Last week, the Federal Deposit Insurance Corporation (FDIC) announced that Legacy Bank of Milwaukee, Wisconsin and First National Bank of Davis, Davis, Oklahoma, were being closed by the Wisconsin Department of Banking and Comptroller of the Currency, respectively. In both cases, the FDIC was appointed as the receiver of the failed banks. That brings the total number of failed banks in 2011 to 25. In these cases, the FDIC - created by the Banking Act of 1933 - is responsible for the payment of deposits and the liquidation or sale of the remaining bank assets. Notably, the FDIC is not funded directly by taxpayer dollars, it is generally funded by premiums paid by its member banks for deposit insurance.
For those customers who do not withdraw their funds from a failed institution (or don't have their account assumed by a successor bank) the FDIC also maintains an unclaimed funds website where depositors can search for their abandoned accounts. Eventually, the FDIC turns the funds over to the appropriate state as unclaimed property, but with a twist. As a matter of federal law, if the funds are not claimed "within 10 years of the date of delivery [to the state], the deposit shall be immediately refunded to the [FDIC] and become its property. All rights of the depositor against the appropriate State with respect to such deposit shall be barred as of the date of the refund to the FDIC." 12 U.S.C. 1822.