Federal Deposit Insurance Reform Act of 2005

Topics: Great Depression, Federal Deposit Insurance Corporation, Individual Retirement Account Pages: 2 (624 words) Published: April 2, 2013
The Great Depression took place in the United States during the 1930's, Congress then came up with The Banking Act of 1933 under the Roosevelt administration, creating the Federal Deposit Insurance Corporation also known as the FDIC. The FDIC had the authority to provide loans to banks and financial institutions with a high risk of failure. These loans acted as insurance on consumer funds that were held by the bank up to a certain amount. The Federal Deposit Insurance Act of 1950 was enacted to consolidate and expand upon the authority provided to the FDIC. Federal Deposit Insurance Reform Act of 2005 is a U.S. federal law that was enacted mainly to reform the Federal deposit insurance system. The Act contained a number of changes to the Federal Deposit Insurance Corporation (FDIC).Some important provisions of the Act are: merging the two deposit insurance funds, increasing coverage for retirement accounts to $250,000, indexing the insurance level for inflation, credits to offset premiums for banks that capitalized the FDIC by 1996, deals with the fairness issue of fast growing banks, a cap on the level of the fund and cash dividends when it grows past a certain point, and the historical basis concept, originally proposed by ABA, for distributing credits and dividends. In this article it goes in detail about one provision raising the insurance coverage on individual retirement accounts and some other types of retirement deposit accounts from $100,000 to $250,000 effective. The first statement brought up in the article about the positive effects on the individual retirement account increase was “The increase in FDIC coverage for retirement accounts is good news for the many people who have saved substantial sums for their retirement and want to deposit more than $100,000 at one bank - for safety, convenience or other reasons.” I agree that this is great news for people with over $100,000 this change would affect both banks and costumers in an overall positive...
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