Despite the regulations that protect banks from failure, some do fail. Go to the FDIC’s website at www2.fdic.gov/hsob/. Select the tab labelled Failures & Assistance Transactions. How many bank failures occurred in the US between 1985 and 2013? How many bank failures occurred between 1985 and 2005? How many took place after 2005?
Engage in independent research on bank failures, and compare and contrast your results for the period 1985 – 2005 with the results for the period 2005 – 2013. Discuss the reasons for bank failures in the US, as well as regulatory responses to these failures.
The website http://www.fdic.gov/bank/historical/history/contents.html will be useful for your investigations.
Bank regulators rely on different types of interventions (what are they), so called enforcement actions (what are they), to correct distressed banks’ behavior and restore safe and sound bank behavior (how). Engage in independent research about regulatory enforcement actions and discuss critically any possible unintended consequences for the real economy in terms of lending and liquidity creation, also discuss critically why banks fail and what can regulators do to prevent future failure.
Critically discuss the effect of competition on bank soundness and stability with reference to recent theoretical and empirical research.