About FDIC, NCUA and SIPC

Federal Deposit Insurance Corporation (FDIC) is the bank association or federal agency created to provide deposit facilities in US banks and avoid any banking failures. This association was created in 1933 after the Great Depression to generate public confidence by ensuring the safety of finance and stability in financial transactions.

The National Credit Union Association is the credit union incorporated to protect savings accounts, money markets, checking accounts, and retirement.

The Securities Investor Protection Corporation (SIPC) is a savior for contingencies in a brokerage firm. The company ensures financial balance irrespective of rising and falling in the share market.

Difference Between FDIC And NCUA And SIPC

FDIC and NCUA perform many common operations. The only difference between the two is FDIC is for bank deposits, providing day-to-day banking facilities. NCUA, on the other hand, is a credit association. NCUA gives credit unions financial assistance if a credit union fails to pay an amount to its members. . This is also applicable in FDIC for banks.

FDIC and SIPC are both for financial help. While FDIC protects the bank accounts, SIPC protects of brokerage accounts. Not all banks are associated with these corporations, so bank fails, and brokerage fails become evident in such cases. But these are mere inconveniences for banks already associated with FDIC and SIPC and can be easily sorted.

FDIC assured banks also advertise their insurance to make it easy for people to find out. But this is not the case in SIPC. People have to research to know if a bank is SIPC assured.

The Takeaway

FDIC is the federal agency for everyday banking insurance to protect deposit accounts. NCUA oversees Credit Unions to provide more convenience to members. Lastly, SIPC is the agency for brokerage firms. This assures that brokerage loss is less prone to affect the customers.

Reference:

Guides, I. Financial institutions industry developments: Including depository and lending institutions and brokers and dealers in securities-2009; Audit risk alerts.

Labonte, M. (2017). Who Regulates Whom: An Overview of the US Financial Regulatory Framework.

Levitin, A. J. (2015). Prioritization and mutualization: clearinghouses and the redundancy of the bankruptcy safe harbors. Brook. J. Corp. Fin. & Com. L., 10, 129.