Yikes, it's a bank heist! Well, no, maybe not. How to tell when your bank is being taken over!

Is the bank being robbed or protected? 

Recently, bank failures in the U.S. have occurred at an alarming rate--yes, even banks you and I have money in, not just the ones in New York City on Wall Street.  In fact, especially the ones where you and I park our dough! Last year 157 banks went kaput; in just two short months so far in 2011, 15 have failed--more will likely follow.  

When a thrift institution falters it is potentially a very disruptive event.  Except for safety mechanisms in place--we're talking here mainly about the Federal Deposit Insurance Corporation [FDIC]--there's a threat at two levels: the safe-keeping of the assets that have yet to be squandered, as well as the need to prevent fear occurring on the part of consumers.  After all, a "run-on-the-bank" can lead to the failure of even a sound financial institution.  [Don't forget, a lot of banking obviously involves the management for "money"; part of the business, though, is managing consumer confidence!]

Why it is done so secretly?

So I bet you didn't realize that the bank failure rate in the country is as high as it is--because much of what happens that's a part of that is done under the cloak of secrecy--it's that way mostly to manage the confidence game associated with the necessity to protect consumers from false fears of loss. 

To make sure that a bank failure entails only minimal negative impact on a community, FDIC take-overs are planned anywhere between one week and 90 days in advance, they happen mostly after dark, are carefully pre-planned, slick operations evocative of a movie heist drama more than anything else.  If you ever wondered exactly how the take-over of a failed bank happens, there's a cool, one-page, illustrated explanation in the most recent issue of FORTUNE [February 28, 2011].

Curious minds want to know.

How a bank take-over is planned, when it happens [incidently, that would be Friday afternoon], what the timing is like, who's involved, and how it is carried out--it's all there!  If you every wondered how something so important is done with so much secrecy--now you can see how it's done, step by step.  
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Write Keith at kmurray@bryant.edu or follow his biz blog on Twitter for updates.  Also, see more of what he's reading about on his blog's Facebook Page.