BFF

Bank Failure Friday (BFF) is where the FDIC shuts down banks due to violations of regulatory capital requirements. The bank is unable to honor its liabilities (your deposits) and its assets are given to another more solid bank with funds to cover the losses from the FDIC's Deposit Insurance Fund.

Even though the rate of failures is increasing the loss rate appears to be diminishing. Losses in excess of 30% were not uncommon meaning the bank was allowed to be severely broken before action was taken. Recent weeks, however, have losses to the FDIC falling below 25%. Sun American Bank in Boca Raton, FL, for instance, was seized today with $535M in assets and cost to the FDIC deposit insurance fund of $105M. Less than 20%. This is good news. The FDIC is taking prompt corrective action and following its mandate and insuring the safety of customer deposits.