75 years 

as a Pillar of the

American Banki

Syste

FD

Celebrates

F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N
12

Who is the

The Federal Deposit Insurance Corporation (FDIC) preserves and promotes 

public confidence in the U.S. financial system by insuring deposits in banks 

and thrift institutions for at least $250,000; by identifying, monitoring and 

addressing risks to the deposit insurance funds; and by limiting the effect on the 

economy and the financial system when a bank or thrift institution fails.

An independent agency of the federal 

government, the FDIC was created in 

1933 in response to the thousands 

of bank failures that occurred in 

the 1920s and early 1930s. Since 

the start of FDIC insurance on 

January 1, 1934, no depositor has 

lost a single cent of insured funds as 

a result of a failure. 

The FDIC receives no 

Congressional appropriations – it 

is instead funded by premiums 

that banks and thrift institutions 

pay for deposit insurance coverage 

and from earnings on investments 

in U.S. Treasury securities. With 

an insurance fund totaling $17.3 

billion, the FDIC insures a total of 

more than $4 trillion of deposits in 

U.S. banks and thrifts – deposits in virtually 

every bank and thrift in the country.

Savings, checking and other deposit accounts, 

when combined, are generally insured to $250,000 

per depositor in each bank or thrift the FDIC 

insures. (On October 3, 2008, FDIC deposit 

insurance temporarily increased from $100,000 

to $250,000 per depositor through December 

31, 2009.) Deposits held in different categories 

of ownership – such as single or joint accounts – 

FDI
CHA PTR  1 ★ M ANAG E M EN T ’ S D I S CUSSI O N AN D ANALYSI

may be separately insured. Also, the FDIC generally 

provides separate coverage for retirement accounts, 

such as individual retirement accounts (IRAs) 

and Keoghs, insured up to $250,000. The FDIC’s 

Electronic Deposit Insurance Estimator can help 

consumers determine whether they have adequate 

deposit insurance for their accounts.

The FDIC insures deposits only. It does not 

insure securities, mutual funds or similar types 

of investments that banks and thrift institutions 

may offer. (Insured and Uninsured Investments

distinguishes between what is and is not protected 

by FDIC insurance.) 

In addition to providing deposit insurance, the 

FDIC directly examines and supervises about 

5,098 banks and savings banks, more than half of 

the institutions in the U.S. banking system. Banks 

can be chartered either by any individual state or 

by the federal government. Banks chartered by 

states also have the choice of whether to join the 

Federal Reserve System. The FDIC is the primary 

federal regulator of state-chartered banks that are 

not members of the Federal Reserve System. The 

FDIC also serves as the back-up supervisor for the 

remaining insured banks and thrift institutions.

To protect insured depositors, the FDIC responds 

immediately when a bank or thrift institution 

fails. Institutions generally are closed by their 

chartering authority – the state regulator, the 

Office of the Comptroller of the Currency, or 

the Office of Thrift Supervision – which then in 

turn appoints the FDIC as receiver for the failed 

institution. The FDIC has several options for 

resolving institution failures, but the one most 

used is to sell deposits and loans of the failed 

institution to another institution. Customers 

of the failed institution automatically become 

customers of the assuming institution. Most 

of the time, the transition is seamless from the 

customer’s point of view. 

The FDIC employs about 5,034 people. It is 

headquartered in Washington, DC, but conducts 

much of its business in six regional offices and in 

field offices around the country.

The FDIC is managed by a five-person Board 

of Directors, all of whom are appointed by 

the President and confirmed by the Senate, 

with no more than three being from the same 

political party.

Year 

2006-Current Sheila C. Ba

75th Anniversary in 2008

2005 Martin J. Gruenber

(Acting)

2001-04 Donald E. Powe

1998-2000 Donna Tanou

1997 Andrew C. Hove, 

(Acting)

1994-96 Ricki Hel

1992-93 Andrew C. Hove, 

(Acting)

1991 William Tay

1985-91 L. William S

1981-84 William M. I

50th Anniversary in 1983

1978-80 Irvine H. Sp

1977 George A. Lemai

1976 Robert E. Barn

1970-75 Frank Wil

1964-69 K. A. Ran

1963 Joseph W. B

1960-62 Erle Cocke, 

1957-59 Jesse P. Wolco

25th Anniversary In 1958

1952-56 H.e. Coo

1945-51 Maple T. H

1934-44 Leo T. Crowl

1933-34 Walter J. Cumm

Congress created FDIC 

in 1933

75 years o

quality service
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 

14
(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 RiegleNeal 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 threequarters 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.

