Federal Deposit Insurance Corp.
Acronym: FDIC
When
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.
Why
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.
Purpose
Actions Taken and the Impact Left
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
- 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.
The Signing
On June 16, 1933, President Franklin Roosevelt signed the Banking Act of 1933, a part of which established the FDIC.
Impact
Members
“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
Publicity
Newspaper printed on June 15, 1933 while the public waited for the final signature of the Glass-Steagall Act.
Citations
"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.