Back in 1933, the Glass-Steagall Act was created. The collapse of many of the large banking institutions in early 1933 was a main factor in the Glass-Steagall Act. The act was created to sop deflation and expand the Federal Reserve’s ability to offer financing to banking institutions (rediscounting). The Federal Deposit Insurance Corporation (FDIC) provides insurance for deposits up to $250,000. This amount is per depositor per bank.

The FDIC also has the following responsibilities:

* Financial institution examinations

* Supervision of financial institutions

* Monitors financial institutions soundness

* Consumer protection

* Failed bank management

* Evaluates financial institution safety

Depositors who have money in an FDIC insured account would not loose any of their deposit no matter what happens with the financial institution. This security has helped in that depositors feel safe depositing their money, so they have higher deposits. There was little confidence in banks back in 1933.

There are some deposits that are not insured. The institution will note that the deposits are not incurred. Some investments aren’t insured due to the risks. Risky deposits often have higher potential for profit, but the potential isn’t always realized.

Some of the financial banks that may or may not have FDIC insured deposits:

* Merchant

* Commercial

* Community

* Community developmental

* Postal savings

* Private

* Off shore

* Savings

* Investment

* Universal

* Central

* Savings and loan

* Credit union

* Insurance

As important as it is for individuals to have their deposits FDIC insured, it is even more important for businesses to have their deposits insured because there deposits are a lot larger. Once a business chooses a bank, they will need to be able to have the bank be able to service payment processes. Not all banks are able to do so.