Is my money safe? What you need to know about bank failures

NEW YORK (AP) — The recent bankruptcy of Silicon Valley Bank and Signature Bankwhich was mainly aimed at the technical industry, you may be worried about your money. They were the second and third largest bank failures in US history.

It all started last week when too many depositors tried to withdraw their money from Silicon Valley Bank in Santa Clara, California. That’s called a bank run.

The bank had to sell government bonds and other securities at a huge loss and more and more people tried to withdraw money as word of the situation spread, causing the bank to go bankrupt. Regulators took control of New York-based Signature Bank shortly after, saying it was necessary to protect depositors after too many people withdraw money.

In response, regulators guaranteed all deposits at the two banks and created a program to protect other banks from a run on deposits.

Here’s what you need to know:


Yes, if your money is in a bank insured by the Federal Deposit Insurance Corp. and you have less than $250,000 there. If the bank fails, you get your money back.

Almost all banks are FDIC insured. You can look for the FDIC logo at the bank’s counters or at the entrance of your bank branch.

Credit unions are insured by the National Credit Union Administration.

If you have more than $250,000 in an individual account, which most people don’t, the amount over $250,000 is considered uninsured and experts recommend that you move the rest of your money to another financial institution, said Caleb Silver, editor-in-chief of Investopedia., a financial media website. Joint accounts are insured up to $500,000.

Federal officials have taken steps to ensure that other banks are not affected.

“You shouldn’t worry too much about your money if it’s in one of the bigger banks, and even some regional banks and the credit unions,” Silver said.


If you’re worried about your bank closing in the near future, according to Silver, there are a few things to look out for:

– Pay attention to the share price of your bank.

— Keep an eye on your bank’s quarterly and annual reports.

— Start a Google alert for your bank in case there are any news about it.

You want to make sure you pay close attention to the way your bank behaves, Silver said.

“If they try to raise money through a stock offering or if they try to sell more shares, they could run into problems with their balance sheets,” Silver said.


If you have more than $250,000 in your bank, there are a few things you can do:

– Open a joint account

You can protect up to $500,000 by opening a joint account with someone else, like your spouse, said Greg McBride, chief financial analyst at Bankratea financial service provider.

“A married couple can easily secure a million dollars in the same bank by each having an individual account and having a joint account together,” McBride said.

— Moving to another financial institution

Moving your money to other financial institutions and having up to $250,000 in each account ensures that your money is insured by the FDIC, McBride said.

– Do not withdraw cash

Despite the recent uncertainty, experts advise against withdrawing money from your account. Keeping your money with financial institutions rather than at home is safer, especially if the amount is insured.

“It’s not the time to take your money out of the bank,” Silver said.

Even people with uninsured deposits usually get almost all of their money back.

“It takes time, but in general, all savers — both insured and uninsured — get their money back,” said Todd Phillips, a consultant and former attorney with the FDIC. “Uninsured depositors may have to wait for some time and may need a haircut, losing 10 to 15% of their savings, but it’s never zero.”


Associated Press Writer Ken Sweet contributed to this report.


The Associated Press receives support from the Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.


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