Question

How did the creation of the Federal Deposit Insurance Corporation change the nature of banking in the United States

Answer 1

Federal Deposit Insurance Corporation (FDIC) was established after the collapse of many American banks during the early years of the Great Depression. It was created under authority of the Banking Act of 1933  with the responsibility to insure bank deposits in eligible banks against loss in the event of a bank failure and to regulate certain banking practices. So that, it restored trust in the American banking system.

Answer 2

The Federal Deposit Insurance Corporation started to guarantee bank deposits made by the people in order to change the banking system perspective in the United States.

Federal Deposit Insurance Corporation did the following changes in the banking system:

• The Federal Corporation inculcated confidence in the public in the financial system by providing insurance facilities to the public.
• The depositors were given a minimum rate of interest on their deposits.
• The investors were not charged with penalities while transferring investments.

Therefore, banks started to provide protection for loss to the public in case of failure of the banking system.

Learn more about changes in the US banking system here:

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