Deposit Insurance The Federal Deposit Insurance Corporation was set up in 1934 to insure deposits at banks; the FSLIC insured deposits at savings and loans. The FDIC gets funds to pay out by charging banks an average premium of $0.23 per $100 of deposits. Banks all pay the same premium. Insurance is limited to $100,000. 30% of total deposits are not insured; this represents 1% of depositors. Bank Failures: 1981 10 1984 79 1989 206 1996 6 The FDIC does not have the power to close a bank. That power rests with either the state banking commissioner if the bank has a state charter or the Comptroller of the Currency if the bank has a national charter. After a bank is closed, the FDIC is responsible for collecting on the bank's assets and satisfying the claims against those assets, that is, the deposits. alternative for handling a failed bank 1. deposit payoff The FDIC pays all depositors the full amount of their insured claims and begins to liquidate the bank's assets. Uninsured depositors and other creditors receive their
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