What share of U.S. banks fail? Plot since 2000 the fraction (in percent) of bank failures (FRED code: BKFTTLA641N) relative to the number of banks (FRED code: USNUM). Comment on the timing and the proportion of failures. Were most of the failing banks large or small?
Answer to relevant QuestionsFor many years you have been using your local, small-town bank. One day you hear that the bank is about to be purchased by Bank of America. From your vantage point as a retail bank customer, what are the costs and benefits ...Explain what the phrase “too-big-to-fail” means in reference to financial institutions. How did the policy responses to the financial crisis of 2007-2009 affect the “too-big-to-fail” problem? Suppose you have a defined-contribution pension plan. As you go through your working life, in what order would you choose to have the following portfolio allocations: (a) 100 percent bonds and money-market instruments, (b) ...When did the financial crisis of 2007-2009 peak and why? Plot weekly data for 2006–2010 for the one-week LIBOR rate (FRED code: USD1WKD156N) and the effective federal funds rate (FRED code: FF). Explain the pattern. Suppose you have two deposits totaling $280,000 with a bank that has just been declared insolvent. Would you prefer that the FDIC resolve the insolvency under the “payoff method” or the “purchase and assumption” ...
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