INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND Deposits insured by the Federal Deposit Insurance Corporation at the close of 1951 were estimated at $96,713 million, or 54 percent of total deposits in all insured banks. The amount of insured deposits was the largest since the inception of Federal deposit insurance in 1934, reflecting both the growth in total deposits since that date and the 1950 increase in maximum coverage for each depositor. Chart A illustrates changes in total and insured deposits between 1934 and 1951. Chart A. TOTAL AND INSURED DEPOSITS, ALL INSURED BANKS, In 1934, when deposit insurance coverage was fixed at $5,000 for each depositor, the amount of insured deposits was approximately $17 billion.1 From that time until the middle of 1942 insured deposits increased steadily at an average rate of 7 percent per year. During the war and early postwar years the increase was much more rapid, averaging 23 percent per year from the middle of 1942 to the end of 1946. By the latter date the amount 1 Under the temporary insurance plan which went into force on January 1, 1934, the maximum insurance for each depositor was $2,500. This was changed on July 1, 1934, to $5,000, except for some of the mutual savings banks, which were permitted to retain the lower maximum. Under the permanent insurance plan which became effective August 23, 1935, the insurance maximum for each depositor became $5,000 in all insured banks. of insured deposits had increased to nearly $74 billion; and until the coverage was increased to $10,000 for each depositor in September 1950, ranged between that figure and $77 billion. At the end of 1950, after the change in coverage, $91 billion of deposits was insured; and this was increased by 6 percent in 1951. Most of the change in the amount of insured deposits, except in 1950 when coverage for each depositor was doubled, has been due to the growth in total deposits in insured banks. However, some changes have occurred in the proportion of total deposits in various types of account, and this has altered the percentage of total deposits that are insured. During the first few years of deposit insurance, approximately 45 percent of deposits in insured banks were insured. In 1939 the percentage of deposits insured began to decline, reaching a low figure of 36 percent in 1942; but increased during the next few years, reaching 50 percent at the end of 1946 and remaining close to this figure until coverage was changed in September, 1950. Since that date the proportion of total deposits in the insured banks protected by insurance has been approximately 54 percent. Chart B shows the ratios of the deposit insurance fund of the Corporation to insured deposits and to total deposits for each mid-year and year-end date from 1934 to 1951. Chart B. RATIOS OF DEPOSIT INSURANCE FUND TO TOTAL AND INSURED DEPOSITS, ALL INSURED BANKS, MID-YEAR AND YEAR END, 1934-1951 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950' 1951' -1.8 1.6 1.4 1.2 1.0 |