Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States federal government established by the Banking Act of 1933, popularly known as the Glass–Steagall Act, signed by President Franklin D. Roosevelt on June 16, 1933, as part of the New Deal response to the banking panics of the Great Depression. Between 1929 and 1933, roughly 9,000 banks failed and depositors lost billions, triggering successive runs that paralyzed the credit system. The FDIC was conceived to restore confidence by guaranteeing deposits, thereby removing the depositor's incentive to withdraw funds in panic. Its statutory framework is codified in the Federal Deposit Insurance Act (12 U.S.C. § 1811 et seq.). The agency is governed by a five-member Board of Directors appointed by the President with Senate confirmation, including the Comptroller of the Currency and the Director of the Consumer Financial Protection Bureau as ex officio members.

The FDIC's core function is to insure deposits at member banks, funded not by taxpayer money but by premiums (assessments) paid by insured institutions into the Deposit Insurance Fund (DIF). When the agency began operations on January 1, 1934, coverage stood at $2,500 per depositor; that ceiling has risen repeatedly, reaching $250,000 per depositor, per insured bank, per ownership category under the Emergency Economic Stabilization Act of 2008, made permanent by the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010. Beyond insurance, the FDIC supervises state-chartered banks that are not members of the Federal Reserve System, examines institutions for safety and soundness, and acts as receiver for failed banks—either selling the failed institution to a healthy acquirer (a purchase-and-assumption transaction) or paying depositors directly. Dodd–Frank also granted the FDIC "orderly liquidation authority" to wind down systemically important financial firms without a disorderly bankruptcy.

The agency's enduring record is notable: no depositor has lost a single cent of insured funds since the FDIC's inception. Its most severe stress tests came during the savings-and-loan crisis of the late 1980s, the 2008 global financial crisis—when institutions such as Washington Mutual failed in September 2008 in the largest bank failure in U.S. history—and the regional banking turmoil of March 2023, when Silicon Valley Bank and Signature Bank collapsed and the FDIC invoked a systemic-risk exception to guarantee all deposits. As of 2026 the FDIC continues to insure deposits up to $250,000 and remains a central pillar of U.S. financial regulation alongside the Federal Reserve and the Office of the Comptroller of the Currency.

For the FSOT and U.S. History sections, the FDIC is tested primarily as a flagship New Deal institution—candidates must associate it with the Glass–Steagall Act of 1933, the alphabet-agency framework, and Roosevelt's first hundred days. Typical question angles ask which agency insures bank deposits, what crisis prompted its creation, the current insurance limit ($250,000), and the distinction between FDIC deposit insurance and the SEC's role in securities regulation. A strong answer pairs the 1933 founding date with the contemporary coverage figure and the principle that the fund is industry-financed rather than taxpayer-financed.