Federal Deposit Insurance Corporation Law & Legal Definition
The Federal Deposit Insurance Corporation (FDIC) is an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. The corporation was established in 1933 in response to the losses incurred during the Great Depression when bankrupt banks could not return the money deposited in them. It is managed by a five member board of directors, appointed by the president with the consent of the U.S. Senate.
National banks, state banks that are members of the Federal Reserve System , and other qualified state banks are covered by the FDIC. However, mutual funds and other securities are not covered. The corporation is financed by assessments on insured banks and interest on government securities. Since 1989 the FDIC has supervised the Savings Association Insurance Fund, the agency that was created to provide coverage for savings and loan associations when the Federal Savings and Loan Insurance Corporation became insolvent. Failures of financial institutions in the late 1980s and early 1990s led to the FDIC's own insolvency, but it has since recovered.
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