Cross Guarantee
Cross Guarantee
Definition: A provision of the FDI Act added by the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) that allows the FDIC to recover part of its costs of liquidating or assisting a troubled insured institution by assessing those costs to the remaining solvent insured institutions which are commonly controlled as defined in the statute. When the FDIC acts to protect its interests under this provision, the assessment can result in a liquidity strain or, in some cases, the immediate insolvency of an affiliated bank.
Definition: A provision of the FDI Act added by the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) that allows the FDIC to recover part of its costs of liquidating or assisting a troubled insured institution by assessing those costs to the remaining solvent insured institutions which are commonly controlled as defined in the statute. When the FDIC acts to protect its interests under this provision, the assessment can result in a liquidity strain or, in some cases, the immediate insolvency of an affiliated bank.