The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States (U.S.) federal government that preserves public confidence in the banking system by insuring deposits. The FDIC is headquartered in Washington, DC, with several regional offices and numerous field offices throughout the U.S. The agency is managed by a five-person Board of Directors, all of whom are appointed by the President and confirmed by the Senate, with no more than three being from the same political party.
The FDIC was created during the Great Depression of the 1930s in response to widespread bank failures and massive losses to bank customers. The funds for the agency are provided in the same way as the funds for a private insurance company but on a larger scale. Premiums are paid by all participating institutions. A total of over $3 trillion ($3 million million) in U.S. dollars is insured by a fund of approximately $50 billion ($50 thousand million). Conventional checking accounts, savings accounts, certificates of deposit and money-market deposit accounts are insured up to $100,000 per depositor in each bank. Most retirement accounts are insured up to $250,000 per depositor. The FDIC does not insure stocks, bonds, annuities, insurance policies, securities or mutual funds. Losses resulting from causes other than financial insolvency such as bank robbery, natural disaster, computer failure, accounting errors or identity theft are covered by separate insurance policies purchased by individual institutions. In some cases civil remedies may be available.
In the event of the failure of a specific financial institution, the FDIC may do any of several things. Usually, customer deposits and loans of the failed institution are sold to another institution. Depositors automatically become customers of the new institution and usually notice no significant change in their accounts other than the name of the institution that holds the deposits.