FDIC

Where would you keep your money if there were no banks? You could dig a hole in a secret place and keep it there, but then paying for things would mean a lot of work. When banks opened for business, people finally had a good place to keep their money safe.

Did you know?

• The FDIC insures $9 trillion of deposits in almost every bank in the U.S.

In 1929, the stock market crashed, causing thousands of bank failures. When a bank fails, people can’t get their money. This scared people, and they stopped depositing their money in banks. To deposit money is another way of saying to put money in a bank.

In 1933, Franklin Delano Roosevelt passed the Banking Act of 1933. Franklin Roosevelt, usually called FDR, was the 32nd president of the United States. The Banking Act created a government agency called the Federal Deposit Insurance Corporation. This agency goes by the abbreviation FDIC. The FDIC started on January 1, 1934.

The FDIC is an insurance company for banks. This means that it makes sure people get their money back if a bank fails, meaning goes out of business. Knowing they will definitely get their money back helps people feel safe about keeping money in banks. After the creation of the FDIC in 1934, people started keeping their money in banks again.

If your bank fails, the FDIC will reimburse, meaning repay, the amount that was in your account up to $250,000. They only cover, meaning pay for, one account per person per bank. If you want to keep more money safe, you can put some in another bank, and the FDIC will protect that money, too. This is called deposit insurance coverage, which is a fancy way of saying it protects your bank account.

The FDIC also makes sure that banks follow proper business practices, such as only lending money to people who can pay it back. If it finds a bank following bad practices, the FDIC can stop the bank. Bad practices is the business way of saying an idea that is not good for the business. The FDIC can give the bank a fine and can even force the bank to shut down.

The FDIC does not receive any money from the government. Instead, the FDIC charges all banks a premium. A premium is money a person or business pays for insurance. The premium payments ensure that the FDIC will have the money to cover the cost if the bank fails.

The FDIC is in Washington, DC, and has 7,000 employees , or workers, in six offices around the United States. Since the start of the FDIC, not a penny has been lost to bank failures.

deposit - to put money in a bank reimburse - pay back cover - pay for premium - money paid for insurance employeesworkers