Loss Sharing Explained

This video explains the way the FDIC uses loss sharing to maximize asset recoveries and minimizes FDIC losses during the bank resolution process.

Loss sharing is a feature that the Federal Deposit Insurance Corporation (FDIC) first introduced into selected purchase and assumption transactions in 1991. Under loss sharing, the FDIC absorbs a portion of the loss on a specified pool of assets which maximizes asset recoveries and minimizes FDIC losses through least-cost approaches. Loss sharing also reduces the FDIC's immediate cash needs, is operationally simpler and more seamless to failed bank customers and moves assets quickly into the private sector.

Category:

Education

Tags:

• Loss sharing
• loss share agreements
• failed bank
• failed bank resolution
• resolution