CHAP TER 6
On August 10, 1987, Congress signed into law the Competitive Equality Banking Act
(CEBA) of 1987, which authorized the Federal Deposit Insurance Corporation (FDIC)
to establish bridge banks. A bridge bank is a temporary national bank chartered by the
Office of the Comptroller of the Currency (OCC) and organized by the FDIC to take
over and maintain banking services for the customers of a failed bank. It is designed to
“bridge” the gap between the failure of a bank and the time when the FDIC can imple-
ment a satisfactory acquisition by a third party. An important part of the FDIC’s bank
resolution process for large or complex failing bank situations, a bridge bank provides
the time the FDIC needs to take control of a failed bank’s business, stabilize the situa-
tion, effectively market the bank’s franchise, and determine an appropriate resolution.
See chart I.6-1, which shows the FDIC’s use of bridge banks.
Between 1987 and 1994, the FDIC used its bridge bank powers only 10 times; however,
most of those instances involved multiple related bank failures. The 10 situations in
which the FDIC used its bridge bank authority resulted in the creation of 32 bridge
banks into which the FDIC placed 114 individual banks.1 Those banks had total assets
1. Throughout this chapter, a distinction is made among (1) individual banks, (2) bridge banks, and (3) bridge
bank situations. Number (1) refers to the number of individual failed banks that were put into bridge banks; (2)
refers to the number of bridge banks that were created to handle the individual banks; and (3) groups all individual
banks within a holding company into one “situation” that was handled by the FDIC with its bridge bank authority.
For example, First RepublicBanks’ 41 individual banks were placed into two bridge banks. Table I.6-1 shows the
results of those distinctions.
M A NAGIN G THE CRISIS
■ Bridge Bank Assets
■ All Failed Bank Assets
Total Number of Bridge Ban