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Who creates bad banks?

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Anonymous

11y ago
Updated: 8/21/2019

By "bad banks" I assume you mean banks that are in financial trouble. Such banks are referred to as "problem banks" by the Federal Deposit Insurance Corporation (FDIC) which regulates banks and insures customer deposits up to specified limits.

Despite the recovery in the economy since the financial crisis there are still 467 banks on the confidential FDIC Problem Bank List as of the latest reporting period. The FDIC makes an assessment of a bank's financial condition and assigns a CAMELS rating of 1 to 5 with 5 being the worst rating. CAMELS stands for capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk.

Banks usually get into trouble by making poor lending decisions. Losses on defaulted loans can deplete a bank's capital to the extent that regulators are forced to close the bank to protect depositors.

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Wiki User

11y ago

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