the method of "purchase and assumption." It would be preferable for you if the FDIC used the buy and assumption procedure if you had deposited $200,000 at the bank that is insolvent.
Banks assume risks and could experience losses if the dangers come to pass. Banks must have the capacity to take on such losses and continue operating during good times and bad in order to be secure and protect depositors' money. That is the purpose of bank capital.
2 Activities of undercapitalized banks are restricted, and severely undercapitalized banks may be forced to close early. 3 However, if a bank is thought to be adequately capitalized, authorities are not compelled to take any action.
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