    A term deposit (more often called a certificate of deposit or CD) is a deposit account that is made for a specific period of time.
  10. Investing

    Bank Failure: Will Your Assets Be Protected?

    The SIPC and FDIC insure against personal financial ruin when banks or brokerages go belly up.
RELATED FAQS
  1. Does the FDIC cover identity theft?

    Learn whether or not identify theft is covered by the FDIC, and find out what steps you can take to prevent or report identity ... Read Answer >>
  2. Is my IRA/Roth IRA FDIC-Insured?

    Understand how the Federal Deposit Insurance Corporation protects certain accounts, and learn if traditional and Roth IRAs ... Read Answer >>
  3. How safe are money market accounts?

    Learn the difference between a money market account and a money market fund. Both savings vehicles are relatively safe, but ... Read Answer >>
  4. Why do longer term CDs pay a higher rate than the short-term CDs?

    To address this question, let's employ the concept of distance. In the city, a short taxi ride from your hotel to a convention ... Read Answer >>
Hot Definitions
  1. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  3. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center