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What Is the FDIC?

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The Federal Deposit Insurance Corp., an independent federal agency, serves several functions. Arguably its most important job is insuring money you’ve deposited at an FDIC-member bank. The FDIC typically insures an account at a bank or savings institution for up to $250,000 in the event that your bank fails.

FDIC insurance means you can feel confident about keeping money at an FDIC-insured bank, rather than stashing it under your mattress. The FDIC says no depositor has lost a single penny of insured money since 1933, when the agency was founded. FDIC coverage automatically kicks in when you open a bank account.

What Is the FDIC?

What Is the FDIC?

The federal government established the FDIC through the Banking Act of 1933 in response to the banking crisis during the Great Depression. FDIC insurance of bank deposits, providing $2,500 in coverage, took effect on Jan. 1, 1934.

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The FDIC’s stated goal is “to maintain stability and public confidence in the nation’s financial system.”

Aside from insuring deposits, the FDIC:

  • Regulates U.S. financial institutions.
  • Props up “too big to fail” financial institutions to avoid bankruptcy filings that could rock the U.S. financial system.
  • Liquidates the assets of financial institutions it shuts down in order to pay depositors and creditors.

Who Runs the FDIC?

A five-member board oversees the FDIC. Three of the members are nominated by the president and confirmed by the U.S. Senate. The two other members are the director of the Office of the Comptroller of the Currency and director of the Consumer Financial Protection Bureau. In 2023, the FDIC’s budget allows for the equivalent of 6,310 full-time workers.

What Is FDIC Insurance?

The agency is best known for its deposit insurance. As of March 31, the FDIC’s Deposit Insurance Fund contained $116.1 billion. Under federal law, the FDIC must keep $1.35 in the fund for every $100 of insured deposits.

FDIC insurance protects deposits at any failed bank, as long as it’s a member of the FDIC. As of March 31, nearly 4,700 banks and savings institutions were FDIC-insured.

Fortunately, banks rarely fail in the U.S. But during the first five months of 2023, the FDIC closed three U.S. banks:

  • Silicon Valley Bank, with about $175.4 billion in deposits.
  • First Republic Bank, with about $103.9 billion in deposits.
  • Signature Bank, with about $88.6 billion in deposits.

The FDIC arranged three different U.S. banks to acquire the majority of the shuttered banks’ deposits and assets. The agency reports that no one lost deposited money in the collapses of First Republic Bank, Signature Bank and Silicon Valley Bank.
If your bank fails after the FDIC has unsuccessfully sought a buyer for the bank’s assets, the FDIC aims to issue a check for an insured deposit within two business days of the failure. Once an FDIC-insured bank closes, interest stops accruing on all accounts.

If money you deposited at a failed FDIC-insured bank falls outside the FDIC’s $250,000 insurance limits, you’ll lose any money exceeding those limits. For instance, if you owned a single account at the failed bank and the account contained $255,000, the $5,000 over the single-account limit would not be insured.

Typically, the FDIC covers $250,000 per depositor and per FDIC-insured bank in each ownership category. This encompasses both the principal and interest in an insured account.

So, let’s say you have the following deposits in only your name (known as single accounts) at one FDIC-insured bank:

  • $5,000 in a money market account.
  • $20,000 in a savings account.
  • $25,000 in a checking account.
  • $200,000 in a certificate of deposit.

The total amount comes to $250,000, meaning all the money across your accounts would be insured.
The math changes if you have joint accounts under your name and the name of someone else, such as your spouse, at the same FDIC-insured bank.

Let’s say you and your spouse jointly own a $350,000 CD and a $150,000 savings account at the same FDIC-insured bank. In this case, the two accounts would be added together and insured up to $500,000. Divided between the two spouses, this would lead to $250,000 in insurance coverage for each co-owner. In this example, it’s assumed that the couple has no other joint accounts at the same bank.

What Does the FDIC Cover?

An array of deposits at FDIC member banks are FDIC-insured. These include:

If you own an account at a credit union, the National Credit Union Administration insures deposits at NCUA institutions following the same $250,000 formulas as the FDIC.

What the FDIC Doesn’t Insure

The FDIC does not insure the following items offered by FDIC-insured banks:

  • Annuities.
  • Mutual funds.
  • Stocks.
  • Bonds.
  • Government securities.
  • Municipal securities.
  • U.S. Treasury bills, bonds and notes.
  • Life insurance policies.
  • Safe deposit boxes and their contents.

The FDIC also doesn’t cover losses stemming from fraud or theft since those crimes aren’t connected to a bank failure. Therefore, if a cybercriminal steals all the money in your checking account, the FDIC won’t cover the loss. However, federal law does offer protection in many cases when money has been swiped from a bank account.

If you suspect you’ve been the victim of bank fraud or theft, notify your financial institution’s fraud division as soon as possible.

How to Confirm Your Bank’s FDIC Status

To avoid losing your money, make sure your bank deposits are FDIC-insured. To see whether your bank is insured, check out the FDIC’s BankFind tool.

Some banks are not FDIC members, meaning deposits there aren’t insured by the FDIC. However, they may be insured by a different entity.

How to File a Claim With the FDIC

To file a claim for money that a failed bank owes you, you must submit a written claim along with proof of the claim.

You can file a claim through the claims portal on the FDIC.gov website. Once you reach the main page of the site, type “Claims Portal” in the search box.

You also can file a claim by mail. For the three banks that have failed so far in 2023, people filing claims have been instructed to send them to:

FDIC as Receiver for [Insert Name of Bank]
600 N. Pearl St., Suite 700
Dallas, TX 75201

That address is the site of a regional FDIC office.

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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