### Question
How is the term failed financial institution defined?


### Answer
The term **failed financial institution** is defined in *12 U.S.C. § 4402* as the following:

> a financial institution that—


(A) fails to satisfy a covered contractual payment obligation when due

#### Citation:
  - *12 U.S.C. § 4402*
  - Heading: **CHAPTER 45-PAYMENT SYSTEM RISK REDUCTION > SUBCHAPTER I-BILATERAL AND CLEARING ORGANIZATION NETTING**

