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| Agency overview | |
|---|---|
| Formed | 16 June 1933 |
| Jurisdiction | Federal government of the United States |
| Headquarters | Washington, D.C. |
| Employees | 8,713 (December 2012)[1] |
| Agency executive |
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| Website | www.fdic.gov |
| This article is part of a series on |
| Banking in the United States |
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The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation providing deposit insurance to depositors in American banks. The FDIC was created by the 1933 Banking Act after the Great Depression to restore trust in the American banking system; more than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially $2,500 per ownership category. Since the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2011, the FDIC insures deposits in member banks up to $250,000 per ownership category.[2]
The FDIC and its reserves are not funded by public funds; member banks' insurance dues are the FDIC's primary source of funding.[3] The FDIC also has a $100 billion line of credit with the United States Department of the Treasury.[4] Depositors in credit unions are insured by the National Credit Union Administration, which is also a government agency.
As of 27 November 2014, there were 6,638 FDIC-insured banks.[5] The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages receiverships of failed banks.
History edit
Panics of 1893 and 1907 and the Great Depression: 1893-1933 edit
During the Panics of 1893 and 1907, many banks[note 1] filed bankruptcy due to bank runs caused by contagion. Both of the panics renewed discussion on deposit insurance. In 1893, William Jennings Bryan presented a bill to Congress proposing a national deposit insurance fund. No action was taken, as the legislature paid more attention to the agricultural depression at the time.[6]
After 1907, eight states established deposit insurance funds.[7] Due to the lax regulation of banks and the widespread inability of banks to branch; small, local unit banks—often with poor financial health—grew in numbers, especially in the western and southern states.[8] In 1921, there were about 31,000 banks in the US.[9] The Federal Reserve Act initially included a provision for nationwide deposit insurance, but it was removed from the bill by the House of Representatives. From 1893 to the FDIC's creation in 1933, 150 bills were submitted in Congress proposing deposit insurance.[10]
The Great Depression devastated the American banking system. There was widespread panic over the American banking system; in the years before the FDIC's creation, more than one-third of all banks failed due to bank runs.[11] Small banks in rural areas were especially affected. Reassurances and regulations by the government failed to assuage depositors' fears. Many depositors withdrew their assets in failed or nearly-insolvent banks.
Establishment of the FDIC: 1933 edit
On 16 June 1933, Franklin D. Roosevelt signed the 1933 Banking Act into law, creating the FDIC. The initial plan set by Congress in 1934 was to insure deposits up to $2,500 ($56,940 today)[12] adopting of a more generous, long-term plan after six months.[note 2] However, the latter plan was repealed by the 1935 Banking Act for an increase of the insurance limit to $5,000 ($113,881 today).[12][13] The FDIC received the authority to insure
Notes edit
- ^ Around 491 commercial banks failed in 1893, and 243 between 1907-8.[6]
- ^ The latter plan was to insure all deposits up to $10,000 ($227,761), 75 percent of all deposits over $10,000 to $50,000 ($1,138,806), and 50 percent of anything over $50,000. Brackets indicate amount taking into account consumer price inflation from 1934.[12]
References edit
- ^ "Statistics At A Glance". FDIC. Retrieved 8 June 2012.
- ^ "FDIC insurance limit of $250,000 is now permanent". Boston Globe.
- ^ Bovenzi 2015, p. 69.
- ^ Bolstad, Erika. "Bill would raise credit limit for FDIC to cover deposits". The McClatchy Company (Washington, D.C.).
- ^ "fdic key statistics". Retrieved 2010-06-03.
- ^ a b White 1981, p. 538.
- ^ White 1981, pp. 537–538.
- ^ White 1981, p. 539.
- ^ Walter 2005, p. 44.
- ^ Golembe 1960, p. 188.
- ^ Walter 2005, p. 39.
- ^ a b c 1634–1699: McCusker, J. J. (1997). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States: Addenda et Corrigenda (PDF). American Antiquarian Society. 1700–1799: McCusker, J. J. (1992). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States (PDF). American Antiquarian Society. 1800–present: Federal Reserve Bank of Minneapolis. "Consumer Price Index (estimate) 1800–". Retrieved February 29, 2024.
- ^ Golembe 1960, p. 193.
Bibliography edit
- Bovenzi, John (2015). Inside the FDIC: Thirty Years of Bank Failures, Bailouts, and Regulatory Battles. Manhattan: John Wiley & Sons. ISBN 978-1-118-99408-5.
- Walter, John (2005). "Depression-Era Bank Failures: The Great Contagion or the Great Shakeout?". Economic Quarterly. 91 (1). Retrieved 4 December 2015.
- White, Eugene N. (1981). "State-Sponsored Insurance of Bank Deposits in the United States, 1907-1929". The Journal of Economic History. 41 (3): 537–557. doi:10.1017/S0022050700044326.
- Golembe, Carter H. (1960). "The Deposit Insurance Legislation of 1933: An Examination of Its Antecedents and its Purposes". Political Science Quarterly. 75 (2): 181–200. doi:10.2307/2146154. JSTOR 2146154.
