What federal entity insures deposits in banks to protect customers if a bank fails?

• A. Interstate Commerce Act
• B. Securities and Exchange Commission
• C. Social Security Act
• D. FDIC (Federal Deposit Insurance Corporation)

Answer: (D)

This question tests knowledge of which federal agency provides insurance for bank deposits to protect customers if a bank fails. The correct agency is the Federal Deposit Insurance Corporation, or FDIC. Created during the Great Depression, the FDIC was established to restore trust in the banking system by insuring deposits up to a certain limit per depositor per insured bank. If a bank fails, insured deposits are protected up to that limit, helping people avoid large losses and maintaining stability in the financial system. Beyond insurance, the FDIC also oversees bank operations and handles failed-bank resolutions. The other options focus on different areas: regulating interstate commerce, overseeing securities markets, and providing social insurance programs. None of them insure bank deposits.