The Federal Deposit Insurance Reform Act

The Federal Deposit Insurance Reform Act was signed into law in 2006. This act implemented new deposit insurance reform and merged two former insurance funds, the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF), together. The new fund was called the Deposit Insurance Fund (DIF).

The FDIC keeps the DIF going by evaluating depository institutions and charging insurance premiums based on the number of insured deposits and the amount of risk the institution poses to the insurance fund. FDIC-insured institutions reported an aggregate net income of $147.9 billion in 2020.

Dues that member banks pay to the FDIC cover deposits up to $250,000 per depositor and per insured bank. This includes principal and accrued interest up to a total of $250,000. In October 2008, the protection limit for FDIC-insured accounts was raised from $100,000 to $250,000.

The new limit was to remain in effect until December 31, 2009, but was extended and then made permanent on July 21, 2010, with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Depositors who are concerned about ensuring that their deposits are fully covered can increase their insurance by having accounts at other member banks or by making deposits into different account types at the same bank. The same rules hold true for business accounts. 

The new limit was to remain in effect until December 31, 2009, but was extended and then made permanent on July 21, 2010, with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Depositors who are concerned about ensuring that their deposits are fully covered can increase their insurance by having accounts at other member banks or by making deposits into different account types at the same bank. The same rules hold true for business accounts. 

Insurable Items vs. Non-Insurable

There’s a very big distinction between what the FDIC insures and what it doesn’t. It’s important for consumers to know the difference.

Insured

  • Member banks and savings institutions.
  • All types of checking and savings deposits including negotiable order of withdrawal (NOW) accounts, Christmas clubs, and time deposits.
  • All types of checks, including cashier’s checks, officer’s checks, expense checks, loan disbursements, and any other money orders or negotiable instruments have been drawn on member institutions.
  • Certified checks, letters of credit, and traveler’s checks when issued in exchange for cash or a charge against a deposit account. 

Not Insured

  • Investments in stocks, bonds, mutual funds, municipal bonds, or other securities
  • Annuities
  • Life insurance products even if purchased at an insured bank
  • Treasury bills (T-bills), bonds, or notes
  • Safe deposit boxes
  • Losses by theft (although stolen funds may be covered by the bank’s hazard and casualty insurance)