Federal Deposit Insurance Corporation - FDIC


 
 
Concept Explanation
 

Federal Deposit Insurance Corporation - FDIC

FDIC - Federal Deposit Insurance CorporationThe Federal Deposit Insurance Corporation (FDIC) is the U.S. corporation insuring deposits in the United States against bank failure. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices. The FDIC insures deposits of up to $250,000 per institution, as of 2016, as long as the bank is a member firm.The FDIC and its reserves are not funded by public funds, members banks insurance dues are the FDIC's primary source of funding. The FDIC also has a US$100 billion line of credit with the United States Department of the Treasury. Only banks are insured by the FDIC; credit unions are insured up to the same insurance limit by the National Credit Union Administration, which is also a government agency.  The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages receiverships of failed banks.funded by public funds; member banks' insurance dues are the FDICSInsured ProductsFDIC deposit insurance covers deposit accounts, which, by the FDIC definition, include:

  • demand deposits (checking accounts of a type that formerly could not legally pay interest), and negotiable order of withdrawal accounts (NOW accounts, i.e. savings accounts that have cheque- writing privileges)
  • savings accounts and money market deposit accounts (MMDAS, i.e. higher-interest savings accounts subject to cheque-writing restrictions)
  • time deposits including certificates of deposit (CDs)
  • outstanding cashier's cheques, interest cheques, and other negotiable instruments drawn on the accounts of the bank
  • accounts denominated in foreign currencies
  • Accounts at different banks are insured separately. All branches of a bank are considered to form a single bank. Also, an Internet bank that is part of a brick and mortar bank is not considered to be a separate bank, even if the name differs. Non-US citizens are also covered by FDIC insurance as long as their deposits are in a domestic office of an FDIC-insured bank.The FDIC publishes a guide entitled "Your Insured Deposits", which sets forth the general characteristics of FDIC deposit insurance, and addresses common questions asked by bank customers about deposit insurance.

     
     


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