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Statement by the President Upon Signing Bill Increasing Insurance of Accounts in Banks and Savings and Loan Associations.

October 17, 1966

I AM PLEASED to sign into law today S. 3158, which affords greater protection and assurance to the millions of Americans who have placed their savings in our banks and savings and loan associations.

This bill--the Financial Institutions Supervisory Act of 1966--strengthens the ability of Federal supervisory agencies to safeguard the soundness of our financial system. And it increases to $15,000 the insurance coverage for depositors and savers. It follows the recommendations I made in my January 1966 Economic Report.

The trust and confidence of all Americans in the institutions which have custody of their savings is an essential element in the smooth working of our complex, and enormously productive economy. As a result of legislative enactments over the years-both by the Federal Government and the States--our financial institutions are sound and well managed and fully merit that trust and confidence.

Even in the rare cases of financial mismanagement, Federal supervisory agencies already have adequate means to protect the interests of savers. But in several respects, the tools available to the agencies have been unnecessarily slow, cumbersome, or otherwise ill-suited to particular situations that may arise.

This legislation greatly improves their ability to safeguard the soundness of our financial institutions. It provides means for dealing more effectively with the few institutions which may be managed improperly.

Our supervisory and regulatory agencies-the Federal Home Loan Bank Board, the Federal Savings and Loan Insurance Corporation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System--will now be able to move more rapidly and effectively to correct unsafe or improper practices. At the same time, provisions for administrative hearings and judicial review of orders will give fair protection to the rights of insured institutions and their officers, directors, or others against whom action proves necessary. The legislation also carefully preserves the existing division of authority between the Federal and State Governments.

Through the increase of insurance coverage from $10,000 to $15,000, our depositors and account holders will enjoy increased protection for their funds should an institution fail for any reason. And the other provisions of this legislation will further reduce the already rare instances in which failure occurs.

I applaud the action of the Congress on this bill. I also thank the many responsible industry leaders who supported this legislation.

Note: As enacted, S. 3158, approved on October 16, 1966, is Public Law 89-695 (80 Stat. 1028).

Lyndon B. Johnson, Statement by the President Upon Signing Bill Increasing Insurance of Accounts in Banks and Savings and Loan Associations. Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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