Federal Deposit Insurance Corporation

Federal Deposit Insurance Corporation

Overview
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance
Deposit insurance
Explicit deposit insurance is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due...

, which guarantees the safety of deposits in member banks, currently up to $250,000 per deposit
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...

or per bank. , the FDIC insures deposits at 7,723 institutions. The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages banks in receiverships (failed banks).

Insured institutions are required to place signs at their place of business stating that "deposits are backed by the full faith and credit of the United States Government." Since the start of FDIC insurance on January 1, 1934, no depositor has lost any insured funds as a result of a failure.

At Q4 2010 there were 884 banks having very low capital cushions against risk.
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The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance
Deposit insurance
Explicit deposit insurance is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due...

, which guarantees the safety of deposits in member banks, currently up to $250,000 per deposit
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...

or per bank. , the FDIC insures deposits at 7,723 institutions. The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages banks in receiverships (failed banks).

Insured institutions are required to place signs at their place of business stating that "deposits are backed by the full faith and credit of the United States Government." Since the start of FDIC insurance on January 1, 1934, no depositor has lost any insured funds as a result of a failure.

At Q4 2010 there were 884 banks having very low capital cushions against risk. It was nearly 12 percent of all federally insured banks, the highest level in 18 years.

Board of directors


The Board of Directors of the FDIC is the governing body of the FDIC. The Board is composed of five members, three appointed by the President of the United States
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

 with the consent of the United States Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...

 and two ex officio members. The three appointed members each serve six year terms. No more than three members of the Board may be of the same political affiliation. The President, with the consent of the Senate, also designates one of the appointed members as Chair of the Board, to serve a five year term, and one of the appointed members as Vice Chair of the Board, to also serve a five year term.

As of July 9, 2011, the members of the Board of Directors of the Federal Deposit Insurance Corporation are:
  • Martin J. Gruenberg - Acting Chairman of the Board
  • Thomas J. Curry
  • John Walsh
    John G. Walsh
    John G. Walsh is an American economist and acting Comptroller of the Currency. He had been Chief of Staff and Public Affairs at the office since October 2005 and became interim Comptroller on August 15, 2010 following John Dugan....

     - Acting Comptroller of the Currency
  • John E. Bowman - Acting Director of the Office of Thrift Supervision
    Office of Thrift Supervision
    The Office of Thrift Supervision was a United States federal agency under the Department of the Treasury that charters, supervises, and regulates all federally- and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency...


Inception


During the 1930s, the U.S. and the rest of the world experienced a severe economic contraction that is now called the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

. In the U.S. during the height of the Great Depression, the official unemployment rate was 25% and the stock market had declined 75% since 1929. Bank run
Bank run
A bank run occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent...

s were common because there wasn't insurance on deposits at banks, banks kept only a fraction of deposits in reserve, and customers ran the risk of losing the money that they had deposited if their bank failed.

On June 16, 1933, President Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...

 signed the Banking Act of 1933. This legislation:
  • Established the FDIC as a temporary government corporation
  • Gave the FDIC authority to provide deposit insurance to banks
  • Gave the FDIC the authority to regulate and supervise state nonmember banks
  • Funded the FDIC with initial loans of $289 million through the U.S. Treasury and the Federal Reserve
  • Extended federal oversight to all commercial banks for the first time
  • Separated commercial and investment banking (Glass–Steagall Act)
  • Prohibited banks from paying interest on checking accounts
  • Allowed national banks to branch statewide, if allowed by state law.

Historical insurance limits

  • 1934 - $2,500
  • 1935 - $5,000
  • 1950 - $10,000
  • 1966 - $15,000
  • 1969 - $20,000
  • 1974 - $40,000
  • 1980 - $100,000
  • 2008 - $250,000


The temporary increase in 2008 of the insurance limit to $250,000 was set to expire on 31 December 2013. However, the Wall Street Reform and Consumer Protection Act (P.L.111-203), which was signed into law on July 21, 2010, made the $250,000 insurance limit permanent. In addition, the Federal Deposit Insurance Reform Act of 2005 (P.L.109-171) allows for the Boards of the FDIC and the National Credit Union Administration (NCUA) to consider inflation and other factors every five years beginning in 2010 and, if warranted, to adjust the amounts under a specified formula.

