Jeffrey Wade
Most banks in the US are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent agency of the US government that was created in 1933 during the Great Depression. It insures deposits in commercial banks and savings banks up to a maximum of $250,000 per account. The FDIC manages two deposit insurance funds: the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). While federal deposit insurance is mandatory for all federally-chartered banks, some banks do not have FDIC protection.
| Characteristics | Values |
|---|---|
| Name of the organization | Federal Deposit Insurance Corporation (FDIC) |
| Year of establishment | 1933 |
| Type of organization | Independent U.S. government corporation |
| Purpose | Insure bank deposits against loss and to regulate banking practices |
| Insured amount | Up to $250,000 per depositor, per bank, per ownership category |
| Insured accounts | Checking, savings, negotiable orders of withdrawal (NOW), money market deposit accounts (MMDA), and certificates of deposit (CD) |
| Not insured accounts | Share accounts at credit unions, regular shares and share draft accounts held at credit unions |
| Website | www.fdic.gov |
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What You'll Learn
The Federal Deposit Insurance Corporation (FDIC)
The FDIC manages two deposit insurance funds: the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). Insured banks pay for deposit insurance through premium assessments on their domestic deposits. The FDIC has the authority to regulate and supervise state non-member banks and has direct supervisory authority over state-chartered banks that are not members of the Federal Reserve System. It also has the power to revoke an institution's deposit insurance, effectively forcing the bank to close. In the event of a bank failure, the FDIC can execute an insured deposit transfer or negotiate a purchase and assumption (P&A) transaction, where a healthy institution acquires the failed bank's assets and deposits.
The FDIC provides extensive resources for bankers and consumers, including guidance on regulations, information on examinations, and legislation insights. The FDIC also launched a Mission-Driven Bank Fund to support insured Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs). The FDIC's deposit insurance is backed by the full faith and credit of the United States government, and according to the corporation, no depositor has ever lost FDIC-insured funds since its inception in 1933.
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![Federal Deposit Insurance Act: [As Amended Through P.L. 117–263, Enacted December 23, 2022]](https://m.media-amazon.com/images/I/517mroyL3UL._AC_UY218_.jpg)
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FDIC insurance limits
The Federal Deposit Insurance Corporation (FDIC) insures deposits in the event of a bank failure. FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including the principal and any accrued interest up to the insurance limit. This limit is typically $250,000 per depositor, per bank, per ownership category. This means that if a depositor has multiple accounts at the same bank, their coverage limit is $250,000 for all their accounts combined. However, if a depositor has accounts at different banks, each account is insured separately up to $250,000.
FDIC insurance covers deposits in all types of accounts, including traditional deposit accounts such as checking and savings accounts, as well as certificates of deposit (CDs). The coverage is automatic when a depositor opens one of these types of accounts at an FDIC-insured bank. It's important to note that FDIC insurance does not cover non-deposit investment products, even if they are offered by FDIC-insured banks. These include U.S. Treasury bills, bonds, or notes, which are backed by the full faith and credit of the U.S. government but not insured by the FDIC.
FDIC insurance is mandatory for all federally-chartered banks and savings institutions. It also applies to state-chartered banks that are not members of the Federal Reserve System. The FDIC has the authority to revoke a bank's deposit insurance, which essentially forces the bank to close. In the event of a bank failure, the FDIC acts as the insurer and pays depositors up to the insurance limit. It also assumes the role of the receiver, selling or collecting the failed bank's assets and settling its debts.
The FDIC manages two deposit insurance funds: the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). The BIF insures deposits in commercial and savings banks, while the SAIF covers deposits in savings and loan associations. These funds are maintained through assessments or insurance premiums paid by the insured institutions and interest earned on funds invested in U.S. government obligations.
Depositors can use the FDIC's Electronic Deposit Insurance Estimator (EDIE) to calculate their specific deposit insurance coverage and determine if their funds are fully covered. It's important for depositors to understand the FDIC insurance limits and ensure their deposits do not exceed the insured limit to maximize protection in the unlikely event of a bank failure.
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FDIC-insured banks
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by Congress to maintain stability and public confidence in the nation's financial system. The FDIC insures deposits and examines and supervises financial institutions for safety, soundness, and consumer protection. It also makes large and complex financial institutions resolvable and manages receiverships. The FDIC provides deposit insurance to protect your money in the event of a bank failure. Your deposits are automatically insured up to $250,000 per depositor, per bank, per ownership category at each FDIC-insured bank. This includes money deposited in traditional deposit accounts, such as certificates of deposit (CDs). Coverage is automatic when you open one of these accounts at an FDIC-insured bank.
