What to Know About the Silicon Valley Bank CollapseMarch 15th, 2023 by Chris Collier
After catering to the tech industry for three decades, Silicon Valley Bank (SVB) collapsed on March 10, 2023, following a bank run. State regulators seized the bank and made the Federal Deposit Insurance Corporation (FDIC) its receiver. According to PBS NewsHour, the bank was the biggest U.S. lender to fail since the 2008 global financial crisis and the second-biggest ever.
In recent days, a statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board chair Jerome H. Powell, and FDIC chairperson Martin J. Gruenberg, assuring “decisive actions” to protect the economy and strengthen public confidence in banking.
Secretary Yellen approved actions enabling the FDIC to complete resolution of SVB to protect all depositors, which had access to their money days later, beginning Monday, March 13. A similar systemic risk exception was also announced for New York-based Signature Bank, which was closed recently by the state’s chartering authority and senior management removed.
The Federal Reserve Board also announced it will make available additional funding to eligible depository institutions to help ensure they can meet the needs of all depositors.
“The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry,” the recent statement declared. “Those reforms combined with [recent] actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
Even with those assurances, what steps can you take to safeguard your business against similar incidents?
Banking Over $250,000
The FDIC’s insurance limit is $250,000 per depositor, per insured bank, for each account ownership category, according to Forbes Advisor. The FDIC recognizes these ownership categories when protecting deposits:
Forbes Advisor cites the best ways to insure excess deposits above the FDIC limits:
Open New Accounts at Different Banks
The simplest way to insure excess deposits above the $250,000 FDIC limit may be spreading money around to different banks. Let’s say you have $50,000 that’s not insured at your current bank. You could deposit it into a savings or money market account at another bank and it would be insured there.
CLICK HERE to read the full, five-point list.
In times of uncertainty, it’s crucial to ensure that you’re doing business with an FDIC-insured bank.
“Deposit insurance is one of the significant benefits of having an account at an FDIC-insured bank—it’s how the FDIC protects your money in the unlikely event of a bank failure,” the government corporation states. “The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. And you don’t have to purchase deposit insurance. If you open a deposit account in an FDIC-insured bank, you are automatically covered.”
This banking tool can help you and your associates confirm that a bank is insured.
CLICK HERE for more information from the FDIC.
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