FE EAL EP SI I
16

(Above) This note was issued by the Farmer

Exchange Bank of Gloucester, Rhode Island, 

1808; the following year, Farmer’s Exchang

became the first bank in the U.S. to fail.

(Right) On August 5, 1931, depositors congregated outside the closed American Union Bank

37th Street and 8th Avenue in New York City

Courtesy of Corbis Image

Background

and Creation

The first bank failure in

U.S. history occurre

in 1809, and many 

more would follow.

For about the next hundred years, 

the country’s recurring financial crises were often accompanied by 

bank failures. Fourteen states 

responded by creating bank obligation/deposit insurance systems 

(none survived beyond 1930). Not 

until the tremendous dislocation of 

the Great Depression, though, was 

federal deposit insurance enacted. 

Its value became apparent immediately: the number of bank failures 

declined sharply, and depositor 

confidence returned. 

The year 2008 marks the 75th anniversary 

of the FDIC. For 75 years, deposit insurance has given consumers peace of mind 

that their insured money is safe. No depositor 

has ever lost a penny of insured funds at an FDICinsured institution. FDIC has been and continues to 

be the pillar of the American Banking System.

To celebrate its 75th anniversary and to demonstrate ongoing commitment to consumers, 

Chairman Bair launched the Face Your Finances

road show. The initiative was announced on 

June 16, 2008, at the anniversary launch in 

Washington, DC. Chairman Bair traveled to 

Chicago, San Francisco, Dallas, New York City, 

and Kansas City, Missouri. In each city, Chairman 

Bair met with community leaders to discuss deposit 

insurance, what it means to be an FDIC-insured 

institution, the costs and benefits of banking services, and the consumer protections resulting from 

federal regulation of the banking industry. Panel 

discussions were held, addressing bank services as 

they relate to building assets and accessing mainstream credit services, including mortgage 

loans. The discussions were intended to elicit 

information that can be used in financial literacy initiatives and informational materials.

Additionally, the FDIC has on display at its 

headquarters location, an exhibit that shows 

FDIC’s history and explores how the FDIC and 

the banking industry have changed over time. 

The photographs, charts, cartoons, maps and 

other images presented will take visitors from 

inception through the banking and savings and 

loan crisis to a typical week in the life of the FDIC 

today. An audio-visual portion of the exhibit offers 

excerpts from President Franklin D. Roosevelt’s first 

fireside chat addressing the 1933 banking crisis, 

as well as film clips on the creation of the agency 

and more. Following are excerpts from the exhibit.
Y ou have accomplished in these few 

months with complete success a gigantic 

task which the pessimists said could not 

possibly be done before Jan. 1. That 

97 per cent of the bank depositors of 

the nation are insured will give 

renewed faith...

—FDR in a letter to FDIC Chairman Cummings, 

dated January 1, 1934

I T

(Top) On June 16, 1933, President Roosevelt signed the act th

created the FDIC. He was surrounded by congression

leaders, including Senator Carter

Glass and Representative Henr

Steagall, both of whom lent their

names to the law.

(Right) The first official emblem o

the FDIC, and a new symbol o

confidence for depositors.

Creation of 

the FD

The Banking Act of 1933 created 

the FDIC as a temporary agency. 

Despite Roosevelt’s reservations 

about deposit insurance, popular 

support for it was so strong that he 

signed the Act into law. In January 

1934, the FDIC began insuring 

deposits, covering them up to 

$2,500. The FDIC also became the 

federal regulator of state 

non-member banks*, the receiver 

for failed national banks, and—

with state authorization—the 

receiver for failed state banks.

*State-chartered banks that were not members

of the Federal Reserve Syst

7,785

Number of state bank

examined under 

auspices during 

last three months of

1933 to ensure that 

they could apply 

deposit insuran
CHA PTR  1 ★ M ANAG E M EN T ’ S D I S CUSSI O N AN D ANALYSI

Prosperity 

and Growth

During the period c.1945-1970, 

the banking industry was highly 

regulated, with tight restrictions 

on interest rates and on products 

and services. Few banks failed, 

so the FDIC faced few challenges 

as a deposit insurer. In fact, by 

1950 the insurance fund had 

become large enough ($1.2 

billion) for the FDIC to begin 

giving rebates to banks on 

their deposit insurance 

assessments.

