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Do Banks Need The FDIC?

Our FDIC podcast last week got listener Nick Casey wondering:

Are any U.S. banks not FDIC insured?

Most U.S. banks are required to have FDIC insurance to be chartered. States, for the most part, make them get it.

Here's a longer answer from the FDIC's press guy David Barr:

Most states require FDIC insurance for their banks. It was more common back in the early- to mid-'80s to have non-FDIC insured banks. That changed when most of those private insurance funds or state-sponsored funds went bankrupt and left customers without access to their deposits for extremely long periods of time. States like OH, NC and MD come to mind as the more well-known cases of depositors of privately insured banks having the most trouble getting their money out of troubled banks.

The result is that today most, if not all, states require federal insurance. There may be some rare exceptions or grandfather provisions to that statement, but most, if not all, banks and S&Ls must be federally insured. States are the ones who decide whether or not to require FDIC insurance. Any federally or nationally chartered bank, or one belonging to the Federal Reserve System, must have FDIC insurance.