Federal Deposit Insurance Corporation
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 Depression 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 System, and in other qualified state banks. (Mutual funds and other securities 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 associations 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.