S&L and bank crisis of the 1980s



Federal deposit insurance received its first large-scale test in the late 1980s and early 1990s during the savings and loan crisis
Savings and Loan crisis
The savings and loan crisis of the 1980s and 1990s was the failure of about 747 out of the 3,234 savings and loan associations in the United States...

 (which also affected commercial banks and savings banks).

The brunt of the crisis fell upon a parallel institution, the Federal Savings and Loan Insurance Corporation
Federal Savings and Loan Insurance Corporation
The Federal Savings and Loan Insurance Corporation was an institution that administered deposit insurance for savings and loan institutions in the United States...

 (FSLIC), created to insure savings and loan institutions (S&Ls, also called thrifts). Due to a confluence of events, much of the S&L industry was insolvent, and many large banks were in trouble as well. The FSLIC became insolvent and merged into the FDIC. Thrifts are now overseen by the Office of Thrift Supervision
Office of Thrift Supervision
The Office of Thrift Supervision was a United States federal agency under the Department of the Treasury that charters, supervises, and regulates all federally- and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency...

, an agency that works closely with the FDIC and the Comptroller of the Currency. (Credit unions are insured by the National Credit Union Administration
National Credit Union Administration
The National Credit Union Administration is the United States independent federal agency that supervises and charters federal credit unions...

.) The primary legislative responses to the crisis were the Financial Institutions Reform, Recovery and Enforcement Act of 1989
Financial Institutions Reform, Recovery and Enforcement Act of 1989
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 , , is a United States federal law enacted in the wake of the savings and loan crisis of the 1980s....

 (FIRREA), and Federal Deposit Insurance Corporation Improvement Act of 1991
Federal Deposit Insurance Corporation Improvement Act of 1991
The Federal Deposit Insurance Corporation Improvement Act of 1991 , passed during the Savings and loan crisis, strengthened the power of the Federal Deposit Insurance Corporation....

 (FDICIA).

This crisis cost taxpayers an estimated $150 billion to resolve.

2008


As a result of the financial crisis in 2008, twenty-five U.S. banks became insolvent
Insolvency
Insolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...

 and were taken over by the FDIC. However, during that year, the largest bank failure
Bank failure
A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities. More specifically, a bank usually fails economically when the market value of its assets declines to a value that is...

 in terms of dollar value occurred on September 26, 2008 when Washington Mutual
Washington Mutual
Washington Mutual, Inc. , abbreviated to WaMu, was a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association until its collapse in 2008....

 experienced a 10-day bank run
Bank run
A bank run occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent...

 on its deposits.

2009


On July 31, 2009, the FDIC launched its Legacy Loans Program (LLP). This initiative is aimed at helping banks rid their balance sheets of toxic assets so they can raise new capital and increase lending.

On August 14, 2009, Bloomberg
Bloomberg L.P.
Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...

 reported that more than 150 publicly traded U.S. lenders had nonperforming loans above 5% of their total holdings. This is important because former regulators say that this is the level that can wipe out a bank's equity and threaten its survival. While this ratio doesn't always lead to bank failure
Bank failure
A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities. More specifically, a bank usually fails economically when the market value of its assets declines to a value that is...

s if the banks in question have raised additional capital
Capital requirement
Capital requirement refers to -The standardized requirements in place for banks and other depository institutions, which determines how much capital is required to be held for a certain level of assets through regulatory agencies such as the Bank for International Settlements, Federal Deposit...

 and have properly established reserves for the bad debt
Bad debt
A bad debt is an amount that is written off by the business as a loss to the business and classified as an expense because the debt owed to the business is unable to be collected, and all reasonable efforts have been exhausted to collect the amount owed...

