Legislation in the United States that created the
Deposit Insurance Fund, which
insures American
banks and
thrifts. Before the passage of the Act, banks and thrifts were separated into two insurance pools. While this was likely beneficial for a time because of the savings and loan crisis, it created a perverse incentive for banks and thrifts to reclassify themselves as the other (i.e., a bank to a thrift or a thrift to a bank), depending on which fund had lower
fees. The Federal Deposit Insurance Act abolished these two funds to simplify
banking regulation.