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Federal Deposit Insurance Corporation: Difference between revisions
Federal Deposit Insurance Corporation (view source)
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{{Organization | |||
|OrganizationName=Federal Deposit Insurance Corporation | |||
|OrganizationType=Regulatory Commissions | |||
|Mission=To maintain stability and public confidence in the nation's financial system by insuring deposits, examining and supervising financial institutions for safety, soundness, and consumer protection, and managing receiverships. The FDIC works to protect depositors of insured banks located in the United States against the loss of their deposits, should an insured bank fail. | |||
|CreationLegislation=Banking Act of 1933 (Glass-Steagall Act) | |||
|Employees=5800 | |||
|Budget=$2.2 billion (Fiscal Year 2023) | |||
|OrganizationExecutive=Chairperson | |||
|Services=Deposit insurance; Bank supervision; Bank failure resolution; Consumer protection; Financial institution regulation | |||
|HeadquartersLocation=38.89881, -77.03925 | |||
|HeadquartersAddress=550 17th Street NW, Washington, DC 20429 | |||
|Website=https://www.fdic.gov | |||
}} | |||
{{Short description|US government agency providing deposit insurance}} | {{Short description|US government agency providing deposit insurance}} | ||
{{Infobox government agency | {{Infobox government agency | ||
| agency_name = Federal Deposit Insurance Corporation | | agency_name = Federal Deposit Insurance Corporation | ||
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Between 1989 and 2006, there were two separate FDIC reserve funds: the '''Bank Insurance Fund''' (BIF), and the '''Savings Association Insurance Fund''' (SAIF). This division reflected the FDIC's assumption of responsibility for insuring [[savings and loan association]]s after another federal insurer, the [[FSLIC]], was unable to recover from the savings and loan crisis. The existence of two separate funds for the same purpose led banks to shift business from one to the other, depending on the benefits each could provide. In the 1990s, SAIF premiums were, at one point, five times higher than BIF premiums; several banks attempted to qualify for the BIF, with some merging with institutions qualified for the BIF to avoid the higher premiums of the SAIF. This drove up the BIF premiums as well, resulting in a situation where both funds were charging higher premiums than necessary.<ref>Sicilia, David B. & Cruikshank, Jeffrey L. (2000). ''The Greenspan Effect'', pp. 96–97. New York: McGraw-Hill. {{ISBN|0-07-134919-7}}.</ref> | Between 1989 and 2006, there were two separate FDIC reserve funds: the '''Bank Insurance Fund''' (BIF), and the '''Savings Association Insurance Fund''' (SAIF). This division reflected the FDIC's assumption of responsibility for insuring [[savings and loan association]]s after another federal insurer, the [[FSLIC]], was unable to recover from the savings and loan crisis. The existence of two separate funds for the same purpose led banks to shift business from one to the other, depending on the benefits each could provide. In the 1990s, SAIF premiums were, at one point, five times higher than BIF premiums; several banks attempted to qualify for the BIF, with some merging with institutions qualified for the BIF to avoid the higher premiums of the SAIF. This drove up the BIF premiums as well, resulting in a situation where both funds were charging higher premiums than necessary.<ref>Sicilia, David B. & Cruikshank, Jeffrey L. (2000). ''The Greenspan Effect'', pp. 96–97. New York: McGraw-Hill. {{ISBN|0-07-134919-7}}.</ref> | ||
Then-[[Chair of the Federal Reserve]] [[Alan Greenspan]] was a critic of the system, saying, "We are, in effect, attempting to use government to enforce two different prices for the same item{{spaced ndash}}namely, government-mandated deposit insurance. Such price differences only create efforts by market participants to [[arbitrage]] the difference." Greenspan proposed "to end this game and merge SAIF and BIF".<ref>Sicilia & Cruikshank, pp. 97–98.</ref> In February 2006, President | Then-[[Chair of the Federal Reserve]] [[Alan Greenspan]] was a critic of the system, saying, "We are, in effect, attempting to use government to enforce two different prices for the same item{{spaced ndash}}namely, government-mandated deposit insurance. Such price differences only create efforts by market participants to [[arbitrage]] the difference." Greenspan proposed "to end this game and merge SAIF and BIF".<ref>Sicilia & Cruikshank, pp. 97–98.</ref> In February 2006, President George W. Bush signed into law the [[Federal Deposit Insurance Reform Act of 2005]] (FDIRA). Among other purposes, the act merged the BIF and SAIF into a single fund. | ||
