What I plan to research is if the FDIC has fulfilled its goals and if they continue to revitalize malfunctioned banks. I will also give history of the FDIC, discuss the functions and structure of the FDIC. What is the FDIC
According to Cole (2009), Federal Deposit Insurance Corporation (FDIC) is a U.S. government institution instigated by the Glass-Steagall Act in 1933. It offers deposit insurance that assures the security of deposits in affiliate banks. It also assesses and supervises financial organizations for security and reliability. It also embarks on consumer-protection roles, and administers financial institutions in receivership. Insured institutions are required to put indicators at their business premises declaring that their deposits are supported by the full trust and credit of the U.S. Government. Since the institution of FDIC insurance in January 1934, no client has lost any deposited funds as a result of malfunction. This paper delves into the history of FDIC, its administration, operations, functions and effectiveness. It also looks into its performance over the years, whether or not it is regulated by laws and whether or not it is still a preferable insurance institution. Board of Directors
This is the administrative body of the FDIC. It comprises of five members, three nominated by the U.S. president with the conformity of the U.S. Senate and two non-executive members. The three nominated by the president have six years of service. Only two representatives of the board may be of similar political inclination. The president, with the permission of the Senate, also selects one of the chosen representatives as chairperson of the board for five-year of service. In addition, another of the members is designated as vice chairperson of the board for a five-year term. History
In the 1930s, the U.S. and many other countries around the world went through a harsh economic recession that is referred to as the Great Depression. At the peak of the depression, the unemployment rate was a quarter and the stock market had reduced by three quarters since 1929. Bank runs were regular since there was security on clients’ money in the banks. This is because banks just stored a percentage of deposits, and clients were at jeopardy of losing their cash that they had entrusted to the banks. In 1933, President Franklin Roosevelt approved the Banking Act. FDIC made was a temporary state institution. It was given the mandate to offer deposit insurance to financial corporations. It was also given the power to control and administer government non-member banks. FDIC was provided with preliminary loans 289 million dollar via the U.S. treasury and the Federal Reserve (Henriques, 2008). For the first time, federal supervision was extended to cover all money-making banks. Moreover, according to the (Glass-Steagall Act), these commercial banks were detached from investment banks. They were also hindered from reimbursing interest on checking account. Furthermore under this Act, state banks were permitted to have branches countrywide with the consent of state law.
How FDIC Operates
The FDIC’s workforce is approximately eight thousand people all over the country (Cole, 2009). The head offices are in Washington, D.C. Regional ones are found in Atlanta, Boston, Chicago, Dallas, Kansas City, Memphis, New York City, and San Francisco. Moreover, field supervisors, whose responsibility is to carry out on-site scrutiny of banks, have ground offices in eighty more places throughout the nation. FDIC aims at safeguarding clients who keep their cash in banks against malfunction of banks. These consumer persons include all individuals who put their funds in banks without putting into consideration whether he or she is a U.S. national or a resident. It also oversees all financial institutions that are affiliates of the Federal Reserve System (FRS)....