, it is an important indicator for future FDIC activity.

On August 21, 2009, the 2nd largest bank, Guaranty Bank, in Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

 became insolvent and was taken over by BBVA Compass , the U.S. division of Banco Bilbao Vizcaya Argentaria SA, the second-largest bank in Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...

. This is the first foreign company to buy a failed bank during the credit crisis of 2008 and 2009. In, addition, the FDIC agreed to share losses with BBVA on about 11 billion of Guaranty Bank's loans and other assets. This transaction alone cost the FDIC Deposit Insurance Fund $3 Billion.

On August 27, 2009, the FDIC increased the number of troubled banks to 416 in the second quarter. That number compares to 305 just three months earlier. At the end of the third quarter that number jumped to 552.

At the close of 2009, a total of 140 banks had become insolvent
Insolvency
Insolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...

. This is the largest number of bank failures in a year since 1992, when 179 institutions failed.

2010


On February 23, 2010, FDIC chairman Sheila Bair warned that the number of failures in 2010 could surpass the 140 banks that were seized in 2009. Commercial Real Estate overexposure was deemed the most serious threat to banks in 2010.

On April 30, 2010, the FDIC used emergency powers to seize three banks in Puerto Rico
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...

 at a cost of $5.3 billion.

In 2010, 157 banks with approximately $92 billion in total assets failed.

Former funds


Between 1989 and 2006, there were two separate FDIC funds — the Bank Insurance Fund (BIF), and the Savings Association Insurance Fund (SAIF). The latter was established after the savings & loans crisis of the 1980s. The existence of two separate funds for the same purpose led to banks attempting to shift from one fund to another, depending on the benefits each could provide. In the 1990s, SAIF premiums were at one point five times higher than BIF premiums; several banks attempted to qualify for the BIF, with some merging with institutions qualified for the BIF to avoid the higher premiums of the SAIF. This drove up the BIF premiums as well, resulting in a situation where both funds were charging higher premiums than necessary.

Then Chairman of the Federal Reserve Alan Greenspan
Alan Greenspan
Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...

 was a critic of the system, saying that "We are, in effect, attempting to use government to enforce two different prices for the same item namely, government-mandated deposit insurance. Such price differences only create efforts by market participants to arbitrage
Arbitrage
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices...

 the difference." Greenspan proposed "to end this game and merge SAIF and BIF".

Deposit Insurance Fund


In February, 2006, President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

 signed into law the Federal Deposit Insurance Reform Act of 2005 ("FDIRA") and a related conforming amendments act. The FDIRA contains technical and conforming changes to implement deposit insurance reform, as well as a number of study and survey requirements. Among the highlights of this law was merging the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF) into a new fund, the Deposit Insurance Fund (DIF). This change was made effective March 31, 2006. The FDIC maintains the DIF by assessing depository institutions an insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 premium. The amount each institution is assessed is based both on the balance of insured deposits
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...

 as well as on the degree of risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...

 the institution poses to the insurance fund.

Bank failures typically represent a cost to the DIF because FDIC, as receiver of the failed institution, must liquidate assets that have declined substantially in value while at the same time making good on the institution's deposit obligations.

