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1. Suppose that you run the FDIC. Your bank examiners report that the Bank of Cary is insolvent. They report the following balance sheet for
1. Suppose that you run the FDIC. Your bank examiners report that the Bank of Cary is insolvent. They report the following balance sheet for this bank in Smillions): Assets Cash Loans and investments (estimated market value) 800 5800 Liabilities Insured deposits Uninsured deposits 59004 11004 a. Explain what would happen if the FDIC closed this bank (payout method)? How much would it cost the FDIC How much would the uninsured depositors get? (5 points) b. Under what circumstances should the FDIC merge this bank with another bank assuming the other bank would take on all deposits? (5 points)
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