FDIC Insurance Limits

Money is always a topic of discussion within households, banks, businesses, corporations, Wall Street, all the way to the government and White House. It's a permanent part of our lives so long as things cost money and the markets of trade run on it. Through the decades, and almost a century, the money markets have gone through their times of promoting wealth to individuals, whilst, in some rare occasions, causing financial devastation to millions, costing people their entire life savings. In order to prolong the money markets and securing them, the FDIC insurance limits help to ensure that consumers' accounts are being financially protected.

The FDIC was created in result of the Glass-Steagall Act of 1933, which was put through by the Roosevelt Administration. This was in response to the major market crash, otherwise known as the Great Depression. During this time, the money markets crashed, leaving those who invested in, literally without any money to their names. Businesses, homes, and everything else relying on money to support themselves were at a loss and were just barely able to recover. Those were not able to bounce back from this huge financial loss, were forced to close their doors and sell their homes and make a living in way they could. The FDIC became active in 1934, with it's purpose to insure all those consumers that had bank accounts throughout the nation. Before the activation of the FDIC, over one hundred billion dollars were lost, not able to be recovered by even the government. To make sure that if anything like the Great Depression were to happen again, the FDIC held the sole responsibility of being able to compensate those consumers that invested in banks through the insurance they provided. There were no special terms or papers to sign in order to establish this insurance, all one had to do was simply open a bank account, and they were automatically insured. During this time, the FDIC insurance limit was $2,500. Unfortunately, this did come after the crashing of the stock market in 1929, and soon after the Great Depression, but the Roosevelt Administration had high hopes that creating the FDIC would prevent anything like this ever happening again. Just shortly after it's creation, in 1935, the FDIC insurance limit increased to $5,000.

Now, the year being 2011, and the stock market took an unfortunate turn for the worse. In the summer of 2009, the stock market did the unthinkable, it crashed in September of that year. Billions of people were shocked, as many had learned while still in school learning about the stock market crash of 1929, that something like this could never happen again. Financial experts quickly began to find the reasons behind this, stating that the major cause of it was due to bad loans used for paying for homes, businesses, corporations, as well as school. Other investments that were made by corporations were also seen as another reason why the stock market took a serious plunge. In result, banks were being bought out by other successful bank names, for instance, Bank of America bought out a few banks, as well as Wachovia Bank purchased banks as well during this time. This wasn't the end of all that was happening, the housing market, which was already slipping through the cracks, saw a total downfall. Loans that were handed out to homeowners prior to the crash were finding difficulty on collecting regular payments from clients. With the banks recalling all of the bad loans that they originally handed out, the result catapulted the rise of foreclosures throughout the nation in neighborhoods both rich and middle class rated. Buildings that were commissioned to be built for every reason to begin building were put to a halt, as there was no more money to keep paying workers. This lead into another issue that arose from the crash of 2009, the job economy began major lay-offs. Millions of people lost their jobs, as the investments businesses and corporations held within the stock market were no longer of great value, leaving the companies without the budget to maintain paying all employees. People suffered from losing their benefits, were forced to take pay decreases, and finally, losing their job entirely. A number of industries were hit the hardest, the construction and car industry being one them. Student loan companies caught the brunt of the 2009 crash as well. Student loans held through Sallie Mae were being reconfigured, if not recalled, order to help keep the financial aid establishment afloat. The year is now 2011, and the economy has taken a turn towards the better, with the government installing over 400,000 jobs back into the economy, and adding any financial stimulus to economy that can be allowed without increasing the national debt. Obtaining home loans are becoming slightly harder than before, and the amount of money given to students to continue their education is dwindled slightly, with the application process a bit more tedious. The year is now 2011, and just recently, in July of 2010, the FDIC insurance limit was increased to $250,000.

Financial experts, along with government officials, were quite curious and hopeful that the FDIC insurance limit was going to be enough to cover the financial loss of the money market and banks. Fortunately, it was just enough to cover them, but not without some changes, i.e. buy out of banks. The limit was put forth to help cover those investments that were already within the stock market and to protect the financial future of those who not only held accounts with banks, but their investments within the stock market as well. The question is always asked if the insurance covers people under the same account, and the answer is yes. For example, if the parents of a child share an account, each person legally on the account, holds their own seperate insurance. So should anything happen the account because of the bank closing, they each hold $250,000 to insure their money, meaning between the three of them, they are insured up to $750,000.

The FDIC insurance limit is the aid that money markets and banks rely on in order to protect them, their consumers, and themselves from the possibility of financial ruin. The insurance limit is fed through the taxes of individuals of the nation, at which, the FDIC insurance limits can keep doing what it's meant to do. Many people who have a problem with paying taxes to government services that they don't use, find that they were unaware they were paying for the FDIC insurance limits, a service that all of us use whenever we go to a bank and open up an account, or go to apply for a mortgage.