In May 1991, the FDIC announced that it would sell the government\"s final 26% stake in...

1) In May 1991, the FDIC announced that it would sell the government\"s final 26% stake in Continental Illinois, ending government ownership of the bank that it had rescued in 1984. The FDIC took control of the bank, rather than liquidate it, because it believed that Continental Illinois

A) was a good investment opportunity for the government.

B) could be the Chicago branch of a new governmentally-owned interstate banking system.

C) was too big to fail.

D) would become the center of the new midwest region central bank system.

2) If the FDIC decides that a bank is too big to fail, it will use the ________ method, effectively ensuring that ________ depositors will suffer losses.

A) payoff; large

B) payoff; no

C) purchase and assumption; large

D) purchase and assumption; no

3) Federal deposit insurance covers deposits up to $100,000, but as part of a doctrine called \"too-big-to-fail\" the FDIC sometimes ends up covering all deposits to avoid disrupting the financial system. When the FDIC does this, it uses the

A) \"payoff\" method.

B) \"purchase and assumption\" method.

C) \"inequity\" method.

D) \"Basel\" method.