I had an econ professor that argued that the FDIC is never needed simply because it exists. People feel reassured and therefore don't make bank runs. Has the FDIC ever had to pay out a claim? What were the circumstances behind that?

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I had an econ professor that argued that the FDIC is never needed simply because it exists. People feel reassured and therefore don't make bank runs. Has the FDIC ever had to pay out a claim? What were the circumstances behind that?

Disclaimer: I am not a historian, and your professor has a Ph.d in econ whereas I only have a bachelor's and have worked for banks and read a lot of financial news:

I think your professor was trying to make the point that the existence of the FDIC is enough to keep bank runs from happening, which is more or less true. However, the thing that prevents bank runs from happening is the direct actions of the FDIC.

When a bank fails, the FDIC shuts down its operations for a brief time and takes it over. Often, in this process the FDIC and get another (larger) bank to buy the failed one, and customers of the failed bank become customers of the new bank automatically.

But banks do still fail somewhat regularly, here is a list of bank failures from the FDIC website:

https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/

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I had an econ professor that argued that the FDIC is never needed simply because it exists. People feel reassured and therefore don't make bank runs. Has the FDIC ever had to pay out a claim? What were the circumstances behind that?

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