The financial insecurities of commercial banks



A different article gives solution on how to curb the federal deposit insurance corporation losses on failed commercial banks. According to him, the FDIC losses can be reduced if the Federal Deposit Insurance Corporation Act of 1991 would be amended to allow FDIC authorities calculate the insured and uninsured depositors amounts for each deposited with several accounts in the same bank. The process of calculation will be done on a daily basis at the end of any banking day. This would be done by banks with at least two million deposit accounts. He suggests that within a large bank, this process will help a lot to allow insured depositors right to use their deposits within one business day of failure. Uninsured depositors are advised to share in the insolvency bank losses at the end of the blanking period. He suggests that this solution will apply to almost 37 banks as at the year 2014. The FDCI has tried to make the prompt corrective action initiative more determinable to secure the FDCI losses on the failing banks. The FDIC has used the test known as “least cost resolution” to protect uninsured depositors against any loss from their deposit accounts even in the failing banks. This article suggests that the entire franchise bank deposit insurance and the uninsured deposits be sold to one or more banks if this test would be successful to protect the uninsured depositors. This test aims at reducing the FDIC loss in a failed bank, by completely protecting the uninsured depositors against any financial loss.