Federal Deposit Insurance Corporation

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Federal Deposit Insurance Corporation

(FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $250,000. The corporation was established in 1933 to prevent a repetition of the losses incurred during the Great DepressionGreat Depression,
in U.S. history, the severe economic crisis generally considered to have been precipitated by the U.S. stock-market crash of 1929. Although it shared the basic characteristics of other such crises (see depression), the Great Depression was unprecedented in its
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 when bankrupt banks could not return the money deposited in them. It is managed by a five-member board of directors, appointed by the president with the consent of the U.S. Senate. The FDIC provides coverage for deposits in national banks, in state banks that are members of the Federal Reserve SystemFederal Reserve System,
central banking system of the United States. Established in 1913, it began to operate in Nov., 1914. Its setup, although somewhat altered since its establishment, particularly by the Banking Act of 1935, has remained substantially the same.
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, and in other qualified state banks. (Mutual fundsmutual fund,
in finance, investment company or trust that has a very fluid capital stock. It is unique in that at any time it can sell or redeem any of its outstanding shares at net asset value (i.e.
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 and other securitiessecurities,
in finance, instruments giving to their legal holders rights to money or other property. Securities include stocks, bonds, notes, mortgages, bills of lading, and bills of exchange. See speculation and stock exchange.
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 are not covered.) It may also make loans to insured banks in the interest of protecting the depositors. The corporation derives its income from assessments on insured banks and interest on government securities. Since 1989 the FDIC has supervised the Savings Association Insurance Fund, the agency that was created to provide coverage for savings and loan associationssavings and loan association
(S&L), type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public.

The first U.S. S&L was founded in 1831.
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 when the Federal Savings and Loan Insurance Corporation became insolvent. A sharp increase in bank failures in the late 1980s and early 1990s led to the insolvency (1991–92) of the FDIC as well, forcing it to seek government loans. The fund recovered by the mid-1990s, but the mortgage and financial crisis that began in 2007 again threatened the fund and led to significant FDIC takeovers of banks.
References in periodicals archive ?
Leveraging proprietary technology, TBS FDIC Insured Deposit Program, currently with over $30 billion in assets under administration, is designed to provide their clients with the benefit of extended FDIC insurance and for participating banks, a stable, diversified and cost-effective source of deposit funding.
A lawyer is not an insurer of clients' funds in his possession, and there is no ethical requirement that he [or she] keep such funds in numerous separate accounts so as to assure complete FDIC insurance coverage of all funds.
A more rigorous way to examine which banks were more likely to choose FDIC insurance in 1934 is through a probit regression model using a variety of balance sheet measures and other data to explain whether a state bank has FDIC deposit insurance.
The most common corporate investment strategy has been to keep cash in non-interest-bearing bank accounts to qualify for unlimited FDIC insurance and take advantage of earnings credits to cover fees, Lansky reports.
Talk to your banker about which account is best for your business, including options like Certificate of Deposit Account Registry Service or CDARS accounts, which can hold up to $50 million invested in CDs at one bank and are covered by FDIC insurance.
Any depositor banking with a state-chartered bank in Massachusetts can have any amount insured through a combination of FDIC insurance and a state program called the Depositors Insurance Fund.
The determining factor of FDIC insurance coverage on multiple deposits is the account title.
The drawback of FDIC insurance is that it is limited to $100,000 per depositor, per institution.
While the money market savings account is well-suited for organizations that want the security of a bank deposit with FDIC insurance, those organizations whose bylaws stipulate that investments must be collateralized can take advantage of the benefits of the automated repurchase investment sweep.
The OCC guidance consequently emphasizes the risks of entrusting assets to even registered broker/dealers and the importance of reviewing their credit histories, and it outlines steps banks can take to see that FDIC insurance covers their purchased CDs.