FEDERAL DEPOSIT INSURANCE CORPORATION

(FDIC) independent U.S. government corporation created under authority of the Federal Reserve Act of 1933, with the duty to insure bank deposits in eligible banks against loss in the event of a bank failure and to regulate certain banking practices. It was established after the disastrous collapse of the banking system in early 1933 and after state plans to insure depositors in the past had not proved successful. The FDIC's income is derived from assessments on insured banks and from investments. Insured banks are assessed on the basis of their average deposits; they are currently allowed pro-rata credits totaling two-thirds of the annual assessments after deductions for losses and corporation expenses. The corporation is authorized to insure bank deposits in eligible banks up to a maximum amount of $100,000 for each deposit and is entitled to borrow up to $3,000,000,000 from the U.S. Treasury, a privilege it has never used. From 1933, all members of the Federal Reserve System were required to insure their deposits, and nonmember banksabout half the United States totalwere allowed to do so if they met FDIC standards. Almost all incorporated commercial banks in the United States participate in the plan. The FDIC is managed by a board of three directors; two are appointed for six-year terms by the president, and the third is the comptroller of the currency.