As of December 31, 2022, the balance of FDIC's Deposit Insurance Fund is $128.2 billion.<ref name="AtAGlance2022">{{cite web |date=December 31, 2022 |title=Statistics at a Glance |publisher=Federal Deposit Insurance Corporation |url=https://www.fdic.gov/analysis/quarterly-banking-profile/statistics-at-a-glance/2022dec/fdic.pdf}}</ref> The year-end balance has increased every year since 2009.<ref name="AtAGlance2022" /> | As of December 31, 2022, the balance of FDIC's Deposit Insurance Fund is $128.2 billion.<ref name="AtAGlance2022">{{cite web |date=December 31, 2022 |title=Statistics at a Glance |publisher=Federal Deposit Insurance Corporation |url=https://www.fdic.gov/analysis/quarterly-banking-profile/statistics-at-a-glance/2022dec/fdic.pdf}}</ref> The year-end balance has increased every year since 2009.<ref name="AtAGlance2022" /> | ||
==Resolution of insolvent banks== | ==Resolution of insolvent banks== | ||
[[File:Federal Deposit Insurance Corporation (FDIC) (52367658071).jpg|thumb|The FDIC's satellite campus in | [[File:Federal Deposit Insurance Corporation (FDIC) (52367658071).jpg|thumb|The FDIC's satellite campus in Arlington County, Virginia, is home to many administrative and support functions, though the most senior officials work at the main building in Washington]] | ||
Upon a determination that a bank is insolvent, its chartering authority—either a state banking department or the U.S. Office of the Comptroller of the Currency—closes it and appoints the FDIC as receiver. In its role as a receiver the FDIC is tasked with protecting the depositors and maximizing the recoveries for the creditors of the failed institution. The FDIC as receiver is functionally and legally separate from the FDIC acting in its corporate role as deposit insurer. Courts have long recognized these dual and separate capacities as having distinct rights, duties and obligations. | Upon a determination that a bank is insolvent, its chartering authority—either a state banking department or the U.S. Office of the Comptroller of the Currency—closes it and appoints the FDIC as receiver. In its role as a receiver the FDIC is tasked with protecting the depositors and maximizing the recoveries for the creditors of the failed institution. The FDIC as receiver is functionally and legally separate from the FDIC acting in its corporate role as deposit insurer. Courts have long recognized these dual and separate capacities as having distinct rights, duties and obligations. | ||
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* {{Official website|http://www.fdic.gov/}} | * {{Official website|http://www.fdic.gov/}} | ||
* [https://www.federalregister.gov/agencies/federal-deposit-insurance-corporation Federal Deposit Insurance Corporation] in the ''[[Federal Register]]'' | * [https://www.federalregister.gov/agencies/federal-deposit-insurance-corporation Federal Deposit Insurance Corporation] in the ''[[Federal Register]]'' | ||
* [https://www.law.cornell.edu/cfr/text/12/chapter-III 12 CFR Chapter III] of the [[Code of Federal Regulations]] from the | * [https://www.law.cornell.edu/cfr/text/12/chapter-III 12 CFR Chapter III] of the [[Code of Federal Regulations]] from the Legal Information Institute | ||
* [https://www.ecfr.gov/current/title-12/chapter-III 12 CFR Chapter III] of the Code of Federal Regulations from the [[Office of the Federal Register|OFR]] | * [https://www.ecfr.gov/current/title-12/chapter-III 12 CFR Chapter III] of the Code of Federal Regulations from the [[Office of the Federal Register|OFR]] | ||
*[https://www.usaspending.gov/agency/federal-deposit-insurance-corporation Federal Deposit Insurance Corporation] on [[USAspending.gov]] | *[https://www.usaspending.gov/agency/federal-deposit-insurance-corporation Federal Deposit Insurance Corporation] on [[USAspending.gov]] | ||