A bank acts as an intermediary between savers and borrowers and manages the whole process by paying equity and cash to savers and cash to net borrowers and in this process the bank earns its profit.
A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses. So bank is a very important part and identity of this whole transaction phenomenon. The TED Spread is the difference between the interest rates on interbank loans and on short-term U.S. government debt ("T-bills"). TED is an acronym formed from T-Bill and ED, the ticker symbol for the Eurodollar futures contract and is an indicator of perceived credit risk in the general economy. This is because T-bills are considered risk-free while LIBOR reflects the credit risk of lending to commercial banks. When the TED spread increases, lenders believe the risk of default on interbank loans is increasing. The 2008 financial crisis led to the failure of a number of banks in the United States. Twenty-five banks failed and were taken over by the Federal Deposit Insurance Corporation (FDIC) in 2008, while 140 failed in 2009, 157 in 2010 and 92 in 2011. A bank failure is the closing of a bank by a federal or state banking regulatory agency. The FDIC is named as Receiver for a bank's assets when its capital levels are too low, or it cannot meet obligations the next day. After a bank's assets are placed into Receivership, the FDIC acts in two capacities—first, it pays insurance to the depositors, up to the deposit insurance limit, for assets not sold to another bank. Second, as the receiver of the failed bank, it assumes the task of selling and collecting the assets of the failed bank and settling its debts, including