In American finance, the FDIC problem bank list is a confidential list created and maintained by the Federal Deposit Insurance Corporation which lists banks that are in jeopardy of failing. The list is closely monitored, and if problems continue with a listed bank, the FDIC takes control of the bank; it may then sell the problem bank to a stronger one, or liquidate the bank and pay off the depositors.
To get onto the FDIC problem bank list, a bank must receive a CAMELS rating by bank examiners of âÂÂ4â or âÂÂ5.â The CAMEL rates each element of Capital, Assets, Management, Earnings, and Liquidity from âÂÂ1â to âÂÂ5,â with âÂÂ1â being the best and âÂÂ5â being the worst. A composite rating is then assigned, and banks in the two lowest categories are placed on the FDIC's problem bank list.