When events like Silicon Valley Bank (SVB) and Signature Bank happen, it's natural to wonder how a bank safeguards your funds. Fortunately, the Federal Deposit Insurance Corporation (FDIC) insurance was designed for this very reason: to help protect your funds once deposited.
The FDIC is an independent government agency that protects bank depositors from the loss of uninsured deposits at an FDIC-insured bank. This organization oversees FDIC deposit insurance, which protects bank customers if an FDIC-insured institution fails. In other words, FDIC insures your money at the bank.
In the event of a bank failure, the FDIC provides depositors with an insurance payout of up to $250,000 per depositor, per institution, and per ownership category. If your bank is an FDIC-insured institution, you don't need to apply for FDIC insurance because coverage is automatic.
With SVB and Signature Bank, banking regulators took the extraordinary step of designating both banks as systemic risks to the financial system, giving regulators flexibility to backstop the uninsured deposits. Regulators hoped that by protecting these deposits, they would bolster confidence in the banking system.
We expect the government’s quick actions will boost trust in the banking system, yet these events may have an impact on longer-term economic growth. I’m keeping a close watch on the situation and plan to provide you with additional updates as the situation evolves.
FDIC Insurance, SVB & Signature Bank
March 16, 2023