The Deposit Insurer

The Deposit Insurer

The Federal Deposit Insurance Corporation (FDIC) administers the Bank Insurance Fund, which insures the deposits of member banks up to $100,000 per account. All states now require newly-chartered state banks to join the FDIC before they can accept deposits from the public. Under the 1991 Federal Deposit Insurance Corporation Improvement Act (FDICIA), both state-chartered and national banks must apply to the FDIC for deposit insurance; previously, national banks had received insurance automatically with their new charters.

The FDIC is the federal regulator of the approximately 6,548 state-chartered banks that do not belong to the Federal Reserve System. It cooperates with the state banking departments to supervise and examine these banks, and has considerable authority to intervene to prevent unsafe and unsound banking practices. Under FDICIA, the FDIC also has backup examination and regulatory authority over national and Fed-member banks.

The FDIC receives failed institutions from the chartering agencies, and either liquidates them or sells the institutions to redeem insured deposits.