2008 Annual Report
75 Years of the FDIC
- On June 16, 1933, at the height of the Great Depression and with more than 4,000 bank failures already that year, President Franklin Delano Roosevelt signs the Banking Act of 1933 establishing the Federal Deposit Insurance Corporation as a temporary agency to raise the confidence of the U.S. public in the banking system.
- FDIC deposit insurance goes into effect on January 1, 1934. The deposit insurance level is $2,500. Only nine banks failed during the first year that the FDIC begins insuring banks.
- On July 1, 1934, FDIC deposit insurance coverage is increased to $5,000.
- The Banking Act of 1935 provides for permanent deposit insurance and maintains it at the $5,000 level.
- In 1950, deposit insurance coverage increases to $10,000.
- 1962 marks the first full year with no bank failure since the FDIC’s creation – a milestone not repeated again until 2005 and 2006.
- The deposit insurance limit jumps to $15,000 in 1966; to $20,000 in 1969; to $40,000 in 1974; and to $100,000 in 1980.
- Congress passes the Depository Institutions Deregulation and Monetary Control Act of 1980 – the most sweeping banking reform package enacted since the Banking Act of 1933.
- Forty-eight insured banks, with $7 billion in assets, failed in 1983. After 50 years, the FDIC still takes in more bank premiums than it loses through failures.
- In 1984, the FDIC – for the first time – spends more on resolving failures than it receives in premiums, with 80 insured bank failures that year.
- In 1988, 280 insured institutions failed – the largest number in the history of the FDIC. Over half of the banks are in Texas.
- President George H. Bush signs the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. This act is the beginning of statutory attempts to re-regulate the banking and saving and loans industries.
- The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) gives the FDIC the authority to borrow $30 billion from the Treasury to help replenish the Bank Insurance Fund. It also requires the FDIC to apply risk-based premiums by January 1, 1994, and to close banks in the least-costly manner to the insurance fund.
- The Riegle-Neal Interstate Banking and Branching Act of 1994 permits bank holding companies to acquire banks in any state, interstate branching among banks, and foreign banks to branch to the same extent as U.S. banks.
- The Gramm-Leach-Bliley Act of 1999 repeals the last provision of the Glass-Steagall Act of 1933 – which separated commercial and investment banking.
- June 25, 2004, to February 2, 2007, marks the longest period in the FDIC’s history without a single bank failure.
- On February 8, 2006, President George W. Bush signs the Federal Deposit Insurance Reform Act of 2005 into law, providing for – among other things – an increase in insurance coverage to $250,000 for certain retirement accounts.
- The FDIC launches its 75th Anniversary celebration on June 16, 2008 – exactly three-quarters of a century after it was created.
- On October 5, 2008, the FDIC implemented the temporary increase in the Standard Maximum Deposit Insurance Amount from $100,000 to $250,000. This increase is in effect until the end of 2009.
- On October 13, 2008, the FDIC adopted the Temporary Liquidity Guarantee Program due to disruptions in the credit market, particularly the interbank lending market, which reduced banks’ liquidity and impaired their ability to lend.
- During 2008, 25 FDIC-insured institutions failed. This was the largest number of failures since 1993 when 41 institutions failed. The 2008 total includes IndyMac Bank, FSB, Pasadena, CA, which was the fourth largest failure in the FDIC’s history and Washington Mutual Bank, Henderson, NV, which was the largest single failure in FDIC history.