Which statement best describes the FDIC?

Which statement best describes the FDIC?

• A. Provides deposit insurance guaranteeing the safety of a depositor's accounts in insured banks.
• B. Sets interest rates for banks.
• C. Issues student loans.
• D. Insures credit unions.

Answer: (A)

The FDIC is a government agency that protects people’s deposits in banks that carry its insurance. The statement that best describes it is that it provides deposit insurance guaranteeing the safety of a depositor's accounts in insured banks. If a participating bank fails, the FDIC reimburses depositors for their insured deposits, up to the limit (currently $250,000 per depositor, per insured bank, for each account ownership category). This protection typically covers checking, savings, money market accounts, and certain CDs at insured banks. It does not set interest rates for banks—those come from market conditions and policy decisions of central banks. It does not issue student loans. It does not insure credit unions; that function is handled by the NCUA, which provides similar protection for deposits at credit unions.

The FDIC is a government agency that protects people’s deposits in banks that carry its insurance. The statement that best describes it is that it provides deposit insurance guaranteeing the safety of a depositor's accounts in insured banks. If a participating bank fails, the FDIC reimburses depositors for their insured deposits, up to the limit (currently $250,000 per depositor, per insured bank, for each account ownership category). This protection typically covers checking, savings, money market accounts, and certain CDs at insured banks. It does not set interest rates for banks—those come from market conditions and policy decisions of central banks. It does not issue student loans. It does not insure credit unions; that function is handled by the NCUA, which provides similar protection for deposits at credit unions.