Federal Deposit Insurance Corp.

Acronym: FDIC


When President Franklin Roosevelt signed the Banking Act, also known as the "Glass-Stegall Act", on June 16, 1933, the FDIC was established.

Senator Carter Glass of Virginia and Representative Henry Steagall who were two most dominant figures that pushed for this bill's development. These two men where there when President Franklin Roosevelt signed the bill.


This corporation was established during a time when people held no trust in the banking system, and for this reason they were withdrawing all of their money from the banks. During the stock market crash in 1929, more than 9,000 banks had closed due to the fact that they could not meet the demands of their clients which led to the financial crisis that gripped the United States.

The FDIC was created to regain the confidence of the public in the banking system and protect the money that was kept in the bank. By guaranteeing checking and saving deposits for the members of banks, the corporation hoped to bring stability and security to the nation.


This agency was simply created as a way to create a confident bond between the public and banks. It also meant to reassure Americans who were trying to regain their balance after the stock market crash and the grueling years that followed. The FDIC official sign is posted at every insured bank and savings association across the country. It has become a symbol of confidence for Americans.

Actions Taken and the Impact Left

The FDIC was declared s success in 1934, when only nine additional banks closed. The FDIC employed 3,476 people, most of them were bank examiners during the 1930s.

Glass-Stegall Banking Reform Act: Insured individual deposits up to 5,000 dollars, provided by the FDIC, which eliminated most bank failures.

The Banking Act of 1933

  • Establishes the FDIC as a temporary government corporation

  • Gives the FDIC authority to provide deposit insurance to banks

  • Gives the FDIC the authority to regulate and supervise state nonmember banks

  • Funds the FDIC with initial loans of $289 million through the U.S. Treasury and the FRB

  • Extends federal oversight to all commercial banks for the first time

  • Separates commercial and investment banking (Glass-Steagall Act)

  • Prohibits banks from paying interest on checking accounts

  • Allows national banks to branch statewide, if allowed by state law.

Reaction of American People/ Government to Agency/ Effort

At first the American Banking Association (ABA) thought that the FDIC was too expensive and an insincere support of Bad Businesses activity.

  • Banking interests, particularly those representing the larger banks, generally viewed federal deposit insurance with distaste.

The lower participation rate among saving banks was attributable to several factors. Many savings banks questioned whether they needed deposit insurance. Unlike commercial banks, savings banks had not been seriously affected by bank runs since they legally could restrict deposit withdrawals. In several states mutual savings banks legally could not subscribe to stock in the FDIC.

“You have accomplished in these few months with complete success a gigantic task which the pessimists said could not possibly be done before January 1. That 97 percent of the bank depositors of the nation are insured will give renewed faith..” -FDR in a letter to FDIC chairman Cummings, dated January 1, 1934


Newspaper printed on June 15, 1933 while the public waited for the final signature of the Glass-Steagall Act.


"Federal Deposit Insurance Corporation." FDIC: The First Fifty Years. Web. 14 Feb. 2016. <https://www.fdic.gov/bank/analytical/firstfifty/chapter1.html>

"Federal Deposit Insurance Corporation." FDIC: When a Bank Fails. Web. 14 Feb. 2016. <https://www.fdic.gov/consumers/banking/facts/>.

Gruenburg, Martin J. "The FDIC: A History of Confidence and Stability." FDIC: A History of Confidence and Stability. Web. 14 Feb. 2016.

Stammers, Robert. "The History Of The FDIC | Investopedia." Investopedia. 2008. Web. 14 Feb. 2016.

By: Lexie Starnes and Hannah Hildreth