When the Federal Deposit Insurance Corporation (FDIC) took over Georgian Bank, it became the 95th bank to fail in 2009. Banks are failing largely because of bad real estate loans. The FDIC’s insurance fund is rapidly dwindling, reaching its lowest point in nearly two decades, while industry analysts are predicting many more failures.
- Consider recent events in the banking industry. What do numerous bank failures teach us about the importance of controlling?
- When the Federal Deposit Insurance Corporation steps in and takes over a bank, what type of control does this represent?
- Georgian bank will immediately reopen as First Citizens Bank (its new owner). What type of controls will be needed to ensure improvement and prevent additional problems?
SOURCE: M. Gordon, “Regulators Close Georgia Bank in 95th Failure for the Year,” USA Today (Retrievable online at http://www.usatoday.com/money/industries/banking/2009-09-25-bank-failure_N.htm)