Each depositor insured to at least $250,000 per insured bank

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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Winter 2007/2008

Then and Now: Changes Since the FDIC's Creation in 1933

How Banking Has Changed

THEN: Services we take for granted today – including online banking, debit cards and credit cards – were unheard of. Also, laws to disclose account terms and protect consumers from fraudulent banking practices did not exist.

NOW: Many of today's banking customers have a debit card and probably more than one credit card. And, with the growing popularity the Internet, many consumers are taking advantage of online banking to monitor their accounts and pay bills. As banking has become more sophisticated, consumer protection laws have become more prevalent. Among the first federal laws protecting bank customers was the Truth in Lending Act of 1968, which requires lenders to clearly disclose terms and costs of their loans.

Lydia Lobsiger received the first federal deposit insurance check in U.S. history on July 3, 1934, in East Peoria, Illinois.
Lydia Lobsiger received the first federal deposit insurance check in U.S. history on July 3, 1934, in East Peoria, Illinois.
Deposit Insurance Coverage

THEN: When federal deposit insurance became effective on January 1, 1934, the FDIC provided $2,500 in insurance coverage. The amount was raised to $5,000 a few months later and remained at that level until 1950. Although $5,000 might not seem like a lot of money, in 1934 it was the equivalent of about $80,000 today (adjusted for inflation). We also insured around 14,000 institutions – mostly small, locally owned banks with about 17,000 main offices and branches. They had total insured deposits of approximately $18 billion, which is around $282 billion in today's dollars.

NOW: The basic insurance amount today is $100,000 per depositor per insured bank. Certain retirement accounts are insured up to $250,000 per depositor per insured bank. The FDIC today insures about 8,600 institutions – far fewer than the number in our early years, but due to economic and population growth as well as other factors, today's banks have many more offices and branches (around 100,000) and far more insured deposits, an estimated $4.2 trillion!

When a Bank Fails

THEN: The first FDIC-insured bank to fail, the Fon du Lac State Bank in East Peoria, Illinois, was closed by the state on May 28, 1934. Because state and federal laws at that time didn't allow for quick action by the FDIC, customers waited until July 3, 1934 – a little more than five weeks – to get their federal deposit insurance checks. From all appearances, though, the depositors at that closing didn't seem troubled by the delay. They knew that without the FDIC, they might have to wait years to get any money back. In the first year of the FDIC, the time it took to pay depositors varied from four days to several months.

NOW: Fortunately, bank failures are less common these days, and when they do occur, there is considerably less disruption for depositors. That's because the FDIC is almost always able to find a healthy bank to take the insured deposits of the failed institution, and in those instances funds are typically available to customers the next business day. During this transition, customers typically still have access to their money by writing checks or by using their debit or ATM cards. If the FDIC cannot find a healthy bank to step in, checks are in the mail to depositors within 48 hours for the amount of their insured funds. (See Making Sure Depositors Have Quick Access to Their Insured Funds After a Bank Closes for more information.)

Bank Examinations

THEN: Examinations of a bank's financial condition, management and compliance with certain banking laws were extremely labor-intensive in the years before computers, and these examinations consumed almost all of the agency's time and resources.

NOW: The FDIC still examines institutions to evaluate their safety and soundness, but the process is much more streamlined and automated than it was 75 years ago, including the frequent collection of data that can provide early warning signs of problems. The FDIC also examines institutions for compliance with consumer laws and investigates and responds to consumer complaints about financial institutions.

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Last Updated 2/12/2008