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Resolutions Handbook

The Federal Deposit Insurance Corporation (FDIC) is responsible for the resolution of failing financial institutions. Past financial crises have taught the FDIC a great deal about how best to resolve a failing financial institution and, in its role as receiver, how best to fulfill its fiduciary obligation to creditors of the receivership. Following is a handbook which describes the FDIC’s resolution and receivership process.

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Table of Contents
Chapter 1 - Introduction1
Chapter 2 - Resolution Handbook at a Glance5
Resolution Process5
Resolution Transaction Methods6
FDIC’s Role as Receiver6
Chapter 3 - Resolution Process8
Resolution Timeline8
Determining the Resolution Strategy9
Financial Institution Information10
Asset Valuation Review (AVR)10
Marketing the Institution11
Virtual Data Room (VDR)11
On-site Due Diligence11
Bid Submission12
Least Cost Analysis12
FDIC Board of Directors Approval14
Bid Approval Memorandum14
Closing the Institution14
Chapter 4 - Types of Resolution Transactions16
Purchase and Assumption Transactions16
 Basic P&As16
 Whole Bank P&As17
 P&As with Optional Shared Loss18
 Bridge Bank P&As18
Deposit Payoffs19
 Straight Deposit Payoff20
 Insured Deposit Transfer (IDT)20
 Deposit Insurance National Bank (DINB)20
Historical Resolution Methods20
 Open Bank Assistance (OBA)21
 Net Worth Certificate Program21
 Income Maintenance Agreements21
 Capital Forbearance Program22
 Loan Loss Amortization Program22
 Branch Breakup22
Chapter 5 - Receivership Process - Post-closing Activities23
Comparison with Bankruptcy Law23
Why the FDIC Acts as Receiver24
How the FDIC Becomes a Receiver25
The FDIC’s Functions as Receiver 26
The FDIC’s Closing Function 27
Resolution of Claims against the Failed Institution 27
Payment of Claims 27
Special Receivership Powers 28
 Repudiation of Contracts 28
 Enforcement of Contracts 29
Placing Litigation on Hold 29
 Avoiding Fraudulent Conveyances 30
 Special Defenses 30
 Improperly Documented Agreements are not Binding on the Receiver 30
 Courts May Not Enjoin the Receiver 30
Settlement with the AI 30