19-82 How Is the Cost of a Systemic Risk Exemption

question 16

Multiple Choice

19-82 How is the cost of a systemic risk exemption to the least-cost resolution of bank failures shared among banks?

• A)It is shared equally among all other insured banks.
• B)Additional deposit insurance premiums are imposed on FIs based on their size as measured by their total deposits and borrowed funds excluding subordinated debt.
• C)Additional deposit insurance premiums are imposed on FI based on their size as measured by their total deposits and borrowed funds including subordinated debt.
• D)It is shared equally among all other insured banks based on the profits earned by the FI during the year.
• E)The cost is borne by the bank whose run was responsible for the contagion.

---

Definitions:

Cooperation

The action or process of working together to the same end, often seen as essential for team success and organizational achievement.

Mutual Benefit

A situation or agreement in which all parties involved gain advantages or profits.

Negotiation Stages

Phases through which a negotiation process progresses, typically including preparation, discussion, clarification, win-win negotiation, and agreement.

Mediator

A neutral third party who facilitates negotiations or conflict resolution between disputing parties, aiming for a mutually acceptable agreement.