What entity insures deposits in U.S. banks against failure?

The Federal Deposit Insurance Corporation (FDIC) is the entity responsible for insuring deposits at U.S. banks against failure. This insurance is crucial as it protects depositors’ funds, ensuring that even if a bank were to fail, individuals will not lose their insured deposits, which currently covers up to $250,000 per depositor per bank. This insurance helps maintain public confidence in the financial system and encourages saving, knowing that money deposited is protected up to a certain limit.

The importance of the FDIC cannot be overstated, especially during financial crises when banks may face difficulties. By providing insurance for deposits, the FDIC stabilizes the banking system and assures customers that their money is secure, which is essential in preventing bank runs and panic among the public.

Other entities like the Federal Reserve System mainly conduct monetary policy and regulate banks but do not provide deposit insurance. The Consumer Financial Protection Bureau focuses on consumer financial products and protections rather than deposit insurance. The U.S. Treasury Department manages federal finances but does not insure bank deposits either. Thus, the FDIC stands out as the dedicated protector of depositors in the banking system.