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Difference Between FDIC and NCUA

bankof-americaFDIC vs NCUA

The National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corporation (FDIC) are both independent federal agencies that regulate depository institutions. The NCUA regulates and insures the deposits of credit unions, while the FDIC regulates and insures the deposits of banks.

Both NCUA and FDIC deposit insurance are backed by the full faith and credit for the United States. The FDIC was established on June 16, 1933, after the US Congress passed the Glass-Steagall Act in 1933. The NCUA was established in 1970 when it assumed the Bureau of Federal Credit Unions’ operations pursuant to Public Law 91-206. Congress established a national system to charter and supervise federal credit unions with the Federal Credit Union Act in 1934. The NCUA oversees federal charters for credit unions, sets credit union policies, and insures “shares” (a form of deposits) in both federal credit unions and state-chartered credit unions through the National Credit Union Share Insurance Fund. The NCUA’s main goal is to keep the credit unions safe and sound and to protect those who deposit money with credit unions.

Both the NCUA and the FDIC aim to build public confidence in the banking and credit union systems by providing insurance for depositors and taking pre-emptive measures to minimize the risk of failures by banks and credit unions. If a bank fails, the FDIC makes the payment of insured deposits to the depositor; if a credit union fails, the NCUA makes the payment of insured deposits to the depositor. Both the NCUA and the FDIC are funded by member institutions that meet reserve and liquidity requirements. Bank and credit union examiners visit their member institutions and check regularly to see that they are complying with safety and soundness guidelines. If a member institution does not comply, both the NCUA and the FDIC have the authority to change the management or take corrective measures.

A difference between a credit union and a bank is that a credit union is a not-for-profit cooperative where the members own their credit union. While a bank organized with capital stock does not share its profits with its depositors, a credit union is owned by its members, who receive dividends — usually in the form of interest — on their “shares” (i.e. deposits). Members of credit unions typically have access to a full range of financial services through their credit union, such as savings and checking accounts, lending products, electronic funds transfers, and other banking and investment products.

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