6:32 p.m. ET, March 13, 2023
No, you shouldn't pull your money out of your bank. Here are answers to other key questions
From CNN's Ramishah Maruf
After Silicon Valley Bank’s stunning collapse
became the second-largest bank failure in US history, many customers are wondering if their money is safe.
Here are the answers to some frequently asked questions:
Do I have to worry about cash stored in my bank?
In short, if you have less than $250,000 in your account, then you almost certainly have nothing to worry about. That’s because the US government insures the first $250,000 in eligible accounts.
Many SVB customers had much more than $250,000 deposited and now that they can’t get their money, some companies are struggling to make payroll.
Should I pull my money out of my bank?
No, it doesn’t make sense to take all your money out of a bank, Jay Hatfield, CEO at Infrastructure Capital Advisors and portfolio manager of the InfraCap Equity Income ETF, said. But make sure your bank is insured by the FDIC, which most large banks are.
“I don’t think people should panic, but it’s just prudent to have insured deposits versus uninsured deposits,” Hatfield said.
Your money is most likely not going anywhere. Everyday consumers, on the whole, are unlikely to be affected. But the collapse is a good reminder to be aware of where your money is held, and not to have it all in one place.
“The first bank failure since 2020 is a wake-up call for people to always make sure their money is at an FDIC-insured bank and within FDIC limits and following the FDIC’s rules,” said Matthew Goldberg, a Bankrate analyst.
How does this compare to 2008?
The banking sector should be, theoretically, more stable due to the regulatory reforms put in place after the crisis in 2008.
The government’s actions this weekend also try to prevent the next SVB from happening, further stabilizing the sector after a chaotic week. Rising interest rates meant cheap Treasury bonds SVB and other banks invested in years ago crumbled in value – last week’s bank run was triggered by SVB selling those securities at a steep loss to help pay customers’ deposit withdrawals after people started pulling their money out of the bank.
The Fed also said it will offer bank loans for up to a year in exchange for US Treasury bonds and mortgage-backed securities that lost value. The Fed will honor the debt’s original value for the banks that take the loans.