A March 2008 memorandum to the FDIC Board of Directors shows a 2007 year-end Deposit Insurance Fund balance of about $52.4 billion, which represented a reserve ratio of 1.22% of its exposure to insured deposits totaling about $4.29 trillion. The 2008 year-end insured deposits were projected to reach about $4.42 trillion with the reserve growing to $55.2 billion, a ratio of 1.25%. As of June 2008, the DIF had a balance of $45.2 billion. However, 9 months later, in March, 2009, the DIF fell to $13 billion.
That was the lowest total since September, 1993
and represented a reserve ratio of 0.27% of its exposure to insured deposits totaling about $4.83 trillion.
In the second quarter of 2009, the FDIC imposed an emergency fee aimed at raising $5.6 billion to replenish the DIF.
However, Saxo Bank Research reported that after Aug 7th further bank failures had reduced the DIF balance to $648.1 million.
FDIC-estimated costs of assuming additional failed banks on Aug 14th exceeded that amount.
The FDIC announced its intent, on September 29, 2009 to assess the banks in advance for three years of premiums in an effort to avoid DIF insolvency. The FDIC revised its estimated costs of bank failures to about $100 billion over the next four years, an increase of $30 billion from the $70 billion estimate of earlier in 2009. The FDIC board voted to require insured banks to prepay $45 billion in premiums to replenish the fund. News media reported that the prepayment move would be inadequate to assure the financial stability of the FDIC insurance fund. The FDIC elected to request the prepayment so that the banks could recognize the expense over three years, instead of drawing down banks' statutory capital abruptly, at the time of the assessment.
The fund is mandated by law to keep a balance equivalent to 1.15 percent of insured deposits.
As of June 30, 2008, the insured banks held approximately $7,025 billion in total deposits, though not all of those are insured.

The DIF's reserves are not the only cash resources available to the FDIC: in addition to the $18 billion in the DIF as of June, 2010; the FDIC has $19 billion of cash and U.S. Treasury securities held as of June, 2010 and has the ability to borrow up to $500 billion from the Treasury. The FDIC can also demand special assessments from banks as it did in the second quarter of 2009.

"Full Faith and Credit"


In light of apparent systemic risks facing the banking system, the adequacy of FDIC's financial backing has come into question. Beyond the funds in the Deposit Insurance Fund above and the FDIC's power to charge insurance premia, FDIC insurance is additionally assured by the Federal government. According to the FDIC.gov website (as of January 2009), "FDIC deposit insurance is backed by the full faith and credit of the United States government". This means that the resources of the United States government stand behind FDIC-insured depositors." The statutory basis for this claim is less than clear. Congress, in 1987, passed a non-binding "Sense of Congress" to that effect, but there appear to be no laws strictly binding the government to make good on any insurance liabilities unmet by the FDIC.

Insurance requirements


To receive this benefit, member banks must follow certain liquidity and reserve requirements. Banks are classified in five groups according to their risk-based capital ratio
Capital adequacy ratio
Capital adequacy ratio , also called Capital to Risk Assets Ratio , is a ratio of a bank's capital to its risk...

:
  • Well capitalized: 10% or higher
  • Adequately capitalized: 8% or higher
  • Undercapitalized: less than 8%
  • Significantly undercapitalized: less than 6%
  • Critically undercapitalized: less than 2%


When a bank becomes undercapitalized the FDIC issues a warning to the bank. When the number drops below 6% the FDIC can change management and force the bank to take other corrective action. When the bank becomes critically undercapitalized the FDIC declares the bank insolvent and can take over management of the bank.

Resolution of insolvent banks


The two most common methods employed by FDIC in cases of insolvency or illiquidity are:
  • Purchase and Assumption Method (P&A), in which all deposits (liabilities) are assumed by an open bank, which also purchases some or all of the failed bank's loans (assets). Other failed assets are auctioned online, primarily through The Debt Exchange and First Financial Network.

  • Payout Method, in which insured deposits are paid by the FDIC, which attempts to recover its payments by liquidating the receivership estate of the failed bank. These are straight deposit payoffs and are only executed if the FDIC doesn’t receive a bid for a P&A transaction or for an insured deposit transfer transaction. In a straight deposit payoff, no liabilities are assumed and no assets are purchased by another institution. Also, the FDIC determines the insured amount for each depositor and pays that amount to him or her. In calculating each customer’s total deposit amount, the FDIC includes all the interest accrued up to the date of failure under the contractual terms of the depositor’s account.

