Man On A Wire & The Sequel: FDIC Balances Need For Additional Capital Against Need For Enhanced Supervision

Spurred on by a notable increase in bank failures this year (89 to date) and the resultant decrease in the size of the Federal Deposit Insurance Fund ("Fund") available to resolve new bank failures ($10.4 billion as of June 30, 2009), the FDIC, on Aug. 26, 2009—a mere 48 days after coming out with its proposal—adopted its final Statement of Policy on the Acquisition of Failed Depository Institutions ("SOP"). The FDIC now has 416 banks on its problem list, an increase of 111 from March 31. The SOP seeks to encourage private capital investors ("Investors") to acquire the deposits or the deposits and assets of failed banks and thrifts ("Banks"), while at the same time imposing limitations and restrictions to reduce the additional risks that these Investors, who are new entrants to the banking industry, are thought to bring with them. Some questions and answers about this new SOP are set forth below.