1950–1959

There are approximately 13,600 FDIC-insured institutions with estimated insured deposits of approximately $91.3 billion.

Chart of the number of FDIC-insured institutions and amount of estimated insured and total deposits - 1950

September 21, 1950

The Federal Deposit Insurance Act of 1950 is signed into law by President Harry S. Truman.

Until now, the FDIC's authorizing legislation has been part of the Federal Reserve Act, but with the passage of this law the FDIC's authorities are consolidated into a separate statute. Important provisions of the new law include:

• Increasing the basic coverage limit to $10,000, which increases insured deposits by about $12 billion and means that almost 99 percent of all accounts in insured banks are fully protected. The increase in the coverage limit was supported by the FDIC, the Federal Reserve Board, and the U.S. Treasury. By 1950, the $5,000 limit provided only half the protection it had when it had been set in 1934. The increase in the limit would also strengthen public confidence in the banking system.
• Maintaining the assessment rate at 8.33 basis points but providing assessment credits to insured banks in years when the FDIC's assessment income exceeds its losses and expenses. The FDIC retains 40 percent of net assessment income, while 60 percent will be credited to insured banks on a pro rata basis.
• Authorizing the FDIC for the first time to provide open-bank assistance to a bank in danger of closing, so long as the bank is essential to its community. The FDIC notes that it intends to use this authority “sparingly.” (The FDIC will not use this authority until 1971.)
• Authorizing the FDIC for the first time to conduct special examinations of national banks and state member banks without consent of the OCC or the Federal Reserve, if the FDIC Board of Directors believes it necessary to measure insurance risk.
• Requiring that the FDIC pay 2 percent interest on the approximately $289 million initial capital (the FDIC had repaid the principal in 1958) provided by the U.S. Treasury and the Federal Reserve banks. This amounts to $81 million and is repaid fully in 1951.

For discussion about increasing the coverage limit, see Christine M. Bradley, “A Historical Perspective on Deposit Insurance Coverage,” FDIC Banking Review 13 no. 2 (2000): 1-25 https://www.fdic.gov/analysis/archived-research/banking-review/br2000v13n2.pdf .

Image of FDIC $10,000 Deposit Insurance Limit Sign

In response to criticism from Senator J. William Fulbright that the FDIC had since the mid-1940s no longer used deposit payoffs and instead used purchase and assumption transactions where all depositors had been protected, FDIC Chairman Maple Harl tells Fulbright that the FDIC would make a cost calculation to determine whether an assumption would be cheaper than a payoff. It was not until 1982 that such a cost test was required by statute, but the FDIC nevertheless applied such a test during the intervening years.

FDIC, “The First Fifty Years: A History of the FDIC, 1933-1983,” 86-87. https://www.fdic.gov/resources/publications/first-fifty-years/book/first-fifty-years.pdf .

May 10, 1953

Henry E. Cook (1886-1971) becomes the fourth Chairman of the FDIC and serves until September 17, 1957. Cook was appointed as an FDIC Director in 1957 to fill the unexpired term of former Senator Phillips Goldsborough. Before joining the FDIC Board, Cook had been Ohio superintendent of banks beginning in 1943. A native of Ohio, Cook worked as a messenger for the Second National Bank of Bucyrus in Bucyrus, Ohio, at age 20. Twenty-three years later on December 1, 1929, after serving as teller, assistant cashier, and cashier, Cook became the bank's president, a position he held until 1943. Cook was also President of the Ohio Bankers Association and served as a member of various committees of the American Bankers Association, all during the 1930s.

May 9, 1956

The Bank Holding Company Act of 1956 is signed into law by President Dwight D. Eisenhower.

The statute defines a bank holding company (BHC) as any company with a stake in 25 percent or more of the shares of two or more banks, and defines a bank as any institution that takes deposits and makes loans.

The law requires BHCs to divest ownership in any nonbank firms.

The Federal Reserve is given regulatory and supervisory authority over BHCs, and any BHC that wanted to expand had to obtain approval to do so.

The law did not apply to one-bank BHCs, a loophole that would not be closed until 1970. Also, its definition of banks failed to take into account institutions that only took deposits or only made loans. The Competitive Equality Banking Act of 1987 would address the issue of these “nonbank banks.”

https://www.federalreservehistory.org/essays/bank-holding-company-act-of-1956#:~:text=The%201956%20act%20redefined%20a,ability%20to%20vote%20on%20shares

September 6, 1957

Ray M. Gidney, the Comptroller of the Currency, becomes Acting Chairman of the FDIC

https://www.occ.treas.gov/about/who-we-are/history/previous-comptrollers/bio-20-ray-gidney.html

September 17, 1957

Jesse P. Wolcott (1893-1969) becomes the fifth Chairman of the FDIC and serves until January 20, 1961. Before being appointed as FDIC Chairman by President Dwight D. Eisenhower, Wolcott served as a Republican Congressman from Michigan from 1931 to 1957 and had twice served as Chairman of the House Committee on Banking and Currency. Before his election to Congress, he served as prosecuting attorney in Port Huron, Michigan, and practiced law. Born in Massachusetts, Wolcott graduated from the Detroit College of Law in 1915 and served in the Army during World War I.