When Silicon Valley Bank and Signature Bank collapsed in a matter of days, it was a stark reminder to the American people that U.S. banks do fail. More than that, while all uninsured depositors were spared in these two bank failures, that’s not always the case.
No. 1: Bank failures happen a lot more often than you think — and people can and do lose money.
More than 500 banks have failed in the U.S. since the year 2000. And while not a penny of insured funds has been lost in the history of the Federal Deposit Insurance Corporation, depositors don’t always get all of their money back. Read more here.
No. 2: SVB has a new owner — and they’re not new to this game
Silicon Valley Bank deposits are no longer under federal control. On Sunday, March 26, the Federal Deposit Insurance Corporation announced that North Carolina-based First Citizens BancShares acquired $56.5 billion in deposits and $72 billion in loans from Silicon Valley Bank. And they got it at a pretty hefty discount. Read more here.
No. 3: The U.S. has almost 200 banks at risk of SVB-like failure
A new study from researchers at the National Bureau of Economic Research found nearly 200 banks would be vulnerable to the same risk if met with a similar event. The researchers said in a working paper that if half of uninsured depositors at banks withdrew their funds, 186 banks would risk failure and could not support even their insured depositors. Read more here.
No. 4: Lawmakers are talking about hiking the FDIC cap to the millions of dollars
Before the 2008 financial crisis, only $100,000 in deposits were FDIC-insured. That was raised to $250,000 in 2008, but is it time to raise the cap again? Read more here.
