The Federal Deposit Insurance Corporation (FDIC) is a government entity created by the Glass-Steagall Act of 1933, and its purpose is to protect savers from losing their deposits in banking institutions if the bank becomes insolvent.
FDIC insurance only covers certain types of assets, up to certain limits for each person, and only at member banks. FDIC insurance will “make whole” any deposit amount up to $250,000 per person if the banking institution that held the funds declares insolvency. Most banks are members of the FDIC program, which was established by the Federal government in the 1930s.
The scary thing about banks is that they are able to lend out up to 90% of the funds that they take in, which essentially creates money that may or may not really exist, depending on how you look at it. If there is a “run” on the bank, as in the famous scene in the classic film It’s a Wonderful Life, the bank will not have enough assets to give everyone their money back.
There are less dramatic ways that a bank can become insolvent, of course. At any rate, FDIC protects the bank’s customers — the “savers” in particular — from suffering due to bad choices made by the bank.
Banks pay premiums for the FDIC insurance coverage, which, instead of going to a separate FDIC entity, actually exists as a line in the Treasury Department accounting books. The insurance is not funded by tax dollars.
Since the financial crisis of 2008, the capital requirements of banks have become subject to new international regulations known as the Basel Accords.
Yes, you can pay more than nominal value for a bond. And this is part of what’s called the interest rate risk of bonds
In most cases, you should consult a tax professional and/or an estate planning attorney for help in setting up a trust
Calculating your net worth is a simple and worthwhile endeavor, and should be done once a year to measure your progress
A common stock is the one you’re most familiar with - having a share of ownership in a company
A Dividend Reinvestment Plan, referred to as DRIP, is a plan offered by corporations that allows investors to reinvest..
Depreciation is the accounting practice of recording the decreasing value of a fixed asset, such as a building
In order to be eligible for an HSA, you must be enrolled in a high deductible health plan (HDHP) that is HSA-eligible
A life estate is often created by an older parent when they sign over the house to their adult children
Despite how it sounds, this publication is not meant for tourists to the US, but rather for non-US-citizen workers
The Dead Cat Bounce pattern appears when a currency pair's price falls quickly but has a temporary “v-shaped” recovery