The Key West citizen., 1953-06-03
|FDIC Has Program To Protect
Depositors From Heavy Losses

This is how FDIC describes its
job of protecting bank depoSitors
against crippling losses:
81. Each bank approved for de,
posit insurance must meet rigid
standards.
SO. Adherence to these standards
is checked thoroughly through
bank examinations.
''3. If, despite these precautions,
an occasional insured bank gets
into trouble. the Federal Deposit
Insurance Corporation is there with
the cash to protect the deposit
ors."
In its 20 years, FDIC has rur
into some fantastic schemes tt
latch on to banks assets. In one
Pennsylvania case, it is charged
bank official stole half of the
institutions assets in an effort tC
buy control of the other hall
through dummy" operatives.
The corporation says that only
last year a defaulting woman
banker in a small Arkansas town
tried to mask an $S0,0 shortage
by shredding bank records and
stuffing them into an outhouse.
FDIC examiners still don't like to
recall that one.
Insurance coVerage at the start
of FDIC operations was limited
to $500 per account. This was
increased to $1,000 in 1885 and to
SIC, 900 in 1850. The official annual
assessment rate against the bank
remains at 1-l2 of per cent, but
the banks are allowed to recapture
so per cent of that assessment aft.
er losses and expenses of the cor
poration, have been deducted. The
remaining 40 per cent is added
to the insurance fund.
This makes the actual assess.
ment rate about 1-33 of / per cent,
an FDIC spokesman said.
The treasury put up $50 million
dollars of the original money to
finance the insurance system. The
IL Federal Reserve banks sub
scribed the remaining l39 million
dollars worth of capital stock. The
corporation paid all this back by
194s. Two years later it paid 81
million in retroactive interest.
II ever the nations financial sys-
tenn encounters an emergency,
FDIC has authority to borrow up
to three billion dollars from the
treasury.
The $4,000 individual insurance
limit applies to accounts main
tanned by a person in the same
fright or capacity" In addition to
his personal account. a deposition
insured deposits as a trustee, ex.
ecutor or agent. His wife's account
could be insured up to $4,000, Sc
could their joint savings or check
ing account, If held with right Of
survivorship.
If a person has accounts in sew.
eral insured banks, the maximum
coverage applies to his accounts
in each of them.
Over the entire period Of It's
operations, the corporation figures
its non-recoverable net losses al
only q million dollars. It comedies
freely that part of this achieve
ment is due to the generally favor
able conditions in recent years fol
| the disposition Of assets by re
ceivers or the corporation. Some
also may be due, II claims. L
FDIC's own liquidation policies.
| The government.sponsored inSur
ance plan apparently has wide
| appeal. In 10 states and the Dis
trict of Columbia all banks regu
larly engaged in deposit banking
are insured Arizona. Montana
| Nevada, New Mexico, South Da
kota. Utah, Wyoming. Alabama
Virginia and Vermont. In each d
I3 other states fewer than five
banks are uninsured.
Three directors manage FDIC
The present chairman is II. Ear
Cook. The other members are
Maple t. Hari and Ray Gidney