What is the difference between a savings bank and a savings institution that is FDIC insured?

Answer 1

A savings institution typically refers to either a Savings and Loan or a Savings Bank. Both Savings Banks and Savings and Loans are thrifts, whose primary federal regulator will be the OTS (Office of Thrift Supervision). In addition, any insured institution would be additionally regulated by the FDIC. Most, if not all states now require, by state law, that any institution operating as either a bank or a thrift be covered by FDIC insurance. Ohio is an example of such a state. The main difference between thrifts and banks is their primary purpose. Thrifts typically have been focused on residential lending and promoting "home ownership." To qualify as a thrift, an institution must maintain a large concentration of lending in loans secured by residential real estate. Banks, in contrast, are generally more focused in commercial lending to help finance business and other ventures. Banks are also more involved in unsecured lending or lending which is secured by items other than real estate (i.e. Inventory Loans or Credit Cards).

Though, historically, there was a difference in the types of products that banks and savings and loans could offer to the public, many of these differences have been modified over the years to the point that most services, at least conceptually, can be offered by either a bank or a thrift. Banks and thrifts, however, remain under the supervision of different regulatory bodies. "Government" FDIC insurance covers money in your savings, checking, or money market checking account for the amount of up to $100,000. The FDIC is technically not part of the governmental system, but one of those long arm beaureacratic long legs. Deposit insurance coverage is based on a variety of factors including how an account is titled and the type of account. For instance, retirement accounts held in an IRA are insured for a greater value than a non-retirement deposit account. Additionally, by altering the ownership of an account, it is possible for individual or multiple depositors to have coverage beyond $100,000. Finally, it should be noted that insurance is calculated "per depositor" and not "per account." Therefore, a depositor may risk having uninsured deposits if the total amount deposited at a given institution is above the threshold amount.