FDIC
President Franklin D. Roosevelt created the Federal Deposit Insurance Corporation (FDIC) by signing the Banking Act of 1933. The FDIC was created in response to the thousands of bank failures that occurred during the Great Depression of the 1920s and early 1930s. During that time, which began with the stock market crash on October 29, 1929, banks were unable to collect on the loans and credit they had extended to borrowers. They were therefore also unable to meet the demands of their depositors who tried to withdraw all their funds at the same time in what became known as bank runs. Under the provisions of the FDIC, if a bank or financial institution should fail, its depositors funds are insured up to $250,000. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.
Vocabulary
depression: a period of severe financial difficulty
stock market: a public or private forum for buying and selling stock in companies
borrower: an individual or group of people using funds from a bank or other lender
depositor: an individual or group of people who place money in a bank account
withdraw: to take money out of a bank account
bank run: a situation in which numerous bank customers try to withdraw their bank deposits simultaneously and the bank's reserves (funds) are not sufficient to cover the withdrawals
provisions: something being provided
insurance: promise of reimbursement (repayment) in the case of loss
President Franklin D. Roosevelt created the Federal Deposit Insurance Corporation (FDIC) by signing the Banking Act of 1933. The FDIC was created in response to the thousands of bank failures that occurred during the Great Depression of the 1920s and early 1930s. During that time, which began with the stock market crash on October 29, 1929, banks were unable to collect on the loans and credit they had extended to borrowers. They were therefore also unable to meet the demands of their depositors who tried to withdraw all their funds at the same time in what became known as bank runs. Under the provisions of the FDIC, if a bank or financial institution should fail, its depositors funds are insured up to $250,000. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.
Vocabulary
depression: a period of severe financial difficulty
stock market: a public or private forum for buying and selling stock in companies
borrower: an individual or group of people using funds from a bank or other lender
depositor: an individual or group of people who place money in a bank account
withdraw: to take money out of a bank account
bank run: a situation in which numerous bank customers try to withdraw their bank deposits simultaneously and the bank's reserves (funds) are not sufficient to cover the withdrawals
provisions: something being provided
insurance: promise of reimbursement (repayment) in the case of loss
1. The bank was crowded with nervous customers during the _________.
2. The _________ asked for a $5,000 loan from the bank.
3. Many people fear that our current economic problems will lead to another _________.
4. His _________ policy will cover any losses he may incur.
5. The __________ of her contract give her two weeks paid vacation time.
6. People can invest in companies through the ________________.
7. I will _________ $100 from my bank account to pay for the party.
8. The bank teller helped the ___________ put funds into her account.
Grammar Point: Acronyms
An acronym is a word created by using the first letters, or initials, of a group of words. The FDIC is an acronym which stands for Federal Deposit Insurance Corporation. You may have seen or read acronyms without even realizing it. Test your acronym skills with the following exercises:
Can you identify what the following acronyms stand for?
SCUBA
MIA
SOS
SONAR
FAQ
Can you name three additional acronyms?
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