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Deposit Insurance
3
Transcript
Deposit Insurance
by Javier Chavez
Overview and History
- Federal Deposit Insurance Corporation (FDIC)
- Independent agency created by to Congress to maintain stability and confidence in the U.S. financial system
- National Credit Union Administration (NCUA)
- Several financial panics -- including The Great Depression -- caused the formation of deposit insurance
Topic 1
The Great Depression
- Over 12 million people unemployed by 1933 (25% of the population)
- Estimated 9,000 banks failed during this period
- Banking Act of 1933 enacted by President FDR
- FDIC became permanent -- insuring over 98% of depositors ($2500, later turned to $5000)
- Allowed the Federal Reserve to become a Lender of Last Resort
- Separated commercial banking and investment banking
Topic 2
FDIC: Recent Years
- The Great Recession (2007-09)
- Banks heavily involved in Subprime mortgage loans
- Washington Mutual assets (the largest U.S. Savings and Loan association at the time) seized by FDIC, then files for CH11 bankruptcy
- Washington Mutual sold to JPMorgan Chase Bank***
- Dodd-Frank Act (2010)
- Comprehensive law that details new rules and regulations that oversee the financial and mortgage industries to protect consumers
- Insured deposits limit raised from $100k to $250k
Topic 3
Your Coverage/Tips
Topic 4
- FDIC and NCUA:
- Insure deposits in participating banks and credit unions (over 10,000 institutions combined)
- No application necessary
- Insurance covers:
- at least $250,000 per depositor, per FDIC-insured bank, per ownership category (i.e. $500,000 for a joint checking account)
- Checking/Savings accounts, money market accounts, Certificate of Deposits, Revocable*/Irrevocable Trusts.
- Uninsured products:
- Annuities, stocks, bonds, mutual funds, government securities, safety deposit boxes
- Products where the value can go up or down depending on the market
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