BANKING: Payoff

To create the Federal Deposit Insurance Corp. in 1933, after the worst bank panic the U.S. ever had, the Government put up $289 million. Since then FDIC has become rich from the annual dues (one-twelfth of 1% of total deposits) of its 13,582 members, and piled up a reserve of more than $1 billion. A year ago, FDIC started paying off the Government loan in installments.

Last week, after making the final payment, FDIC Chairman Maple T. Harl said: “Everybody should follow [our] example and pay off their debt now.” Not everybody had the money, but, thanks to FDIC, everybody’s bank accounts were safer than ever before. In 1933 alone, when 16,000 U.S. banks closed their doors in three months, U.S. depositors lost over $500 million.

Even in good times, more than 500 of the nation’s banks used to go bust every year. Since FDIC started insuring, only 404 banks have been forced to close, and less than one-eighth of 1% of their deposits were lost. In the last five years not one FDIC-insured bank has closed, and not one depositor has lost a cent.