Which deregulation act was established to counteract disintermediation and created the FDIC?

The Deposit Monetary Control Act of 1980 is recognized for its role in addressing disintermediation, which is the phenomenon where depositors withdraw their funds from traditional banks in search of higher returns elsewhere. This act aimed to bring some deregulation to the banking sector by allowing financial institutions greater flexibility in terms of interest rates on deposits and loans.

A key feature of this act was the establishment of the Federal Deposit Insurance Corporation (FDIC) insurance coverage for different types of accounts, reinforcing consumer confidence in the banking system. This helped stabilize the banking industry during a time when customers were increasingly turning to alternative investments. The act also expanded the FDIC’s authority and improved the safety of deposit accounts, which in turn encouraged depositors to maintain their funds in banks rather than moving them to other financial institutions or investments that were not insured.

In contrast, the other options present significant regulatory measures but do not align directly with the intent to address disintermediation or the direct establishment of the FDIC. The Banking Act of 1933 established the FDIC alongside other banking reforms but was primarily focused on preventing bank failures during the Great Depression. The Dodd-Frank Act, passed in 2010, focused on increasing regulations in response to the financial