Who Started the FDIC?

For many people, the FDIC and FDIC insurance has always been around. So, who started the FDIC and FDIC insurance? Below is a brief history of the FDIC which answers the question 'who started the FDIC'.

History of the FDIC and what / who started the FDIC

After the Great Depression of 1929, in 1932-1933, the banking system in the United States deteriorated rapidly. The economic uncertainty of that time brought about many speculative investments with no real values. More and more people liquidated their investments, converting their investments to gold and foreign currencies. The outflux of money from the banking system shattered the already near collapse economy. The election of President Franklin D. Roosevelt in November 1932 did not aid the situation. The fear of the dollar being devalued caused more money to leave the US banking system.

Failed banks in 1933 & the introduction of the Emergency Banking Act of 1933

By March 4, 1933, about 4,000 banks had already failed within the last couple of months. The US banking system was near collapse by March 6. More bank holidays were announced. By March 9, 1933, Congress rushed into a draft plan in an effort to save the US banking system from a total meltdown. The House of Representative passed the bill soon after and the Senate approved it almost equally without any say. The Emergency Banking Act of 1933 was enacted by Congress that very day.

Who started the FDIC?

Following the Emergency Banking Act of 1933, the Banking Act was enacted in June 1933. It was this Banking Act that established the FDIC as a temporary agency to restore the public confidence in the US banking system. In particular, Section 8  of the Glass Steagall Act within the Banking Act created the FDIC through the amendment of the Federal Reserve Act. The Banking Act included many provisions of the duties of the FDIC.