Bank failure occurs when a bank is unable to meet its obligations to its depositors or creditors due to financial distress or insolvency. This can happen for various reasons such as mismanagement, risky investments, or economic downturns. When a bank fails, it can lead to disruptions in the financial system, loss of depositor funds, and broader economic consequences. The Federal Deposit Insurance Corporation (FDIC) plays a crucial role in mitigating the impact of bank failures. It provides deposit insurance to depositors in member banks, guaranteeing the safety of their deposits up to a certain limit (typically $250,000 per depositor per insured bank). This helps maintain depositor confidence and stability in the banking system, as it assures depositors that even if a bank fails, they will not lose their insured deposits. re write