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 institution 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 banks in that depositors feel safe depositing their money in the bank or other financial institution, so they have higher deposits. There was little confidence in banks back in 1933.
There are some deposits that are not insured. The financial 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 institutions that may or may not have FDIC insured deposits:
- Merchant banks
- Commercial banks
- Community banks
- Community developmental banks
- Postal savings banks
- Private banks
- Off shore banks
- Savings banks
- Investment banks
- Universal banks
- Central banks
- Savings and loan banks
- Credit union banks
- Insurance banks
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.
Merchant Data Systems offers an agent banking program for banks that do not offer merchant services for commercial accounts. Merchant Data Systems will assist banks by providing marketing material that is co-branded with both the bank’s name with Merchant Data Systems. They will contact the account holder after the bank completes the preliminary information form. In addition, Merchant Data Systems offers a variety of other services including offering point of purchase payment processing equipment for sale or lease and e-commerce services. Fill out a secure approval form today and contact them for more information on how they can help your business process payments.
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