The Banking Act of 1933 had the provision which led to the
creation of the Federal Deposit Insurance Corporation or FDIC. The FDIC was intended to
safeguard depositors in case a bank collapsed and to protect them from losing all their
funds.
The FDIC is an insurance firm that is run by a
yearly fee which banks that join it have to pay. Its role is to pay depositors a sum of
up to href="http://www.fdic.gov/deposit/deposits/changes.html">$250,000 as of
7/21/2010 in case the bank fails. The FDIC was started in 1933 and by 1935 almost 14,000
banks had joined it. By 2000, approximately 98% of all banks are insured by the
FDIC.
The FDIC has brought back the confidence of people in
the banking system as they know that their funds deposited in the banks are safe and
even if a large number of banks were to fail, the FDIC is in a position to secure
deposits up to $250,000 as it has access to money from the US
Treasury.
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