Topic: Data on how many times FDIC saved someone? (Read 928 times)

The FDIC is backed by the federal government and debt issued by the federal government is assumed to be essentially risk free.

As of now the FDIC's insurance fund is ample to be able to pay claims on funds lost by failed banks. Their insurance funds is receiving more in premiums now then they are paying out in claims.

Not very often.

In 2009 the FDIC protected depositors at hundreds of banks that were failing. Other then times of severe economic events it is rare that the FDIC needs to step in.

The real protection the FDIC gives is the protection against runs on banks. Without the FDIC, if bank1 were to fail, then depositors at bank2 would have a reason to withdraw all of their money as they would not know how safe bank2 is. FDIC makes this issue moot as even if bank2 were to fail, depositors money would still be safe up to certain amounts.

Exactly. The concept of looking after your own money and belongings seems so foreign to people. It surprises me to see that kind of mentality here. 

Yes.

Same with all insurance, yet we still pay arm and leg just to insure our way of life.

fdic insurance is to trick people into trusting the banks with all their money

when there is a bank run, fdic is going to default on their promises

The FDIC has been used a relatively small number of times. This is true when comparing against both the total amount of deposits insured and the total number of insured institutions.

The FDIC will not take over an institution until it has failed. During the time when it is close to failing the bank will be given the opportunity to attempt to turn things around and try to increase capital ratios.

The purpose of the FDIC is to prevent bank runs. Without the FDIC when there are signs of trouble depositors will attempt to withdraw their funds, forcing banks to sell assets at a potential loss. This will spill over into other healthy banks that hold the same kind of assets, but have better/safe capital ratios. The safe banks that hold the same assets will have to write down the value of assets to below what they are likely valued at because other, non-healthy banks are essentially panic selling. This would then cause the healthy banks to appear and become unhealthy, causing a bank run and the same problems of the original unhealthy bank, spreading the problem. 

The FDIC doesn't deal much with bank customers on an individual level. They also don't take over banks persay - they help liquidate them and sell the business to another bank that can handle the accounts. They are very, very good at what they do. There are occasions when certain government bodies can be small and have a very confined focus, and all their employees are highly experienced experts.

Occasionally, if a bank is very bad and no other bank will buy it, they will send checks to the customers.

It really bothers me when people complain about the FDIC and claim the free market could do better. The banks would scream bloody murder if the FDIC was instantly dissolved - even if it's assets were split among banks. If the FDIC goes away, then consumer deposits are not safe, customers won't make deposits, banks won't have money to loan, and much of the economy stops. A private for-profit company will not come in and save the day during a bad economy - for-profit companies don't do that. But we can imagine a scenario where there is a company that does offer private insurance for bank deposits. An insurance company would be the obvious choice, as this is their business anyway and they are usually very conservative with money - and many provide mortgage insurance, so deposit insurance would not be a big stretch. And in 2007, the largest, wealthiest, and most capable insurance company on Earth was... AIG.


So, overall, I think the FDIC has done a pretty good job.

Here is a list of the banks that have failed since 2000.

http://www.fdic.gov/bank/individual/failed/banklist.html


I'm sure all that information is on the FDIC site. Perhaps you could look it up and let us know what you find.

The FDIC is sold as consumer protection but it is really there to protect the banks and even encourage risky behavior. Most of us trust banks because of the FDIC and have no qualms about storing all of our money in them. This keeps the wheels in motion for fractional reserve lending and devaluation of the dollar.

http://www.fdic.gov/bank/historical/bank/

Exactly.

People are always concerned whether it is insured or not. But I'd like data on how many people actually lost something and how much did they recover through FDIC and also how much say, for 2013 did the FDIC Insurance pay out to lost money?

Good thought.  I'd like to see how much insurance monies people receive when there's a run on the banks.

FDIC insurance covers all deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category

How many times have they actually been used to recover money?