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1 1 (March 20, 2023)

handle is hein.crs/govekyb0001 and id is 1 raw text is: Congressional_______ 'Research Servi e The Role of Bridge Banks in FDIC Receiverships March 20, 2023 The collapses of Silicon Valley Bank (SVB) and Signature Bank (Signature) bring to the fore the function of the Federal Deposit Insurance Corporation (FDIC) in winding down a failed financial institution. As part of the process of taking over SVB and Signature, the FDIC created bridge banks for both entities. A bridge bank is a chartered national bank, supervised by the FDIC, which serves customers while the FDIC either obtains buyers for the failed banks or proceeds to liquidate them. This Legal Sidebar summarizes the legal history of FDIC bridge banks. It also describes how bridge banks operate under current law and discusses considerations facing Congress if it seeks to amend the laws underlying the bridge brank process. Legal Authority for Bridge Banks A bridge bank is a temporary national bank chartered by the Office of the Comptroller of the Currency, the same entity that charters traditional national banks. A charter is a business license for banks and similar entities. This CRS Report explains charters in greater detail. Congress authorized the FDIC to create bridge banks when it passed the Competitive Equality Banking Act of 1987. That statute allowed the FDIC to create bridge banks as a matter of the agency's discretion, a provision that remains in effect today. Congress later extended the applicability of bridge banks to savings institutions with the Housing and Economic Recovery Act of 2008. The FDIC's governing statute, Federal Deposit Insurance Act (FDI Act), contains the relevant provisions for bridge banks. While the FDI Act mainly refers to bridge banks as bridge depository institutions, this Sidebar adopts the more colloquial and widely used bridge bank. Bridge Banks Today A primary feature of a bridge bank is that it allows the FDIC to take over a failed bank and maintain operations. For instance, the FDIC transferred nearly all of SVB's assets to bridge bank Silicon Valley Bridge Bank, N.A. It did the same for Signature when it created Signature Bridge Bank, N.A. As announced by the FDIC, these bridge banks are performing under their respective failed banks' contracts, Congressional Research Service https://crsreports.congress.gov LSB10937 CRS Legal Sidebar Prepared for Members and Committees of Congress

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