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Bank Failures, Rights Of FDIC Against Holding Cos.

Law360 (May 28, 2009, 12:00 AM EDT) -- Two recent rulings directly and materially impact and reduce the Federal Deposit Insurance Corp.’s rights against bank holding companies.

The impact of the financial crisis on the banking system has been staggering. In the first four months of 2009, the FDIC has taken over 31 U.S. banks — a rate of closure nearing two banks for every week of 2009. Generally, these banks are closed and their deposits assumed by other, presumably more healthy, banks.

But what happens to a bank’s holding company when its subsidiary bank...
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