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 | |
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CHAPTERS | PAGE# |
Chapter 1 - Introduction | 1 |
Chapter 2 - Resolution Handbook at a Glance | 5 |
Resolution Process | 5 |
Resolution Transaction Methods | 6 |
FDIC’s Role as Receiver | 6 |
Chapter 3 - Resolution Process | 8 |
Resolution Timeline | 8 |
Determining the Resolution Strategy | 9 |
Financial Institution Information | 10 |
Asset Valuation Review (AVR) | 10 |
Marketing the Institution | 11 |
Virtual Data Room (VDR) | 11 |
On-site Due Diligence | 11 |
Bid Submission | 12 |
Least Cost Analysis | 12 |
FDIC Board of Directors Approval | 14 |
Bid Approval Memorandum | 14 |
Closing the Institution | 14 |
Chapter 4 - Types of Resolution Transactions | 16 |
Purchase and Assumption Transactions | 16 |
Basic P&As | 16 |
Whole Bank P&As | 17 |
P&As with Optional Shared Loss | 18 |
Bridge Bank P&As | 18 |
Deposit Payoffs | 19 |
Straight Deposit Payoff | 20 |
Insured Deposit Transfer (IDT) | 20 |
Deposit Insurance National Bank (DINB) | 20 |
Historical Resolution Methods | 20 |
Open Bank Assistance (OBA) | 21 |
Net Worth Certificate Program | 21 |
Income Maintenance Agreements | 21 |
Capital Forbearance Program | 22 |
Loan Loss Amortization Program | 22 |
Branch Breakup | 22 |
Chapter 5 - Receivership Process - Post-closing Activities | 23 |
Comparison with Bankruptcy Law | 23 |
Why the FDIC Acts as Receiver | 24 |
How the FDIC Becomes a Receiver | 25 |
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 |
Glossary | 23 |