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A situation in which a bank is unable to service its debts. This may occur when too many of a bank's loans default or, more rarely, when a bank has too few accounts providing it with cash flow. Bank failure used to cause great turmoil to the financial system, but since the Great Depression, the FDIC has insured bank accounts up to a certain amount to reduce the pressure for bank runs. When a bank fails, the FDIC takes it over and either sells it to another bank or operates the bank itself.