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How does the FDIC determine which bank to transfer seized assets to?

Asked by Mamradpivo (9665points) July 31st, 2010

So, a bank here in town was seized by the FDIC yesterday. They’ve been troubled for a while, I don’t think this is a surprise. But their assets were transferred (sold?) to a bank in Boise. All locations will reopen Monday as the new Idaho-based bank.

I wondered this when the giant banks were failing, but I assumed that Wamu was sold off to Chase due to bribery and back-room dealmaking. I still believe that was the case for the giant banks in 2008.

But how did the FDIC decide to transfer/sell the deposits of the customers of a bank in Oregon to a bank in Idaho? What criteria do they use? Is there an auction? A lottery system? A list of healthy banks that would be a good fit for troubled banks?

Anyone have any ideas, or can you point me to an article that describes the process?

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