FDIC
The Great Depression had a huge effect on the confidence of the American people after the economic downfall of the 1920's and early 1930's. During this time, banks and businesses were going under at a dangerously fast pace and taking all financial securities with them. In the decades following the Great Depression, confidence in such Federal structures have been limited; in response, the FDIC was created.
The Federal Deposit Insurance Corporation was established by the federal government to increase confidence in the American banking systems. It is not a global system, it does not affect other countries or parts of the world; the FDIC is an independent production of the United States government. It began as the Banking Act of 1933, also referred to as the Glass-Steagall Act. This act established the Federal Deposit Insurance Corporation to be a temporary solution to facilitate the increase in public confidence of the banking system. Two years later, the year 1935 saw the FDIC become a permanent part of the United States government. In the beginning stages, the FDIC had holdings and legislation that was mixed in throughout many level of government; in 1950, the Federal Deposit Insurance Act was created in order to gather all the related material into a single Act.
The Federal Deposit Insurance Corporation was originally intended as a way to ensure consumer belief in the national banking systems after the massive failures of the Depression. It is a process of insuring deposits that are made into accredited banking systems up to $100,000 and is set up to protect consumers against loss of funds if a bank that is insured with FDIC encounters a similar failure. The FDIC was made active in 1934 officially and since has seen no funds lost through the FDIC insured banking systems. The FDIC is not funded by the federal government or by congressional allottments; it is funded by the premiums that member banks pay for coverage.
It is hardly possible for the federal government to insure and control all funds that are secured by FDIC associated banking systems. The FDIC covers and insures deposits only. Consumers are responsible for their own alternate financial and savings options, including mutual funds, corporate accounts and securities. These products may not be insured by the institution, but confidence in the systems are being restored by the promise to insure and maintain all deposits into accredited institutions. It is possible to register online with the FDIC and see just how much of your money is actually insured; it is a good way to keep in touch with your financial holdings and to stay secure. Five members of the board of directors in the FDIC is also working hard to make sure that secured holdings are staying safe and that all consumers are happy. These members are qualified and appointed only by the President of the United States and the Senate.
In times of economic hardship, businesses often lose their footing within the economy; banks are no different. When there are global, national and federal stresses, the American people feel the effects of that stress. Money is withdrawn at rapid rates and banks lose their grip within the society as the stress level rises. If a member bank with the FDIC fails, as was the case in the Great Depression and has happened in the recent depressive state of the economy, the Federal Deposit Insurance Corporate takes over immediately. The FDIC has grown in stature and in strength; it has many ways of dealing with bank failures. One of the most popular options for the FDIC was dealing with bank failures is selling deposits and loans from the collapsed instution to a more active and capable bank. It automatically makes the members of the failed bank, new members of the active one. All of this is done behind federal curtains and is hardly even noticeable to the consumers.
Since the time of the original Glass-Steagall Act, banks that boast the Federal Deposit Insurance Corporations seal of approval are fully able to insure up to $250,000 per member or depositor. It has fulfilled its obligations to the American people since 1934, and it continuing to do so today. After experiencing another economic downturn in 2008, FDIC has taken over and insured the members of 275 banks throughout the nation. In 2008, 25 banks were taken over and no funds were lost. 2009 and 2010 were even worse than the previous year; 2009 saw 140 banks dissolved and 2010 saw 118 banks dissolved, the FDIC preparing funds for each to insure members of affected banks. The FDIC is a large and important part of our nations economic successes in the past and will help to maintain those successes in the future.