What is the name of the public corporation that insures depositor's deposits in member banks?

What is the name of the public corporation that insures depositor's deposits in member banks?

• A. Federal Housing Administration (FHA)
• B. Federal Deposit Insurance Corporation (FDIC)
• C. Consumer Financial Protection Bureau (CFPB)
• D. National Credit Union Administration (NCUA)

Answer: (B)

The correct answer is the Federal Deposit Insurance Corporation (FDIC), which is the public corporation that serves to insure deposits made by individuals in member banks. Established in 1933, the FDIC provides deposit insurance to protect depositors in the event that an insured bank fails. This coverage ensures that individuals can recover their funds up to the insured limit, which fosters public confidence in the banking system. The FDIC plays a crucial role in maintaining stability within the financial system by backing deposits, which encourages individuals to save and invest within banks knowing their money is safe. This is particularly important in times of economic uncertainty when there may be fears of bank failures. In contrast, the Federal Housing Administration (FHA) primarily focuses on ensuring loans for homebuyers, the Consumer Financial Protection Bureau (CFPB) is responsible for protecting consumers in the financial sector, and the National Credit Union Administration (NCUA) serves a similar purpose to the FDIC but specifically for credit union members. Each of these entities has its own specific function within the broader financial regulatory framework, but only the FDIC provides direct insurance for bank deposits.

The correct answer is the Federal Deposit Insurance Corporation (FDIC), which is the public corporation that serves to insure deposits made by individuals in member banks. Established in 1933, the FDIC provides deposit insurance to protect depositors in the event that an insured bank fails. This coverage ensures that individuals can recover their funds up to the insured limit, which fosters public confidence in the banking system.

The FDIC plays a crucial role in maintaining stability within the financial system by backing deposits, which encourages individuals to save and invest within banks knowing their money is safe. This is particularly important in times of economic uncertainty when there may be fears of bank failures.

In contrast, the Federal Housing Administration (FHA) primarily focuses on ensuring loans for homebuyers, the Consumer Financial Protection Bureau (CFPB) is responsible for protecting consumers in the financial sector, and the National Credit Union Administration (NCUA) serves a similar purpose to the FDIC but specifically for credit union members. Each of these entities has its own specific function within the broader financial regulatory framework, but only the FDIC provides direct insurance for bank deposits.