The FDIC only insures your money if it is in a deposit account at an FDIC-insured bank. Banks offer some financial products and services that are not deposits, and the FDIC does not insure them. These include investments and shares. FDIC deposit insurance is backed by the full faith and credit of the United States government. It is important to note that FDIC insurance is not just for individuals but is also available for corporations, partnerships, and other entities. FDIC insurance is also available for different types of deposit accounts, including checking, savings, money market, and certificate of deposit (CD) accounts.
The FDIC has a five-member board that includes the Chairman of the FDIC, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, and two other members appointed by the President and confirmed by the Senate. The FDIC has the authority to revoke an institution's deposit insurance, essentially forcing the bank to close. It also has direct supervisory authority over state-chartered banks that are not members of the Federal Reserve System and backup authority over national and Fed-member banks.
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FDIC deposit insurance funds
The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance to protect your money in the event of a bank failure. FDIC deposit insurance covers money held in traditional deposit accounts at FDIC-insured banks, including certificates of deposit (CDs). Coverage is automatic when you open one of these accounts, and your deposits are insured for up to $250,000 per depositor, per bank, and per ownership category. This means that if you have multiple accounts at the same bank, your coverage limit remains the same across all accounts. However, if your accounts are in different ownership categories, you may qualify for more than $250,000 in FDIC deposit insurance coverage.
FDIC deposit insurance does not cover all financial products and services offered by banks. For example, it does not insure mutual funds, annuities, life insurance policies, stocks, bonds, crypto assets, or safe deposit contents. It is important to note that FDIC insurance only applies to banks that are FDIC-insured, and it does not cover non-deposit investment products or the default or bankruptcy of any non-FDIC-insured institution.
The FDIC manages the Deposit Insurance Fund (DIF) to maintain public confidence in the financial system and resolve failed banks. The DIF is funded through assessments or insurance premiums paid by FDIC-insured institutions and interest earned on investments in U.S. government obligations, such as Treasury notes. The FDIC has maintained a deposit insurance fund since its creation in 1933 and has authority over state-chartered banks that are not members of the Federal Reserve System and backup authority over national and Fed-member banks.
The FDIC also manages two additional deposit insurance funds: the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). The BIF insures deposits in commercial and savings banks, with a maximum coverage of $100,000 per account, and is funded by premium assessments on domestic deposits. The SAIF, which was previously separate from the BIF, was merged with it following the elimination of the thrift charter.
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FDIC's role in bank failure
The Federal Deposit Insurance Corporation (FDIC) insures most banks in the US. FDIC insurance covers deposits in the event of a bank failure. The FDIC acts in two main capacities in the event of a bank failure: as the insurer of the bank's deposits and as the "Receiver" of the failed bank.
Firstly, as the insurer, the FDIC insures all deposits up to a limit of $250,000 per depositor, per bank, per ownership category. This includes money deposited in deposit accounts such as checking, NOW, and savings accounts, money market deposit accounts (MMDA), and time deposits such as certificates of deposit (CDs). The FDIC does not insure money invested in other products and services, even if they were purchased from a bank with FDIC insurance.
Secondly, the FDIC acts as the "Receiver" of the failed bank, assuming the task of selling/collecting the assets of the failed bank and settling its debts, including claims. The FDIC may execute an insured deposit transfer, selling the failed bank's insured deposits to another institution for a fee. This is similar to a liquidation, where the FDIC sells off the bank's assets and pays the uninsured depositors according to what it recovers. The FDIC can also negotiate a purchase and assumption (P&A) transaction, where a healthy institution buys all or most of a failed bank's assets and deposits. The FDIC restores the assets of the failed institution with cash payments or guarantees, so the acquiring bank takes on little risk.
The FDIC has no authority to charter a bank, and may only close a bank if the bank's charterer fails to act in an emergency. The FDIC depends on the charterer to declare a bank in danger of failure before it can step in. However, the FDIC does have the authority to revoke an institution's deposit insurance, essentially forcing the bank to close. The FDIC also has direct supervisory authority over state-chartered banks that are not members of the Federal Reserve System, and backup authority over national and Fed-member banks.
The FDIC provides depositors with prompt access to their funds in the event of a bank failure, and no insured depositor has ever lost any funds. The FDIC also offers resources to help unbanked households get started with opening an account.
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Frequently asked questions
The Federal Deposit Insurance Corporation (FDIC) insures most banks in the US.
The FDIC insures up to \$250,000 per depositor, per bank, and per ownership category.
The FDIC executes an insured deposit transfer, selling the failed bank's insured deposits to another institution for a fee. The FDIC also assumes the role of "receiver" of the failed bank, collecting and selling its assets, and settling its debts.
The FDIC does not insure regular shares and share draft accounts held at credit unions. These accounts are insured by the National Credit Union Share Insurance Fund, run by the National Credit Union Administration (NCUA).
You can use the FDIC's Bank Find Suite page to check if your bank is FDIC-insured.