Insured products



FDIC deposit insurance covers deposit account
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...

s, which, by the FDIC definition, include:
  • demand deposit accounts (checking accounts), and negotiable order of withdrawal account
    Negotiable Order of Withdrawal account
    In the United States, a Negotiable Order of Withdrawal account is a deposit account that pays interest, on which checks may be written....

    s (NOW accounts, i.e., savings accounts that have check-writing privileges)
  • savings deposit accounts
    Savings account
    Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money . These accounts let customers set aside a portion of their liquid assets while earning a monetary return...

     (savings accounts), and money market deposit accounts (MMDAs, i.e., higher-interest savings accounts subject to check-writing restrictions)
  • time deposit accounts
    Time deposit
    A time deposit is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time...

     including certificates of deposit
    Certificate of deposit
    A certificate of Deposit is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions....

     (CDs)
  • outstanding cashier's checks, interest checks, and other negotiable instrument
    Negotiable instrument
    A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. According to the Section 13 of the Negotiable Instruments Act, 1881 in India, a negotiable instrument means a promissory note, bill of exchange or cheque payable either...

    s drawn on the accounts of the bank.
  • accounts denominated in foreign currencies

Accounts at different banks are insured separately. All branches of a bank are considered to form a single bank. Also, an Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...

 bank that is part of a brick and mortar
Brick and mortar
Brick and mortar in its most simplest usage is used to describe the physical presence of a building or other structure...

 bank is not considered to be a separate bank, even if the name differs. Non-US citizens are also covered by FDIC insurance.

The FDIC publishes a guide entitled "Your Insured Deposits", which sets forth the general characteristics of FDIC deposit insurance, and addresses common questions asked by bank customers about deposit insurance.

Items not insured


Only the above types of accounts are insured. Some types of uninsured products, even if purchased through a covered financial institution, are:
  • Stock
    Stock
    The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

    s, bonds
    Bond (finance)
    In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...

    , mutual fund
    Mutual fund
    A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...

    s, and money fund
    Money fund
    A money market fund is an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. Money market funds are widely regarded as being as safe as bank deposits yet providing a higher yield...

    s
    • The Securities Investor Protection Corporation
      Securities Investor Protection Corporation
      The Securities Investor Protection Corporation is a federally mandated, non-profit, member-funded, corporation in the United States. It protects investors in certain securities from financial harm if a broker-dealer fails...

      , a separate institution chartered by Congress, provides protection against the loss of many types of such securities in the event of a brokerage failure, but not against losses on the investments.
    • Further, as of September 19, 2008, the US Treasury is offering an optional insurance program for money market funds, which guarantees the value of the assets.
    • Exceptions have occurred, such as the FDIC bailout of bondholders of Continental Illinois.
  • Investments backed by the U.S. government, such as US Treasury securities
    Treasury security
    A United States Treasury security is government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States federal government, and they are often referred to simply as Treasuries...

  • The contents of safe deposit box
    Safe deposit box
    A safe deposit box or wrongly referred to as a safety deposit box is an individually-secured container, usually held within a larger safe or bank vault. Safe deposit boxes are generally located in banks, post offices or other institutions...

    es.
    Even though the word deposit appears in the name, under federal law a safe deposit box is not a deposit account – it is merely a secured storage space rented by an institution to a customer.
  • Losses due to theft
    Theft
    In common usage, theft is the illegal taking of another person's property without that person's permission or consent. The word is also used as an informal shorthand term for some crimes against property, such as burglary, embezzlement, larceny, looting, robbery, shoplifting and fraud...

     or fraud
    Fraud
    In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

     at the institution.
    These situations are often covered by special insurance policies that banking institutions buy from private insurance companies.
  • Accounting errors.
    In these situations, there may be remedies for consumers under state contract law, the Uniform Commercial Code
    Uniform Commercial Code
    The Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...

    , and some federal regulations, depending on the type of transaction.
  • Insurance
    Insurance
    In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

     and annuity products, such as life
    Life insurance
    Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...

    , auto and homeowner's insurance.

See also


External links