The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States federal government that provides deposit insurance to protect depositors in the event of a bank failure. Established to restore public confidence in the banking system following widespread bank failures during the Great Depression, the FDIC insures deposits up to $250,000 per depositor, per insured bank, for each account ownership category.
The Federal Deposit Insurance Corporation was created on June 16, 1933, as part of the Banking Act of 1933, also known as the Glass-Steagall Act. This legislation was a direct response to the financial instability of the early 1930s, during which over 9,000 banks failed between 1930 and 1933, wiping out billions in deposits and eroding trust in the banking system. Prior to the FDIC, attempts at deposit insurance had been made at the state level since the 19th century, but none succeeded on a large scale. Between 1886 and 1933, more than 150 federal proposals for deposit insurance were introduced in Congress, often in reaction to banking panics.
Initially, the FDIC provided temporary deposit insurance for two years, covering up to $2,500 per depositor. In 1934, it became a permanent agency with expanded coverage. During its first year, the FDIC examined over 7,000 banks and insured deposits in more than 14,000 institutions. The agency's early efforts helped stabilize the banking sector, with bank failures dropping significantly after 1933.
Key milestones in the FDIC's history include:
During the Global Financial Crisis of 2008, the FDIC temporarily expanded coverage through the Transaction Account Guarantee Program, insuring non-interest-bearing accounts up to $250,000. The agency has managed over 500 bank failures since 2000, including high-profile cases like Washington Mutual in 2008, without any loss to insured depositors.
The FDIC is headquartered at 550 17th Street NW, Washington, D.C., and operates as an autonomous agency within the executive branch, funded primarily by premiums paid by insured banks rather than taxpayer dollars. It is governed by a five-member Board of Directors: the Comptroller of the Currency, the Director of the Consumer Financial Protection Bureau, the Director of the Office of Thrift Supervision (until its dissolution), and two additional members appointed by the President and confirmed by the Senate. The Board is led by a Chairman, currently Martin J. Gruenberg as of 2023.
Core functions of the Federal Deposit Insurance Corporation include:
The FDIC maintains two insurance funds: the Deposit Insurance Fund (DIF) for commercial banks and thrifts, and the Federal Savings and Loan Insurance Corporation Resolution Fund (historically for savings associations). Premiums are assessed based on a bank's risk profile, with healthier institutions paying lower rates.
The Federal Deposit Insurance Corporation continues to evolve, adapting to modern risks such as cybersecurity, climate-related financial vulnerabilities, and fintech innovations while maintaining its mandate to promote economic stability.
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