The federal deposit insurance system in the United States, which was established in the 1930s, protects depositors from losses that may result from at least two causes. First, a financial institution may use deposits to fund lending activities that may later prove to be unprofitable, leading to substantial losses that make it difficult to repay depositors. Second, a financial institution may find itself unable to repay depositors if its customers suddenly and simultaneously withdraw their deposits based upon speculation or knowledge about the health of similar or neighboring institutions. This phenomenon is generally known as a bank run. Hence, deposit insurance has arguably promoted and helped to sustain public confidence in the U.S. financial system, particularly at times when depositories have suffered large losses. As the financial crisis of 2008 developed, the number of failures of depository institutions increased. The Federal Deposit Insurance Corporation (FDIC) administered 25 bank failures in 2008, 140 bank failures in 2009, 157 bank failures in 2010, and 92 bank failures in 2011. In contrast, no banks failed in 2005 and 2006, and only three bank failures occurred in 2007. Funds used to reimburse depositors when banks fail are maintained in the Deposit Insurance Fund (DIF), which is managed by the FDIC. The pace of bank failures has, so far, declined since 2011. According to the National Credit Union Administration (NCUA), 15, 16, and 12 credit unions failed in 2005, 2006, and 2007, respectively; in comparison, 18 credit unions failed in 2008, 28 in 2009, 28 in 2010, and 16 in 2011. In addition, five corporate credit unions, which provide financial services for retail credit unions, saw severe liquidity pressures and were eventually placed under conservatorship by the NCUA. Funds to reimburse credit union members are maintained in the National Credit Union Share Insurance Fund (NCUSIF), which is managed by the NCUA. The pace of credit union failures has declined since 2011. Regulators and legislators reacted to (1) the depletion of the DIF that resulted from the surge in bank failures and (2) a temporary dip in the NCUSIF below its statutory level during 2010. For example, regulators increased deposit insurance assessments on member institutions. In addition, the NCUA borrowed funds (which must be repaid) from the U.S. Treasury via the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) to administer the conservatorships of the corporate credit unions. The 111 th Congress also provided the FDIC and the NCUA with greater ability to meet the liquidity needs of depository institutions, which are discussed later in this report. Whether additional legislative action becomes necessary depends in part upon the future number and pace of failures of depository institutions. This report provides an overview of the FDIC and the NCUA, the status of the DIF and NCUSIF, and the resolution procedures that are implemented when depository institutions fail. Appendix A summarizes efforts to support the DIF during the recent period of financial distress prior to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203 , 124 Stat. 1376). Appendix B summarizes recent actions taken to minimize losses to the NCUSIF and the credit union system. The FDIC was established as an independent government corporation under the authority of the Banking Act of 1933, also known as the Glass-Steagall Act, to insure bank deposits. The FDIC insures demand deposit (non-interest bearing) accounts, interest bearing checking accounts, savings accounts, and certificates of deposit. The FDIC also insures funds held in traditional and Roth Individual Retirement Accounts (IRAs). It provides separate coverage for deposits held in different account ownership categories, such as single accounts, joint accounts, and IRAs. For example, the funds in a deposit account and those in an IRA would be insured separately by the FDIC, even if the accounts belonged to the same individual. When a bank becomes insolvent or fails, the FDIC assumes responsibility for repayment of the principal balance in depositor accounts up to the deposit insurance limits. Typically, most depositors have access to their insured funds within one business day after the FDIC closes the bank. With certain deposits, such as 401(k) accounts and retirement accounts, additional time is required to make an insurance determination, but the FDIC estimates that this should not be longer than several days. In some situations, depositors may also receive a portion of their uninsured funds, depending on the sale of the failed bank's assets, a process which may take one or two years. Congress has periodically increased the maximum amount of deposit insurance coverage as deemed necessary to enhance public confidence and reduce the risk of bank runs. For example, the Federal Deposit Insurance Reform Act, which was enacted on February 8, 2006, raised the