On October 18, 2024, regulators closed First National Bank of Lindsay (FNBL), OK. In a departure from other recent bank closures, the FDIC elected not to fully reimburse uninsured depositors. What does this decision say about moral hazard, market discipline, and which depositors the government chooses to protect? Moral Hazard and Deposit Insurance Regulators took…

Assumptions around nonmaturity deposits (NMDs) are key drivers of a bank’s interest rate risk profile. I’ve looked at a host of models over the course of my career. These include market models, credit models, prepayment models, and stress testing models. But NMD modeling presents the most challenges. What makes NMD risk modeling so difficult? Modeling…