What is the Federal Deposit Insurance Corporation? – Guide to Investments
The Federal Deposit Insurance Corporation, also known as the FDIC, is an organization that insures the funds that are deposited in financial institutions up to the amount of $250,000. This offers the American people a type of peace of mind that their money will not be lost if the bank encounter’s its own financial troubles. The FDIC was started in 1933 after the bank collapse in the 1920’s. There was a large amount of distrust in the banking system of the United States, so this organization instilled a little more trust in the American people’s money by insuring it.
The Federal Deposit Insurance Corporation does not insure securities or mutual funds. The Federal Deposit Insurance Corporation only insures deposits that are made into an approved and insured financial institution. The corporation is located in Washington DC and has a staff that is over 7,000 people strong. The organization oversees the banking industry as a whole and monitors the banking institutions to be sure that they are complying with all rules and regulations. They are the main regulator of banks in the United States and are responsible for monitoring the transactions that take place at these banks daily.
There are many Acts and Regulations that all the insured banks are held accountable to follow by the Federal Deposit Insurance Corporation. Some of these regulations include The Fair Credit Reporting Act and the Truth in Lending Act. These are set in place to protect consumers from misinformation that can affect their credit an eventually their livelihood. There are many different consumers in the US that benefit from this organization and the monitoring that take place. This is important in order to keep the accountability of the financial institutions in place.
If a financial institution fails, the Federal Deposit Insurance Corporation is the first to react and take over. This organization is responsible for making sure that every dollar is accounted for, and the consumers are offered the financial security in having their money recovered. This takes a great deal of resources for the federal government in order to have a seamless process for the money to be recovered. This organization provides a great way for Americans to feel safe investing their money. If people did not use the banking systems, there would be a major financial crash in the country that would affect many other countries. This global impact would be much too great to endure, so the solution of insuring the funds has worked.