Friday, July 5, 2013

Jul 5 (1934) Mrs. Lydia Lobsiger receives first FDIC check: "I don't know how to thank you men"

On July 5, 1934, Mrs. Lydia Lobsiger received the first federal deposit insurance disbursement, following the failure of the Fond Du Lac State Bank in East Peoria, Illinois. Photo: UPI

On this day in 1934, the Federal Deposit Insurance Corporation issued its first insurance disbursement to Lydia Lobsiger, after the failure of her bank Fond Du Lac State Bank in East Peoria, IL.

Established by The Banking Act of 1933, the FDIC was authorized to insure up to $2,500 in deposits, manage bank failures and liquidate their assets. As of January 1, 1934 the FDIC insured 14,000 banks. Today, the FDIC insures over 7,000 financial institutions, and individual depositors up to $250,000.

According to the New York Times, 99 percent of the 1,789 depositors of Fond Du Lac State Bank received their deposits in full thanks to the FDIC guaranty.

The check to Mrs. Lobsiger, a widow devastated by the Depression, was $1,250--her entire family fortune. A Time magazine article described the event.

A scrawny bespectacled widow in a cotton dress marched up to a cage marked 'CASH F. D. I. C. ORDERS HERE.' She then posed for photographers and said with a grin 'I don't know how to thank you men.'

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Flannery O'Connor

You shall know the truth and the truth shall make you odd.