What Is Federal Deposit Insurance Corporation (FDIC)?
FDIC is an independent Federal Agency. The main responsibility of this agency is to insure deposits (in the American Banks) and to thrifts the condition in case of any bank failure. The foundation of this agency was in 1933 with a mission of enhancing public confidence. To make a more stable financial system, FDIC works through a Sound Banking Practice. And due to their sound promotional banking system, on the last 2020-FDIC insures more than $250,000/depositor (Per bank actually).
What Does the Federal Deposit Insurance Corporation (FDIC) Do?
FDIC from its main office in Washington D.C, (multiple branches in different states) works mainly to insuring deposits. Usually, FDIC ensures more financial security for the customer in smooth banking practice. The main duties of this organization are as follows-
- Insures Against Bank Failures
- Supervision of Banks
- Legal Compliance Investigations
Undoubtedly FDIC is broadly working with a diverse working strategy. But the main purpose of this bank is to insure every bank of the U.S.A. Ultimately FDIC takes responsibility for trillions of dollars (deposits on each bank). The standard amount for the deposit money for each bank, (each depositor actually) is $250,000.
So if any bank fails to run, and if it is closed down (by the State/ Federal Agency) then the FDIC take an immediate action. FDIC starts to protect the customer by selling the deposits, might take a loan from other organizations so that this bank still can get access to their money. So customers can easily move to a new bank, with no disruption in their Financial Status.
Supervision of the Bank is another important work by FDIC. FDIC goes through a direct examination & Supervision they are chartered for. Supervision of the bank mainly ensures that this bank is operated safely. However, FDIC now are dealing with 4,000 banks (almost half of the total American banks). Even the banks are chartered by the states, can join with Federal Reserve System for the examination and supervision for a secured regulation and oversight ultimately. And the bank which is chartered by the State, and did not join with Federal Reserve, can join with FDIC.
Legal Compliance Investigations is an additional checking parameter on bank performance and duties. This function is to aim, that the enrolled bank is following all govt. regulation properly with fair and legal banking activities. Some Relevant Laws to ensure the Legal Compliance Investigations are-
- Fair Credit Billing Act
- Fair Credit Reporting Act
- Truth-in-Lending Act
- Fair Debt Collection Practices
- Community Reinvestment etc.
FDIC Does Not Cover:
Though FDIC Covers the Shavings Accounts, CDs, IRAs, Revocable & Irrevocable Trust Accounts, and other Money Market Accounts, but FDIC does not cover the Mutual Funds, Annuities, Life Insurance, Stocks or the Bonds etc. FDIC also covers the Employee Market Accounts as well. FDIC also never gives coverage for the safe deposits boxes.