Federal Deposit Insurance Institution Failure

Background. Grant Thornton LLP v. FDIC, took place in West Virginia District Court in 2004. We are here today as a result of the appeal filed by Grant Thornton. In asserting for the OCC, we will prove why Grant Thornton is responsible for not acting in accordance with the laws and regulations designed for independent financial institutions while conducting an audit for the First National Bank of Keystone. The OCC is an independent bureau of the U.S. Department of Treasury that is responsible for supervising all national banks and federal savings associations, including federal branches and agencies of foreign banks (Office of the Comptroller of the Currency, 2015). The First National Bank of Keystone was incorporated in 1904 in Keystone, West Virginia. Keystone Bank was a member of

Faced with this economic decline, came other factors that included unemployment and lack of confidence in banks (Church 100). Restoring faith in banks across the United States was one goal for FDR. As depositors lost confidence in the national bank, over $1,000,000,000 was taken out in cash and hoarded (Boardman 64). The Emergency Banking Act closed all banks for four straight days, and put them under inspection by the national government (Schraff 52). Banks were put under meticulous scrutiny by the Treasury Department. The U.S. government demanded that all hoarded gold be returned and all of the $1,000,000,000 was deposited (Boardman 65). Banks were allowed to open only under a strict system of licensing (Schraff 52). Another banking program was The Federal Deposit Insurance Corporation, or FDIC, which was created by Congress to guarantee deposits up to $5000 (Gupta). In the case

These periods of financial panics along with the inelastic money supply had long beleaguered the country. Bank failures, business bankruptcies, and unstable economic development were results of the lack of a central banking system (Federal Reserve System 8th ed. pp. 6-7). The Panic of 1907 was a bank run of epic proportions that exacerbated the problem. Depositors withdrew their savings from the second and third largest banks in the country. These banks were not able to generate enough funds to cover the demand and subsequently closed their doors. Their closings rapidly spread fear across the country leading to one of the largest runs on the banks the nation had ever witnessed (Schlesinger pp. 41).

Treasury securities. They insure approximately nine trillion dollars of deposits throughout the country. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The FDIC insures deposits only, excluding securities, mutual funds, and the like. To protect depositors, the FDIC responds immediately when a bank fails. Institutions commonly are closed by the state regulators or the Office of the Comptroller of the Currency. The FDIC has numerous alternatives for resolving failures, but most often deposits and loans of the failed bank are sold to another institution, and the customers become customers of the assuming bank. Most of the time, the transition is seamless from the customer's point of

The credit system of the country had ceased to operate, and thousands of firms went into bankruptcy (Born...,.12). Something had to be done that would provide for a flexible amount of currency as well as provide cohesion between banks across the United States. (Hepburn, 399) This knight in shining armor, as described in the story of the bank run, was the Federal Reserve. The Federal Reserve Act of 1913 helped to establish banks as a united force working for the people instead of independent agencies working against each other. By providing a flexible amount of currency, banks did not have to hoard their money in fear of a bank run. Because of this, there was no competitive edge to see who could keep the most currency on hand and a more expansionary economy was possible.

The FDIC is another program that exists today, protecting people’s money in the bank up to $250,000 per account per bank. This came at a time when people rushed to the banks when the stock market crashed to pull all their money out. When this occurred, many banks were unfortunately forced to close their doors due to a lack of money. Many people lost their hard earned life savings as a result as well. With the implementation of the FDIC, people were guaranteed to keep their life

Once FDR’s Inauguration ceremony concluded, he was faced with the damaging effects of the banking crisis that have plagued the nation’s economy. FDR was only in office for a single day when he “called Congress into a special session” because he wanted to start facing the beast head on starting with the banking crisis. The Emergency Banking Act was proposed, developed and signed in a signal day on March 9, 1933. This newly enacted law was “drawn up under pressure and passed promptly in order to facilitate the reopening of the nation’s banks“(Preston, 585). The Emergency Banking Act stated that there will be “12 Federal Reserve banks” that will be issuing additional currency to people with good assets and the banks that will be reopened will

