Elijah is concerned that his bank is making poor financial decisions and worries that his $1,200 deposited in savings will be lost if the bank were to fail. As long as his bank meets the necessary requirements, which of the following protects Elijah against this potential loss?

Question

Federal Deposit Insurance Corporation
Home Owners' Loan Act
fractional-reserve banking
Glass-Steagall

Answer 1

The correct answer is Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent agency of the federal government that provides insurance for depositors in the event that a bank fails. It covers deposits up to $250,000 per depositor, per insured bank, for each account ownership category. This means that Elijah's $1,200 deposit in savings is protected by the FDIC as long as his bank meets the necessary requirements. The Home Owners' Loan Act, fractional-reserve banking, and Glass-Steagall are all related to banking and finance but do not directly protect depositors against loss.