Bank Failure

  

Categories: Banking, Regulations

Let's go waaaay back in time. To the Great Depression, to be financially hangry. The quintessential example of bank failure. Money was lost, and people went broke. Trust in The System was crushed. And upon those hard times, the FDIC was born. Federal Depository Insurance Company.

Though bank failures still happen today, large institutions are FDIC-insured. This means that anything $250,000 and under is protected. Even if you're a non-US citizen making that deposit. That said, banks still go belly-up. Thus, the term "bank failure."

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Finance: What is Bankruptcy?260 Views

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Finance a la' Shmoop what is bankruptcy well in the old days

00:10

this was bankruptcy you'd go to prison if you couldn't pay your bills and [People in prison for bankruptcy]

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unfortunately there weren't and still aren't a lot of legal high wage earning

00:19

opportunities in prison working your way out of debt on the chain gang wasn't [Prisoners working outside]

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really a thing back then so instead the burden would be on your family to pay

00:27

back the loan you'd promised to pay back and didn't ugly situation it paved the [Officer knocking on a prisoners family member to pay their debts]

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way for some well today bankruptcy has a range of flavors that it comes in but

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basically it exists as a legal vehicle to avoid the aforementioned situation a [Bankruptcy van driving]

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bankrupt person and/or corporation stands in front of a judge they turn

00:48

their pockets inside out with a sad face and the judge then decide who will be [Person opens their pockets inside out in front of a judge]

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paid when and how much well how does she decide the order for who gets paid back

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when? well, it usually prioritizes employees and vendors owed a paycheck

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above banks who have made a loan and under that umbrella all different types

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of loans have different priorities if the bankrupt individual owns a home it's [bankrupt individual in his home on the toilet reading a newspaper]

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usually sold out from under him and anything left after paying off the

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mortgage is used to pay others even if you do survive a bankruptcy your credit

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is pretty much ruined who's going to want to loan you money once you've

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proven that you're not good with being loaned money yeah if you've defaulted in [a really low credit score chart for a bankrupt individual]

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the past on promises to pay people back why wouldn't you do the same thing again

01:33

well remember that twenty dollars you loaned your buddy Eric that he never [Person loaning 20 dollars to friend Eric

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paid back well how eager are you going to be to hook him up with another twenty

01:41

especially since you'd only be feeding his betting on frog fighting habit yeah [Eric betting money on frog fighting]

01:46

not so much so long Eric you'll get the help you need!

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