If the depositor has over the $250.000.00, the depositor may still be insured if it meets specific requirements, but the FDIC has limitations to its coverage and does not cover things such as content of a safe deposit box, life insurance plans, or stocks. However, the FDIC will cover checking accounts, saving accounts, money market accounts, single accounts and joint accounts. Insurance is only guaranteed by the FDIC in the case of a bank failure, and the risk of bank failure has vastly decreased since 2013. Between 2008 and 2013, over 400 banks failed, one being the largest bank failure ever covered by the FDIC. Washington Mutual crashed in 2008, and had over $300 billion worth of assets. Since 2013, only a handful of banks have

Some background: In the wake of the 1929 stock market crash and the subsequent Great Depression, Congress was concerned that commercial banking operations and the payments system were incurring

In order to have a stable banking system, congress had called a meeting where “the National Monetary Commission” (Bagwell), was formed a year after the panic had passed. The meeting include bankers like J.P Morgan, the National city bank, and many others. They all have gather to discuss the crisis that happened and to add new regulations on how to protect the money from people investing. This action was led for the creation on The Federal Reserve act of 1913. Historians had agree that the creation of the federal reserved was due to The National Monetary Commission, where banking laws where review. According to historians the text shows “Congress formed the National Monetary Commission to review banking policies in the United States” including “the monetary reform movement that led to the establishment of the Federal Reserve

The Glass Steagall Act was passed on 1933, which is also known as The Banking Act to tighten regulation on the way banks did their business. This act was written as an emergency measure when about 5,000 banks failed during the Great Depression. Banks mostly failed because of the way they would invest with money. The act prohibits banks from investing money on investments that turn out to be risky. Banks could no longer sell securities or bonds. The act also created Federal Deposit Insurance Corporation (FDIC) to protect the deposits of individuals, which is still used to this date. The FDIC in this era insures your deposits in your bank up to $250,000. This gave the public confidence again to deposit their money in the bank. In 1933

Senator Duncan U. Fletcher of Florida along with counsel Ferdinand Pecora were the ones who exposed the bankers and how they would appropriate funds for their own personal use and also to evade income tax. The public was outraged rightfully so the New Dealers response to these claims they founded the Glass-Steagall Banking Act in June of 1933. The Glass-Steagall Banking Act was to separate commercial banks from their investment affiliates that way they could not use depositors’ funds or funds from the Federal Reserve for speculation. This in turn gave the Federal Reserve more power and who there members are. Another impact that came out of this act is the FEDERAL DEPOSIT INSURANCE (FDIC) this would insure all clients’ with a security deposit. The American Banking Association thought that this was a type of government

The banking industry as a whole after the stock market crashed was going bankrupt due to not being able to carry the “bad debt” that was created from using customer money to buy stock. Because the banks were out of money, they were unable to cover customer withdrawals from their bank, causing many bank customers to lose all of their savings. With the uncertainty of the future of the banking industry, many people withdrew all of their savings, which caused more than 9,000 banks to close their doors and go out of business (Kelly). Due to the effects of the Great Depression, and the collapse of the banking industry, the government created regulations to prevent similar failure in the future. For Example, the SEC, (or Securities Exchange Commission), which regulates the sell and trade of stocks, bonds and other investments was created as a result of The Great Depression. The FDIC (or Federal Deposit Insurance Corporation), was created to insure bank accounts so that that the consumer would be protected if the bank were to go out of business (Kelly). The Great Depression's effect on the banking industry led to many useful changes to the banking industry and helped restore confidence in banks in the American people.

The Great Depression is undoubtedly one of the most significant events in American and world history. It was the most widespread depression in the 20th century affecting most nations in the world and lasting for as long as a decade. However, there still remain unanswered questions regarding the cause of the great depression. One of the most debated topics regarding the Great Depression continues to be the role of the Federal Reserve (Fed) in causing and prolonging the crisis. The Federal Reserve, the central banking system of the United States, was created on December 23, 1913, with the enactment of the Federal Reserve Act, primarily in response to a series of financial panics in 1907. The Fed had being in existence for 15 years before the

The Federal Deposit Insurance Corporation (FDIC) was established in 1933 . It protects the fund depositors place in banks and savings associations. At the beginning of the FDIC introduction in 1934, it was designed as a system with a fixed-rate insurance premium. To improve the implicit moral hazard problems that might flow from the financial institutions, the 1991 Federal Deposit Insurance Corporation Improvement Act (FDICIA) introduced a requirement to apply a risk-based deposit insurance premiums and the system was implemented by the FDIC in 1992.