4.1: Failure Resolution
The FDIC resolves failed insured depository institutions in the least-costly manner. Other Information:
Means & Strategies: When an institution fails, the FDIC facilitates an orderly and least-cost resolution.5 The FDIC obtains
an accurate valuation of the failing institution by valuing and assessing its assets and liabilities. Using this information,
the FDIC markets the institution to potential bidders. The FDIC analyzes the bids received, conducts a least-cost test determination
and selects the least-cost strategy to pursue. External Factors: Industry consolidation presents both benefits and risks.
While the risks to the deposit insurance funds are diminished because the risks are diversified through consolidation (along
both geographic and product lines), the concentration of deposits into fewer insured depository institutions increases the
risks to the funds in the event one of these larger insured depository institutions fails. In accordance with law, if a failure
threatens serious adverse effects on economic conditions or financial stability, resolution strategies other than the least-cost
resolution may be employed.
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