Which agency is responsible for insuring deposits in commercial banks?

The Federal Deposit Insurance Corporation (FDIC) is the agency responsible for insuring deposits in commercial banks. This insurance protects depositors by providing them with a safeguard against the loss of their deposits in the event that a bank fails. Since its establishment in 1933, the FDIC has played a crucial role in maintaining public confidence in the U.S. financial system. It insures deposits up to a certain limit, which helps to reduce the risk of bank runs and promotes overall financial stability.

The role of the FDIC is particularly important because it ensures that individuals and businesses have a level of security knowing that their money is protected, fostering trust in the banking system. This encourages savings and investment, which are essential for a healthy economy.

In contrast, the Federal Reserve System primarily focuses on monetary policy, controlling inflation, and regulating banks, but it does not provide deposit insurance. FHA loans are government-backed loans for homebuyers and relate to housing finance rather than deposit insurance. The fiduciary standard refers to the obligation of fiduciaries to act in the best interests of their clients, but it does not pertain to deposit insurance.

Thus, the FDIC's function of insuring deposits emphasizes its critical role in the banking system and the protection of