A more thorough explanation:

The Federal Deposit Insurance Corporation (FDIC) is a government agency in the United States that provides insurance for depositors' accounts at most U.S. banks. This means that if a bank fails, the FDIC will reimburse depositors up to $250,000 per account type, per depositor.

For example, if an individual has a savings account, a checking account, and a retirement account at the same bank, each account is insured up to $250,000, for a total of $750,000 in coverage. If the individual also has accounts at another bank, those accounts are also insured up to $250,000 each.

The FDIC helps to reassure depositors that their money is safe, even in the event of a bank failure. This reduces the risk of bank runs during financial crises, which can further destabilize the banking system.

In exchange for providing insurance, the FDIC can require banks to meet certain capital and oversight requirements to reduce the risk of failure. Banks must also pay a premium to the FDIC for their deposits to be insured.

If a bank does fail, the FDIC will step in to ensure that depositors are reimbursed and creditors receive what can be salvaged from the bank's assets. The FDIC has broad authority to sell, merge, or reorganize a failed bank's assets to pay off creditors.

Overall, the FDIC plays an important role in maintaining confidence in the U.S. banking system and protecting depositors' funds.