What is Bridge Bank?

Bridge Bank is a temporary financial institution created to take over the liabilities and assets of the bank that failed. Bridge Banks are used to secure the bank and maintain its function while the buyer is located or the bank is liquidated. Federal deposit insurance (FDIC) has the power to rent such institutions under the Competitive Banking Act of 1987. It has a number of other legal powers that allow it to interfere with failing financial institutions to protect depositors as well as economies in general.

When the bank is identified as problematic, you can take steps to create a bridge bank. Bridge Bank is up to three years old to find the buyer for the bank or destroy it. It is rented as other financial institutions and is required to maintain business as much as possible, except for the submission of its activities to regulatory bodies. Existing loans and other obligations are honored and Bridge banks all deposits and assets under the control of unsuccessful banks.

At the time of receipt, customers are informed using the latest information in the file. Since the timing of the takeover is not published to prevent panic, the announcement is sent after the bridges are taken over. They are provided with information about receipt and how it will affect their accounts in these notifications. Account numbers will still be valid, ensuring that direct deposit and other activities are not interrupted and customers can continue to use existing checks and bank cards.

Bridge Banks usually require some time to check financial records, but will try to complete the takeover as quickly as possible so that the bank customers are not unpleasant. If the buyer cannot be placed within three years, Bridge Bank must inform the regulators. The regulatory bodies will enter into the receipt and liquidation of the bank.

There may be a small change under the supervision of the bank's bridge for banks. Their deposits areLe insured with FDIC, they will continue to pay for loans and materials that have in safe deposition boxes are still secured. Customers may decide to stay with the bank through their transition and possible sales, and it is often recommended that they avoid bank run, panic, where too many customers try to close their accounts at the same time.