Net-Worth Certificate

AAA

DEFINITION of 'Net-Worth Certificate'

An instrument used by the FDIC starting in 1982 as part of an effort to save failing banks and thrifts by providing capital. When deposit-rate restrictions that had existed for decades were lifted, banks and thrifts found themselves having to pay out more in interest on deposits than they were earning from their long-term investments, such as 30-year fixed-rate mortgages and government bonds. Net-worth certificates gave the banks and thrifts time to resolve their problems.

INVESTOPEDIA EXPLAINS 'Net-Worth Certificate'

During the 2008 financial crisis, some people, including former FDIC chairman William Isaac, suggested reintroducing net-worth certificates to rescue struggling banks while using minimal government intervention.

RELATED TERMS
  1. Forbearance

    A temporary postponement of mortgage payments.
  2. FDIC Problem Bank List

    A list of commercial banks in the U.S. that are considered to ...
  3. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank ...
  4. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  5. Thrift Bank

    A financial institution focusing on taking deposits and originating ...
  6. Discounted Payoff

    The repayment of a loan in an amount that is less than the principal ...
Related Articles
  1. Savings

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  2. Retirement

    The History Of The FDIC

    Find out why this corporation was developed and how it protects depositors from bank failure.
  3. Options & Futures

    Who Backs Up The FDIC?

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

    What's the average salary of an investment banker?

    Compare average annual salaries of investment bankers based on position. Different levels of the career result in different levels of base payment and bonuses.
  5. Credit & Loans

    P2P Loans: Consider the Payoffs; Assess The Risks

    The available data seems to indicate that P2P loans, although risky, promise great payoffs, and the prospects of good returns seem to be getting brighter.
  6. Economics

    What's the Federal Funds Rate?

    The federal funds rate is the interest rate banks charge each other for overnight loans to meet their reserve requirements.
  7. Trading Strategies

    Is Goldman Sachs Still A Winner?

    Goldman Sachs might not be the best dividend play out there, but there are other reasons you might want to consider it as an investment.
  8. Trading Strategies

    Is Wells Fargo The Ideal Dividend Investment?

    Wells Fargo has been rewarding its shareholders for years via stock appreciation and dividend payments. But are those rewards sustainable?
  9. Personal Finance

    What Exactly Does A Portfolio Analyst Do?

    Portfolio analysts have the exciting role of working between the investment team layers and they touch various aspects of an investment organization.
  10. Personal Finance

    World's Top 10 Hedge Fund Firms

    Ready for the high-risk, high-return hedge fund investments? Here is a list of the top hedge fund investment firms.

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