Over the past several months, the federal government has taken unprecedented steps to stabilize and protect our financial markets and the broader economy. While these actions were absolutely necessary, many Americans have been left scratching their heads about what these changes mean. Obscure acronyms and complex financial terms for many of these programs have only added to the confusion. But when you cut through all the clutter, there is good news out there for bank customers. Recent legislation signed into law provides more protection for everyone’s money.
Structuring your accounts properly is the key to maximizing deposit insurance protection.
With this year’s 75th anniversary of the Federal Deposit Insurance Corporation, I embarked on an aggressive campaign to remind all Americans about the important role that deposit insurance plays in promoting confidence and stability in the banking system. After going two and a half years without a bank failure, many people had forgotten that banks do fail. Banking, like any other business, is cyclical. During the Great Depression—an era that gave birth to the FDIC—thousands of banks were shuttered. In 1989, a total of 534 FDIC-insured institutions closed their doors. These numbers provide some perspective—at the end of October, despite the seriousness of the credit crisis, only 17 banks had failed. Through good times and bad, the FDIC has been there to protect depositors. Indeed, in 75 years, no depositor has ever lost a penny of insured deposits. Not a penny.
Recent changes in FDIC insurance limits temporarily raised protection from the familiar $100,000 level to $250,000 per qualified account category. This means that a married couple could each have individual accounts, two separate retirement accounts and a joint account at one bank and be fully insured for up to $1.5 million. As we remind customers, structuring your accounts properly is the key to maximizing deposit insurance protection. If you have questions, I urge you to call the FDIC’s consumer hotline at 1-877-ASK-FDIC (1-877-275-3342) toll-free, or visit EDIE, our online deposit insurance calculator, at www.myfdicinsurance.gov. EDIE can help ensure that your savings are 100 percent FDIC-insured and fully government-backed.
Despite what we hear about the credit crisis and the problems facing banks, the bulk of the U.S. banking industry is healthy and remains well capitalized. While we will likely continue to see more bank failures, it is important for the American public to know that the FDIC stands ready to meet our sacred commitment to depositors. It is a golden promise that has been kept for 75 years and one that will not be broken.
Sheila C. Bair is chairman of the Federal Deposit Insurance Corporation.