establishment of the federal deposit insurance corporation

with the establishment of the FDIC in 1933, an important concerned not only with the safety of depositors, but with the overall stability of the banking industry, came into existence. when the FDIC was organized, all member banks of the federal Reserve System were required to join. Noninsured state banks were given the option to apply to the corporation for admission to insurance. A sufficient number of these state banks, along with those banks in the federal Reserve System, did apply for insurance, so that more than 90 per cent of all commercial banks have been covered by this depositor insurance since January 1,1934. since November 27,1974, each account has been insured up to $40000.
Most commercial bank are insured In 1977, the FDIC insured 14,425 commercial banks with total assets 0f $1,040 billion. Only 293 small banks with total assets of $33 billion were noninsured.
Bank Application for insured status Most newly established banks apply, even before they open their doors, for such deposit insurance. When a bank applies to the FDIC for insured status, the FDIC considers the following factors: the financial history and condition of the bank, the adequacy of its capital structure, its future earnings prospects, the general character of its management, the convenience and needs of the community to be served by the bank, and the consistency of the bank's corporate powers with the purposes of the Federal Deposit Insurance law. Although most banks applying for insurance are likely to be newly organized banks, some banks already in operation, but hitherto not insured, also make such application. in 1976, for example,the FDIC approved application for deposit insurance of 112 banks and denied only 10 application. (four were subsequently approved following amendments to the applications.) IN 1977, there were 104 applications; only six were denied.