Federal Deposit Insurance Corporation (FDIC) Clarifies Policy on Bankruptcy and Banking Operations

The Federal Deposit Insurance Corporation (FDIC) these days clarified its coverage on banking operations withinside the occasion of a financial ruin. The rationalization is meant to offer readability and consistency to financial institution examiners and the general public concerning this issue.
In latest months, numerous information retailers have said that FDIC-insured establishments have to now no longer be undertaking banking operations at some stage in financial ruin proceedings. The Department of Justice has issued an opinion declaring that it might be suitable for banks to hold to perform at some stage in financial ruin proceedings, so long as they're now no longer counting on finances from customers` debts for running expenses.
The FDIC has lengthy taken the location that doing so should probably create a warfare among its missions: insuring deposits in establishments and overseeing their protection and soundness. Banking operations at some stage in financial ruin can also positioned depositors at danger in the event that they do now no longer get hold of complete reimbursement for his or her losses once they record claims with the financial ruin court.
In mild of those concerns, FDIC Chairman Sheila Bair issued a memo these days clarifying the agency's coverage in this issue.