Business Glossary

deposit insurance payoff whereby uninsured depositors, persons holding deposits exceeding $100,000 per account, receive only a portion of their claim against the assets of a failed bank. The modified payoff was introduced by the Federal Deposit Insurance Corporation in the early 1980s to cope with bank failures where a sizable portion of the deposits were rate sensitive brokered deposits that paid well above rates offered by competing institutions.

method used by the Federal Deposit Insurance Corporation in closing a failed bank and transferring ownership and control to a healthy institution. Purchase and assumption is used only when it is a less expensive option to a liquidation, in which the FDIC pays depositor claims and disposes of the failed bank's assets to partially recover its liquidation costs.

U.S. government agency created by the 1989 bailout bill to merge or close savings and loan institutions becoming insolvent between 1989 and August 1992. The RTC was terminated in 1996 and its responsibilities were shifted to the Savings Association Insurance Fund (SAIF), a unit of the Federal Deposit Insurance Corporation. The Resolution Trust Corporation Oversight Board, an arm of the executive branch, was charged with overseeing broad policy and the dispensing of funds to sick thrifts by RTC.

account at a bank, savings and loan association, credit union, or brokerage firm that belongs to a federal or private insurance organization. Bank accounts are insured by the Deposit Insurance Fund (DIF) administered by the Federal Deposit Insurance Corporation (FDIC). In 2005, Congress raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010. Credit union accounts are insured by the National Credit Union Administration.. Brokerage accounts are insured by the securities investor protection corporation Such insurance protects depositors against loss in the event that the institution becomes insolvent. Federal insurance systems were set up in the 1930s, after bank failures threatened the banking system with collapse. Some money market funds are covered by private insurance companies.

bank organized to assume the deposits and secured liabilities of an insolvent bank. TheFederal Deposit Insurance Corporation (FDIC) was given authority to charter these temporary banks by the Competitive Equality Banking Act of 1987. The FDIC has the authority, using a bridge bank, to operate a failed bank for up to three years until a buyer can be found.