What is the Federal Deposit Insurance Corporation (FDIC)?

The FDIC was created in 1933—during the Great Depression—to fight the effects of thousands of bank failures that happened in preceding years. It protects depositors up to $250,000 per account holder at each institution, and guarantees this amount for every depositor at every FDIC-insured institution in the United States. If a bank fails, the FDIC is the receiver entrusted to pay all eligible depositors up to this amount, as well as handle the liquidation of all assets owned by the failed institution, combining them with healthier banks when possible, or selling them off entirely. This insures that all Americans have complete trust in the banking system and liquidity, and know their deposits are backed by the U.S. government.

What else does the FDIC do?

The FDIC also examines the health of the banking system by analyzing 5,160 banks— more than half of all banks in the banking system—to ensure they have enough cash on deposit, and to assess the quality of assets and loan repayments. If a bank is having difficulty, the FDIC may intervene to help it move toward a healthier state. If this doesn't work, the FDIC may take over the bank or merge the bank with another, healthier bank.

How is the FDIC funded?

Although an independent agency of the U.S. federal government, the FDIC is not funded by any congressional appropriation. It is funded entirely by insurance premiums charged to member institutions, and from earnings by investing in U.S. Treasury Securities.

What doesn't the FDIC insure?

If your bank offers stocks and mutual funds, these are not insured by the FDIC. Your bank must disclose to you everything that is and is not insured when you open up an account.

How much money does the FDIC protect?

The FDIC protects $4 trillion in deposits of every bank and savings institution in the United States.

 
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