With all the recent talk of the FDIC wanting to raise more funds to meet its obligations, I thought it would be interesting to take a look at FDIC insurance limits over the years.
A brief history of the FDIC
For those that aren’t aware, the FDIC was formed following the signing of the Banking Act of 1933 (also known as the Glass-Steagall Act). Prior to that time, bank customers were at risk of losing all of their money if their bank failed, and bank runs were a common occurrence.
In the beginning, the FDIC was funded with “just” $289M in loans from the U.S. Treasury and Federal Reserve. While this has grown to tens of billions of dollars (currently $10B, but headed to $40B with the accelerated premium payments), they’re currently insuring $4.8 trillion in deposits.
Unfortunately, I couldn’t find any data on how much money the FDIC was insuring back in the 1930s. It would be very interesting (at least to me) to see how much the ratio of money on hand vs. funds insured has changed over the years. Anyway…
A brief history of FDIC limits
What follows is a list of historical FDIC insurance limits, accompanied by the 2009 inflation adjusted values (in parentheses; courtesy of the CPI Inflation Calculator).
- 1934 – $2, 500 ($40, 268)
- 1935 – $5, 000 ($78, 772)
- 1950 – $10, 000 ($89, 558)
- 1966 – $15, 000 ($99, 923)
- 1969 – $20, 000 ($117, 621)
- 1974 – $40, 000 ($175, 119)
- 1980 – $100, 000 ($261, 934)
- 2008 – $250, 000 (current, expires at end of 2013)
As you can see, the limits have grown fairly steadily in both nominal and “real” terms over the years. That being said, the gap from 1980-2008 was by far the longest on record, and the adjustment to $250k was long overdue.
Indeed, that $100k back in 1980 was worth the equivalent of roughly $260k in current dollars. Conversely, by the time the 2008 adjustment rolled around, that $100k limit had effectively shrunk to only $38k in 1980 dollars. Gotta love inflation, huh?
Check out “Money of the Mind” by James Grant for a fascinating history of lending and banking in the US. The author is more critical of the FDIC than most, an extension of his overall critique of monetary policy in America since the early 20th century.
Why that 250K is not permanent I don’t know. They need to make it forever.
Watching Meet the Press today makes you want to slit your wrists.
The question I have is the FDIC going to actually guarantee their promise to Americans. Can’t believe we’re even talking about the FDIC guarantee.
It’s the growth in “real” terms that is the problem. Keeping FDIC insuring the same amount in “constant currency” would be much better, otherwise they need to increase the premiums that is charged the banks (pre-collecting premiums will not help).
Thank fully the limit went to $250k, b/c I was worried. We’ve spread out our savings to 3 banks, so we can be under the limit.
As a couple, you have a $500,000 limit / bank btw.
I wonder why they don’t automatically adjust the limit each year with the CPI, similar to how social security does?
As of last year, there still were no savings in America.
Without FDIC insurance, there would be no savings in America.