Abstract

When a bank fails, the liquidating authority succeeds to the rights, powers, and privileges of the bank and its stockholders, officers, and directors. The liquidating authority can be a deposit insurance agency (DIA), a special-purpose agency (e.g., an asset management company—see Annex 6.1), or an administrator appointed by a commercial bankruptcy court. A bank liquidation office can be a stand-alone operation established in the failed bank’s office, or consolidated within a DIA or other special-purpose agency, such as an asset management company. To facilitate the orderly solution of bank failures, standardized procedures and methods of dealing with failed banks and the liquidation of their assets should be developed and followed.