limit on deposit insurance for IRAs from $100,000 to $250,000. The Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343 , 122 Stat. 3765) temporarily raised the limit on deposit insurance until December 31, 2009. Under the new 2008 deposit insurance limits, an individual checking account may be covered up to $250,000 and an IRA may be covered up to $250,000. An individual having both of these accounts would receive total coverage of up to $500,000 in a single bank. On May 20, 2009, the Helping Families Save Their Homes Act of 2009 (HFSTHA; P.L. 111-22 , 123 Stat. 1632) made the increase in the deposit insurance limit effective until December 31, 2013. On July 21, 2010, the Dodd-Frank Act made the increase permanent. To cover losses or costs associated with bank failures, the FDIC collects insurance premiums from member depository institutions and places the monies in the DIF. The designated reserve ratio (DRR), which is the ratio of total funds in the DIF relative to the estimated amount of insured deposits, provides some indication about the adequacy of reserves available to protect depositors and maintain public confidence. The DRR is required by the Dodd-Frank Act to be a minimum of 1.35% of total insured deposits. Should the DRR fall below its statutorily mandated range, the FDIC is then required to devise a restoration plan to recapitalize the fund. A well-capitalized DIF arguably would help maintain public confidence in the FDIC's ability to protect deposits. By the end of 2013, there were $6,011 billion estimated FDIC-insured deposits and 24 bank failures for the year. The FDIC reports that the decline in insured deposits from 2012 to 2013 is primarily due to the expiration of the temporary unlimited insurance coverage on noninterest-bearing transaction accounts. Figure 1 illustrates the evolution of the total amount of FDIC-insured deposits and the DRR. The DRR, which was 1.25% at the end of December 2005, was 0.79% as of December 31, 2013. The DRR movements reflect losses to the DIF as well as a substantial increase in insured deposits. Figure 2 illustrates the DRR along with the number of bank failures. The FDIC has adopted a restoration plan to recapitalize the DFF to meet the 1.35% minimum requirement by September 30, 2020. Appendix A summarizes efforts to support the DIF during the recent period of financial distress. Credit unions are non-profit depository financial institutions that are owned and operated entirely by their members. Natural person credit unions, also known as retail credit unions, hold member deposits, which are referred to as "shares"; interest earned by members is referred to as "dividends"; and the shares may be used to provide loans to members, to other credit unions, and to credit union organizations. Corporate credit unions operate as wholesale credit unions, providing financing, investment, and clearing services to retail credit unions. Corporate credit unions accept deposits from retail credit unions and invest them in longer-term assets. Retail credit unions are cooperative owners of corporate credit unions. The U.S. Central Federal Credit Union , which is one of the 28 corporate credit unions, functions as a wholesale corporate and provides services to the other 27. The Federal Credit Union Act of 1934 formed a national system to charter, supervise, and examine federal credit unions; the National Credit Union Administration (NCUA) became an independent federal agency in 1970. Typically, the Office of the Comptroller of the Currency (OCC) charters and supervises commercial banks; the FDIC provides deposit insurance and liquidates failed banks; and the Federal Reserve provides lender-of-last-resort liquidity to solvent banks via its discount window. The NCUA, by comparison, serves all three functions for federally regulated credit unions. All 28 corporate credit unions are federally insured. Share deposit insurance may help bolster public confidence and prevent panic behavior that can lead institutions to fail, which would require the NCUA to arrange an assisted merger, a purchase and assumption action, or an involuntary liquidation. The NCUA provides insurance coverage for each individual account holder, per federally insured institution, up to the legal limit; funds in IRA and KEOGH accounts are treated as separate accounts that are insured up to the legal limit, per institution. ESSA temporarily raised the basic limit of $100,000 on federal deposit insurance coverage for individual (non-retirement) accounts to $250,000 until December 31, 2009; the limit was made permanent by the Dodd-Frank Act. Retirement accounts retained their existing $250,000 insurance coverage limit. The NCUA manages the NCUSIF, which was created in 1970 to be the insurance fund for all federally regulated credit unions. Premiums from insured credit unions are the fund's primary source of income. These arrangements are similar to those of the FDIC's DIF.