Business Glossary

federal agency established in 1933 that guarantees (within limits) funds on deposit in member banks and thrift institutions and performs other functions such as making loans to or buying assets from member institutions to facilitate mergers or prevent failures. In 1989, Congress passed savings and loan association bailout legislation that reorganized FDIC into two insurance units: the Bank Insurance Fund (BIF) continued the traditional FDIC functions with respect to banking institutions and the Savings Association Insurance Fund (SAIF) insured thrift institution deposits, replacing the Federal Savings and Loan Insurance Corporation (FSLIC), which ceased to exist. In 2005, Congress passed the FDI Reform Act merging the SAIF and BIF into one insurance fund called the Deposit Insurance Fund (DIF). The same law also raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010.

depositor who has checking or savings account deposits in a federally insured bank or savings institution exceeding the $100,000 deposit insurance limit per depositor ($250,000 in coverage for IRA, Roth IRA, and other self-directed retirement accounts). Depositors holding accounts with principal amounts exceeding the $100,000 limit, for example, a jumbo certificate of deposit, risk losing part of their principal and interest earned if the institution holding their account becomes insolvent and its assets are liquidated. The Federal Deposit Insurance Corporation is required by law-the Federal Deposit Insurance Corporation Improvement Act of 1991-to follow the least costly method of handling bank failures, which means that depositors with accounts above the insurance ceiling may suffer a loss.

Despite the limitation, it is still possible for an individual to have more than $100,000 in fully insured deposits-by owning a joint account with someone else, or by holding an account in trust for another and naming that person as beneficiary. Coverage for an Individual Retirement Account, roth ira, or keogh account is treated separately from ordinary savings or deposit account. Individuals with self-directed IRA, Roth IRA, and employer-sponsored 401(k) accounts can have federal insurance coverage up to $250,000 per account.

account at a bank, savings and loan association, credit union, or brokerage firm that belongs to a federal or private insurance organization. Bank accounts are insured by the Deposit Insurance Fund (DIF) administered by the Federal Deposit Insurance Corporation (FDIC). In 2005, Congress raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010. Credit union accounts are insured by the National Credit Union Administration.. Brokerage accounts are insured by the securities investor protection corporation Such insurance protects depositors against loss in the event that the institution becomes insolvent. Federal insurance systems were set up in the 1930s, after bank failures threatened the banking system with collapse. Some money market funds are covered by private insurance companies.

U.S. government entity created by Congress in 1989 as part of its savings and loan association bailout bill to replace the Federal Savings and Loan Insurance Corporation (FSLIC) as the provider of deposit insurance for thrift institutions. SAIF, pronounced to rhyme with safe, was administered by the Federal Deposit Insurance Corporation (FDIC) separately from its bank insurance program, called the Bank Insurance Fund (BIF). In 2005, Congress passed legislation merging the SAIF and BIF into one insurance fund called the Deposit Insurance Fund (DIF). The same law also raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010.

1. mutual savings bank reserve fund required by some states as cushion against short-term losses. The fund is set aside from current earnings. Also called a surplus account.
2. privately sponsored deposit insurance fund, the predecessor of federal deposit insurance. Even after federal deposit insurance was enacted in 1933, private guaranty funds co-existed with federal insurance programs for many years until the mid-1980s when a series of savings and loan failures in Ohio and Maryland forced the private insurers to liquidate. About 10% of credit union shares, however, are still privately insured, and the Deposit Insurance Fund of Massachusetts provides deposit insurance for uninsured (above $100,000) deposits in that state not covered by the Federal Deposit Insurance Corporation.

Federal Deposit Insurance Corporation (FDIC) unit providing deposit insurance for banks other than thrifts. BIF was formed as part of the 1989 savings and loan association bailout bill to keep separate the administration of the bank and thrift insurance programs. There were thus two distinct insurance entities under the FDIC: BIF and Savings Association Insurance Fund (SAIF). In 2005, Congress passed legislation merging the SAIF and BIF into one insurance fund called the Deposit Insurance Fund (DIF). The same law also raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010.

federal agency established in 1933 that guarantees (within limits) funds on deposit in member banks and thrift institutions and performs other functions such as making loans to or buying assets from member institutions to facilitate mergers or prevent failures. In 1989, Congress passed savings and loan association bailout legislation that reorganized FDIC into two insurance units: the Bank Insurance Fund (BIF) continued the traditional FDIC functions with respect to banking institutions and the Savings Association Insurance Fund (SAIF) insured thrift institution deposits, replacing the Federal Savings and Loan Insurance Corporation (FSLIC), which ceased to exist. In 2005, Congress passed the FDI Reform Act merging the SAIF and BIF into one insurance fund called the Deposit Insurance Fund (DIF). The same law also raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010.

not-for-profit financial institution typically formed by employees of a company, a labor union, or a religious group and operated as a cooperative. Credit unions may offer a full range of financial services and pay higher rates on deposits and charge lower rates on loans than commercial banks. Federally chartered credit unions are regulated and insured by the National Credit Union Administration.