The Savings an

Loan Indust

Savings and loan 

associations 

(S&Ls), or thrifts, 

were depository 

institutions that 

made home mortgage loans at 

relatively low fixed rates. 

Starting in 1934, they were 

insured by the Federal 

Savings and Loan Insurance 

Corporation (FSLIC). The S&L 

industry grew rapidly during 

this period and very few institions failed.

2,508

Number of F

employees a

year-end 1970

Repaying the Trea

(Right) In September 1947, FDIC Chairman M

Harl (right) presented a check for $139 million to

a representative of the Treasury Department, repaying almost half of the government’s initial

funding of the FDIC. The balance was paid t

following year.

Increased Protec

Congress increased FDIC insurance coverage levels six times between 1934 and 198

$2,500 $5,000 $10,000 $15,000 $20,000

$40,000

$100,000

1933 1934 1950 1966 1969 1974 1980
The Banki

Crisis

The banking crisis of the 1980s 

and 1990s was the greatest challenge the FDIC had ever faced. 

The crisis had four main causes. 

Boom-and-bust economic activity 

occurred in certain regions and 

economic sectors. Legal restrictions on branching made banks 

more vulnerable to regional and 

sectoral recessions. Many banks 

exhibited weak risk management. And inappropriate 

government policies, such as 

less-frequent bank examinations, 

also played a role. Agricultur

A 1970s boom in farm

commodity prices and farm 

real estate values was 

followed by a downturn in 

the early 1980s. Many 

banks that concentrated in 

agricultural lending failed.

Real Esta

Both the Northeast and 

California had booming 

economies in the 1980s. 

But aggressive real estate 

lending led to overbuilding 

and inflated prices. When 

recessions struck in the 

early 1990s, banks in 

both regions failed.

Consequences 

of Failur

(Left) Oklahoma’s Pen

Square Bank speculated

heavily in oil and gas lending. The construction of its

new headquarters was halted by the bank’s failure 

in 1982.

Image courtesy of the Oklahom

Historical Socie

Energ

Soaring oil prices in the

1970s and early 1980s 

generated a boom in the 

Southwest. When energy

prices dropped sharply, the 

region’s economy was 

devastated and many 

banks failed.

The S&L Cri

Deregulation let S&Ls enter new 

fields where they had little expertise. In addition, capital standards 

were lax and supervision inadequate. Given government policy 

and the FSLIC’s lack of resources, 

many institutions that should have 

been closed stayed open. By 

1986, the industry was clearly in 

crisis—672 S&Ls and the FSLIC 

itself were insolvent.

$153 Billion

Cost to the taxpayers and the S&L industr

resolving failures from 1986 through 19

204 Tota

1980 

22Tota

40Tota

119 Total Failu

106 Tota

180 Tota

262 Tota

470 Tota

$36 Billion

Losses to the FDIC’s insura

fund as a result of the crisi
1990

534 Tota

382 Tota

271 Tota

181 Tota

50Total Failu

Totalling the Failur

Number of bank and S&L failure

from 1980 to 1994.

FDIC F

FSLIC F

RTC F

S&L Ref

In 1989, a new law reformed the 

S&L industry, imposing stricter capital 

requirements and limiting investment and lending activities. The 

industry’s regulatory structure was 

overhauled. The FSLIC was abolished, and the FDIC became the 

federal deposit insurer of thrifts. 

S&Ls received a new federal 

regulator, the Office of Thrift 

Supervision, and the Resolution Trust 

Corporation (RTC) was created to 

dispose of the assets of failed thrifts.

Crisis and 

Resolutio

From 1980 through 1994, a 

total of 1,618 banks failed. 

The FDIC handled these failures 

without the public losing confidence 

in the banking system and without 

the need for taxpayer funding. By 

the early 1990s, favorable interest 

rates and economic conditions 

helped the industry rebound and 

enter a period of unparalleled 

growth and profitability.

