Basic Banking


What is the FDIC?

The FDIC, or Federal Deposit Insurance Corporation, was set up during the Great Depression in 1933, to fight the effects of the thousands of bank failures that happened in the years preceding. It protects depositors up to $250,000 per account holder at each institution, and guarantees this amount for every depositor at every FDIC-insured institution in the United States. In the event that a bank fails, the FDIC is the receiver, and is entrusted to pay all eligible depositors up to this amount, as well as handle the liquidation of all assets owned by the failed institution, combining them with other healthier banks, when possible, or selling them off entirely. This ensures that all Americans have complete trust in the banking system, since most Americans have substantially less money on deposit, and know that the deposits are backed by the U.S. government.


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