Which act established the Federal Deposit Insurance Corporation to insure bank deposits?

Which act established the Federal Deposit Insurance Corporation to insure bank deposits?

• A. The Securities Act created the SEC.
• B. The Glass-Steagall Act established the FDIC to insure deposits.
• C. The Emergency Banking Act created the FDIC.
• D. The Rural Electrification Act created the FDIC.

Answer: (B)

When the banking system was collapsing during the Great Depression, one big goal was to restore public confidence in banks by protecting people’s deposits. The act that created the Federal Deposit Insurance Corporation to insure those deposits was the Glass-Steagall Act of 1933, commonly tied to the Banking Act. This reform set up federal deposit insurance, so most bank deposits would be protected if a bank failed. That insurance reduced the fear of losing savings and helped stop the runs on banks, which was essential for stabilizing the financial system. The other options address different moves: one established a securities regulator, the Securities and Exchange Commission; another helped banks stay open and manage the crisis but didn’t create deposit insurance; and the Rural Electrification Act funded rural electricity projects. The key feature of establishing deposit insurance—protecting depositors and restoring trust—comes from the Glass-Steagall/Banks Act reform that created the FDIC.

When the banking system was collapsing during the Great Depression, one big goal was to restore public confidence in banks by protecting people’s deposits. The act that created the Federal Deposit Insurance Corporation to insure those deposits was the Glass-Steagall Act of 1933, commonly tied to the Banking Act. This reform set up federal deposit insurance, so most bank deposits would be protected if a bank failed. That insurance reduced the fear of losing savings and helped stop the runs on banks, which was essential for stabilizing the financial system.

The other options address different moves: one established a securities regulator, the Securities and Exchange Commission; another helped banks stay open and manage the crisis but didn’t create deposit insurance; and the Rural Electrification Act funded rural electricity projects. The key feature of establishing deposit insurance—protecting depositors and restoring trust—comes from the Glass-Steagall/Banks Act reform that created the FDIC.