Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved1 Introduction There were more bank failures in 2009 and 2010 (~2% of all banks) than in the previous 18 years! Each bank failure was quickly handled by the FDIC ensuring the bank’s customers did not lose any of their money! As a result of their actions, most experts think banks today are safer than they have ever been! It is the job of the FED and the FDIC to keep banks safe and they are very good at their job! They do this by closing, taking over or selling off weak and financially troubled banks!

Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved2 Objectives Review what the acronyms FDIC and FED stand for You should be able to do the following after completing this lesson Discuss the primary responsibilities of the FDIC Identify what the most regulated business in the US is Discuss FDIC insurance Summarize how a bank works and how one fails Review the steps taken by the FDIC when a bank fails List the four major causes of bank failures Explain why economic conditions is rarely the primary cause of a bank failure Define the important banking terms introduced in this lesson

Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved – Federal Deposit Insurance Corporation What the acronym FDIC stands for The three things the FDIC does on a regular basis Where the money to operate the FDIC comes from How the FDIC ensures banks are following the established laws and banking regulations FDIC Highlights Exercise In this section, you will learn: You will run the following Interactive Exercise: About the major accomplishments and highlights associated with the FDIC over the years

Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved – Keeping Banks Safe How much the money in FDIC-insured deposit accounts is insured for What the most regulated industry in the US is Why you might be insured for more than the maximum amount How retirement accounts established at a bank are protected In this section, you will learn: What you should do to make sure all of your money in the bank is insured

Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved – Bank Failures Why a bank has assets and liabilities like other businesses What a bank’s assets consist of What a bank’s liabilities consist of When a bank is in trouble Why a bank is in trouble Who handles bank failures About trends in bank failures over the years In this section, you will learn: Bank Failures Timeline Example You will run the following Interactive Example

Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved – What Happens When a Bank Fails? What the FDIC is checking for when they audit a bank The 3 options the FDIC can use when a bank is in trouble What happens to banks that can not be salvaged What happens to banks that can be salvaged What happens to banks that are in trouble solely because of their management In this section, you will learn: What insured and un-insured depositors are

Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved – The Causes of Bank Failures The four primary reasons banks fail What a bank’s internal controls are designed to do Why economic conditions are rarely the primary cause of a bank failure Who is responsible for developing the policies and procedures within a bank In this section, you will learn: Why banks are similar to other businesses What internal controls, fraud and economic conditions are

Lesson 6.2 Keeping Banks Safe February 28, 2011Copyright © … REMTECH, inc … All Rights Reserved8 Discussion Questions What happens to a bank’s personnel when a bank is closed because of problems caused by the bank’s management? Why can’t banks come up with a way to make sure all of an individual’s money in the bank is insured even if they have more than $250,000 in the bank?