to the bank. When the number drops below 6%, the primary regulator can change management and force the bank to take other corrective action. When the bank becomes critically undercapitalized the chartering authority closes the institution and appoints the FDIC as receiver of the bank.

Insurance coverage

The FDIC insures deposits at member banks in the event that a bank fails--that is, the bank's regulating authority decides that it no longer meets the requirements for remaining in business.

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