F.D.I.C

Introduction

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the federal government (Holland, 3). It was created by the Banking Act of 1933 to restore the public's confidence in banks after the numerous bank failures of the 1920s and early 1930s. The FDIC's mission is to maintain stability and the public's confidence in the nation's financial system. The FDIC has three main responsibilities: (1) to insure deposits, (2) to examine and supervise financial institutions, and (3) to manage receiverships for failed banks.

Virtually all the deposits in every bank and thrift in the United States are insured by the FDIC. If an insured banking institution fails, it is the FDIC's responsibility to ensure that customers have access to their insured deposits. Savings, checking, certificate of deposit, money market, IRA, and Keogh accounts are insured up to $100,000 per depositor. Since January 1, 1934, when the FDIC started insuring banks, no depositors have lost insured funds due to a bank failure.

Funding

The FDIC is funded through premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. The FDIC only insures the type of accounts listed in the foregoing and does not insure other types of financial investments such as securities, mutual funds, or other investments that banks and thrift institutions may offer.

There are approximately 9,200 banks in the United States today. Banks can be either state or nationally chartered. The FDIC has primary responsibility for examining and supervising all the FDIC-insured, state-chartered banks. It also serves as the backup supervisor of the banks that are members of the Federal Reserve System. As primary regulator, the FDIC conducts periodic examinations of the state-chartered banks to assess their overall financial condition, management policies and practices, and compliance with laws. The FDIC has authority to ...