We have all the recent bank closings, takeovers, and failures.
While bank failures are a scary thought, the FDIC prides itself on the following motto: “No depositor has ever lost a penny of insured deposits since the FDIC was created in 1933.” The FDIC is an independent Government agency formed in 1933 to insure the public’s confidence in the US banking system. The FDIC insures the public’s deposits up to the full limit of the standard amount of $250,000 per depositor, per insured bank.
The FDIC’s role when a bank fails is to assume all deposits, assets, and debts of the bank. The FDIC will seek to find another bank to assume the customer’s deposits of the bank and maintain the customer accounts going forward. The FDIC insurance fund is funded by charging all member banks premiums, with no federal dollars involved.
While the recent bank closings dominate the news channels, the numbers don’t compare to the large bank failures during the 1980s and 1990s. High inflation and oil prices were the major contributing factors to the decline from 3,234 savings and loans to 1645 by 1995. The FDIC insurance fund was short of the necessary funds to support all these bank failures so the Us taxpayers contributed over $124 billion dollars to bailout theses banks.