(Above) Number of FDIC and RTC employees at year-end 

Banking R

(Left) In 1991, a new la

strengthened the insurance 

funds and increased regulatory 

supervision. Its provisions called

for insurance premiums based 

on risk and annual on-site 

examinations of most banks 

and thrifts. Regulators also

were required to take “prompt 

corrective action” against 

weakening institutions and to 

close critically undercapitalized 

institutions at the least cost to 

the FDI

Image courtesy of the National Archiv

On August 9, 1989

President George 

H.W. Bush signed the

Financial Institution

Reform, Recovery, an

Enforcement Ac

Image courtesy of the George Bush

Presidential Library and Museu

Resolving the S&L Cris

The RTC, operating from 1989 to 1995, resolved 7

failed thrifts with assets of about $450 billion, successfully 

ending the thrift crisis. FDIC personnel and expertise wer

essential to the creation and operation of the RTC, and th

FDIC managed the RTC during its first two ye

22,586
Managing the Deposit 

Insurance Fu

The FDIC manages the deposit insurance fun

which is supported by risk-based premiums paid 

by insured banks and thrifts. On an ongoing basis, FDIC staff work to set appropriate depos

insurance premiums and to structure the deposit 

insurance fund’s portfolio of Treasury securities

The FDIC T

Events continue to

highlight the importance 

of the FDIC

In the decade following the crisis of 

the 1980s and early 1990s, the business of banking became more 

profitable but also more complex. 

The industry consolidation that began 

in the 1980s accelerated. Big 

financial institutions got bigger. 

Simultaneously, however, community banks found ways to 

thrive and prosper.

The following panels will cover recent 

FDIC history and describe how we 

serve the American people today.

A Week in th

Life of the F

Identifying risks and promoting 

stability have been hallmarks of 

the FDIC’s mission for 75 years. 

But the FDIC’s job doesn’t end 

there. Here is a behind-the-scenes 

look at a typical “Week in the Life 

of the FDIC.”

RESP

Q

The FDIC typically responds to mo

than 5,000 inquiries each week from 

consumers and financial professionals 

about deposit insurance coverage. 

The FDIC’s Web site, which contai

extensive information on deposit insurance, consumer protection, and 

banking, is used by the public more 

than 500,000 times a week.
Promoting Local Lendi

The FDIC encourages banks to make mortgages and oth

loans in low- and moderate-income neighborhoods. One

strategy involves conducting about 10 outreach meetings 

weekly with bankers and community representatives. 

Examining

Supervising B

FDIC staff conduct off-site monitoring 

and on-site examinations to assess risk 

and promote prudent banking practices. 

Examinations identify whether banks 

operate in a safe and sound manner and 

comply with consumer protection laws. 

During any given week, the FDIC may be 

examining more than 200 banks.

4,532

Number o

FDIC employ

at year-end 2007

Dallas Cowboys 

The FDIC owned 12 percent of the team during the 1988 a

1989 seasons, after FirstRepublic Corporation of Dallas failed in 198

Citrus and Almond Tree Far

Assets acquired by the FDIC often require significant upkeep. For example, FDIC asset managers had to purchase machinery to protect our citrus crops from fre

weather and bought beehives for pollination of our almond trees.

Taxicabs

The FDIC owned fleets in Californi

Arizona, and New York

Ghosts and Ghouls

The FDIC acquired a house in Salem, Massachusetts, that was reputedly haunted

the ghosts of the men and women who were sent to their deaths more than 300 

years ago by the previous landowner, the town sheriff. The property was acquired

from the Bank of New England, which failed in 1991

Abracadabr

The RTC acquired the Mulholland Library of Conjuring and the Allied Arts fro

failed First Network Savings in 1990. Magician David Copperfield made it disappear from the RTC’s asset portfolio by purchasing it for $2.2 million. The collec

included letters written by Harry Houdini and books dating back to the 16th centur

Grizzly 2: The Predato

The FDIC acquired this B-grade horror picture, filmed in 19

with budding stars Charlie Sheen and George Clooney. The movie is about a grizzly bear that attacks patrons at a rock concert i

a national park.

From Oil Tankers to Shrimp 

Throughout the years, the FDIC has h

interests in oil tankers, shrimp boats, and tuna 

boats, and consequently experienced many of the pitfalls facing the maritime industry. In one case, an oil tanker ran

aground. In another, a shrimp boat was blown onto the main street

of Aransas Pass, Texas, by a hurrican

Race Hors

The FDIC temporarily owned more than 100 ra

horses and breeding horses, most of which had been collateral for 

loans made by the failed Penn Square Bank in Oklahom

Las Vegas Casin

In 1993, the FDIC acquired the voting rights to a controlling share 

the stock in companies that owned casinos, including the Maxim and 

the Dunes in Las Vegas

Unusual Holdin

When a bank fails, the FDIC often winds up acquiring 

some of the institution’s assets. Through the years, the 

FDIC has temporarily owned some highly unusual businesses and properties, typically the result of bad loans 

or investments made by the failed banks. Take a look at 

some of our oddest acquisitions.
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N