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Silicon Valley Bank (SVB), an institution that held  $210 billion in assets, made headlines in March of 2023 as it filed for bankruptcy. In the wake of the unexpected downfall and the subsequent bank runs across the country, many Americans are asking; is my money safe?

What Happened At SVB?

First, we have to understand what happened to SVB. SVB’s primary customers were tech startups. The Federal Reserve’s recent interest rate increases caused many of SVB’s clients to reduce their investments held at the bank.

This provoked a bank run on SVB, where companies frantically began withdrawing their deposits and closing accounts. Eventually, the bank could no longer redeem customer deposits and filed for bankruptcy.

That’s where the  FDIC stepped in.

What Is the FDIC?

The Federal Deposit Insurance Corporation (FDIC) is the branch of the U.S. government that acts to protect bank deposits.

It was formed during the Great Depression. After a long series of destructive bank runs prompted the government to create a safety net against the financial crisis that bank runs can cause.

The main purpose of the FDIC is to ensure confidence in the economy. Their overarching presence screens the public against economic instability. If a bank is FDIC-insured, depositors will be safeguarded from suffering a loss up to the insured amount.

The FDIC has several measures in place to protect financial institutions and individuals in the United States.

How the FDIC Protects Your Money

Deposit Insurance

FDIC deposit insurance is a government program that protects your money if a bank fails. The FDIC insures deposits up to $250,000 per depositor, per insured bank, for each account ownership category. This means if your bank is FDIC insured, and the bank fails—like SVB—then at least $250,000 is safe.

Oversight of U.S. Financial Institutions

The FDIC acts as a consumer protection agency. It monitors major financial institutions nationwide, looking for unsafe business practices and unreasonable risk management policies. The FDIC also has the authority to resolve failed financial institutions in a way that minimizes losses to depositors and taxpayers.

Receivership Management

A receivership describes the process by which an institution takes charge of a failed bank like SVB. The FDIC acts as a receivership to protect the public from losing money. It takes care of the bank’s assets and looks for a way to settle its financial obligations as quickly as possible.

Questions

Have questions about whether your money is safe? Our team of financial experts is here to help assess the risk to your finances and plan for the future. Contact Us.