Final answer:
The FDIC, founded in 1933, insures depositors' funds up to $250,000, protecting them from losses in the event of bank failures and playing a role in maintaining stability in the U.S. financial system.
Step-by-step explanation:
The Federal Deposit Insurance Corporation (FDIC)
The Federal Deposit Insurance Corporation (FDIC) was established by the Glass-Steagal Banking Act of June 16, 1933. Its primary role is to provide federal insurance for bank deposits, which includes deposits in commercial banks and thrift institutions. The FDIC insures deposits up to a certain limit, which is currently $250,000 per depositor. This insurance system is in place to help maintain public confidence in the U.S. financial system by protecting depositors' funds in the event of bank failures.
Banks fund the FDIC insurance through insurance premiums based on their deposit levels and risk profiles. The FDIC, alongside other financial regulatory bodies such as the Office of the Comptroller of the Currency (OCC) and the Federal Reserve, plays a crucial role in bank supervision to ensure the health and stability of the banking sector. Notably, the FDIC's creation was a response to the banking crises and bank runs of the Great Depression, aimed at restoring confidence in the banking system.