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. IDC Deposits

    IDC Deposits Corp. oversees the MMAX (Money Market Account Extra) ...
  3. Bank Insurance

    A guarantee by the Federal Deposit Insurance Corporation (FDIC) ...
  4. FDIC Problem Bank List

    A list of commercial banks in the U.S. that are considered to ...
  5. Assuming Institution

    A healthy financial institution that purchases the assets of ...
  6. Money Market Account Extra - MMAX

    An account structure that provides depositors with the ability ...
Related Articles
  1. Personal Finance

    The History Of The FDIC

    Find out why this corporation was developed and how it protects depositors from bank failure.
  2. Personal Finance

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  3. Insights

    Financial Regulations: Glass-Steagall to Dodd-Frank

    Here are some of the most important financial regulations that have been established.
  4. 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.
  5. Investing

    Certificates Of Deposit

    Safety is a hallmark of the traditional certificate of deposit (CD) sold by a bank or credit union.
  6. Investing

    What is a Bank?

    A bank is a financial institution licensed to receive deposits or issue new securities to the public.
  7. Investing

    NYIF Instructor Series: Synthetic Stock

    In this short instructional video Anton Theunissen explains how to replicate a levered stock using a combination of options.
  8. Insights

    Negative Interest Rate Policy (NIRP)

    A negative interest rate policy is an unconventional monetary policy tool in which nominal target interest rates are set below zero.
RELATED FAQS
  1. Are 401ks FDIC insured?

    Learn what part of your 401(k) retirement plan is covered by FDIC insurance, and what part is not. Find out what happens ... Read Answer >>
  2. Are variable annuities FDIC insured?

    Understand how variable annuities are not insured by the FDIC but realize that most states have guarantee funds in place ... Read Answer >>
Hot Definitions
  1. Trustee

    A person or firm that holds or administers property or assets for the benefit of a third party. A trustee may be appointed ...
  2. Gross Domestic Product - GDP

    GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
  3. Debt/Equity Ratio

    The D/E ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders’ equity.
  4. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
  5. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  6. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
Trading Center