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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

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 - 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 Agreements 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 32
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