UNITED STATES BANK FAILURE POLICY

Abstract

Bank failure in the USA is inextricably linked to the US system of federally administered deposit insurance, a fact that explains both its past successes and its recent limitations. Historically, the deposit insurance guarantee has reduced the risk of bank failures caused by panic rum by insured depositors, while the Government's dispositions of failed banks have minimised other forms of market disruption resulting from bank failure. Recently, however, the escalating cost of failure resolution has increased political pressure to limit public intervention in failed banks to the narrow function of protecting insured depositors. This paper describes how this constraint is likely to affect future Governmental response to bank failure.

Citation

GARTEN, H.A. (1993), "UNITED STATES BANK FAILURE POLICY", Journal of Financial Regulation and Compliance, Vol. 1 No. 3, pp. 239-244. https://doi.org/10.1108/eb024771