Jeff Rosenblum is a senior legal and human capital executive whose career includes extensive leadership within the Federal Deposit Insurance Corporation (FDIC) and other federal agencies. Serving as chief human capital officer, Jeff Rosenblum led agency-wide human resources operations, overseeing workforce structure, job classification, benefits administration, and evolving workplace policies across headquarters and regional offices.
Prior to that role, he held senior legal positions within the FDIC focused on labor, employment, and administrative matters. His background also includes service as deputy general counsel at the Securities and Exchange Commission and legal leadership roles within the U.S. Department of Justice and Department of Labor. Alongside his federal service, he has taught employment law and legal ethics at George Mason University Law School. His professional experience provides a practical framework for examining the historical development and institutional purpose of federal deposit insurance in the United States.
An Overview of the Federal Deposit Insurance Corporation
Established in 1933 at the height of the Great Depression, the Federal Deposit Insurance Corporation (FDIC), a federal organization, helps safeguard the nation’s fiscal solvency through a national deposit insurance structure. Before establishing it, Congress had reviewed over 150 proposals that proposed forming a national banking insurance system, as around 4,000 banks shuttered their doors in the first few months of 1933 alone.
In 1829, New York State launched the nation’s first bank-obligation insurance program, inspired by the practices of Hong merchants in Canton, China. It required merchants with special approval to trade internationally to hold each other liable for their debts.
By 1860, six programs existed. They limited coverage to circulating notes, and mutual guaranty programs emerged, making supervisory officials more accountable. Indiana’s successful program reflected a robust supervisor board, as no banks failed for 30 years.
With the establishment of a national bank system in 1863, state-chartered banks converted to national charters, replacing state insurance systems. National banks held US bonds as collateral. When any national bank failed, the US Department of the Treasury stepped in and paid bank note holders, regardless of the values of the bonds behind the notes. However, bank deposits quickly surpassed circulating notes in value, exceeding them by seven times by the turn of the 20th century.
The shift provided states with the impetus to establish deposit insurance programs, particularly in agricultural areas. Eight states established deposit guaranty programs between 1908 and 1917. Unfortunately, these state insurance funds could not handle the economic turbulence of the 1920s, including the Depression of 1921 and agricultural challenges, which resulted in 600 annual bank failures between 1921 and 1929. As a result, state funds ceased operations by 1930.
Since 1886, the government fielded various proposals for a federal deposit insurance or guaranty program. The Panic of 1907 yielded 30 deposit guaranty legislation proposals, while the unfolding banking crises of 1931 yielded 20 bills, since many bank depositors could not access cash by the end of 1930. Banks often took on more credit to fulfill these short-term liquidity demands. The severely restricted new loans as investors lost confidence.
The Federal Reserve took minimal steps to address the liquidity issues, as most struggling banks did not have Federal Reserve membership, and many attributed their failure to poor management. However, the 1,350 banks that suspended operations in 1930 went well beyond agricultural banks and included the New York City-headquartered Bank of the United States. With the Federal Reserve still failing to take action, 1931 saw 2,300 banks suspend operations, resulting in losses that exceeded the total bank losses America experienced from 1921 to 1929.
In early 1932, the Hoover Administration established the Reconstruction Finance Corporation (RFC), which loaned approximately $900 million to more than 4,000 banks. As the situation continued to deteriorate in late 1932, economists began discussing the possibility of devaluing the dollar. Incoming president Franklin D. Roosevelt proclaimed a four-day nationwide bank holiday starting on March 6. Across an extremely compressed schedule, legislators passed the Emergency Banking Act, which provided for the issuance of federal securities-backed Federal Reserve Notes. The RFC invested in banks’ capital notes and preferred stock, and also provided specific banks with secured loans, staving off failure.
On June 16, Roosevelt signed the Banking Act of 1933, which established the FDIC. Modeled after Massachusetts’ deposit insurance program and sanctioned by the Glass-Steagall Act of 1933, it made a single federal agency guarantor for a specific amount of member banks’ checking and savings deposits.
About Jeff Rosenblum
Jeff Rosenblum is a former chief human capital officer of the Federal Deposit Insurance Corporation, where he led workforce policy, organizational structure, and human resources operations across headquarters and regional offices. His federal career also includes senior legal roles at the Securities and Exchange Commission, the Department of Justice, and the Department of Labor. In addition to government service, he has long taught employment law and legal ethics at George Mason University Law School. He earned his law degree from Loyola University Chicago School of Law, graduating cum laude.
