![]() ![]() ![]() It was created by Congress, but it doesn't get its money from congressional appropriations. The Federal Deposit Insurance Corporation is an independent government agency. The institutions themselves "can be chartered by the states or by the Office of the Comptroller of the Currency." The FDIC is funded by banks The FDIC "directly supervises and examines more than 5,000 banks and savings associations" to ensure they're safe and financially sound. It also doesn't apply to safe deposit boxes and municipal securities. But in July of the same year, the maximum was doubled to $5,000.īoth of those amounts were lower than the original target, which was to provide "full protection of the first $10,000 of each depositor, 75 percent coverage of the next $40,000 of deposits, and 50 percent coverage of all deposits in excess of $50,000," according to the FDIC.ĭeposit insurance does not apply to investment instruments such as stocks, bonds, mutual funds and annuities. The FDIC initially covered accounts up to $2,500 for each depositor at an insured institution in 1934, the year federal deposit insurance first took effect. The plan worked: "Only nine banks failed in 1934, compared to more than 9,000 in the preceding four years," the FDIC says. "We knew how much of banking depended upon make-believe," Raymond Moley, a speechwriter and adviser to Roosevelt said years later, "or, stated more conservatively, the vital part that public confidence had in assuring solvency." Economy Biden reassures bank customers and says the failed firms' leaders are firedįrom the agency's early days, deposit insurance has been seen as a key to bank customers' confidence - which in turn has been the key to banks' solvency. ![]()
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