Here’s how much of your bank deposits are FDIC protected
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When the U.S. savings and loan crisis hit in the 1980s, I was reporting for my hometown newspaper, the Evening Sun, in Baltimore.
The city editor sent me out to interview depositors of one failed thrift. I’ll never forget arriving and seeing angry, confused and teary-eyed customers waiting in lines stretching for several blocks. It was a scene replicated hundreds of times as the crisis played out, while interest rates and inflation rose.
On Friday, a run on deposits led to the closure of Silicon Valley Bank, making it the second-largest bank failure in U.S. history. The bank was shut down by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.
Regulators close Silicon Valley Bank to avert crisis
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The FDIC, in turn, created the Deposit Insurance National Bank of Santa Clara and announced that all insured depositors will have access to their insured funds no later than Monday.
“Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds,” the FDIC said in a statement.
Silicon Valley Bank closed in second-biggest bank failure in U.S. history
The situation provides an opportunity to remind depositors how much of their money is protected by the federal government.
Wondering how safe your bank deposits are? Here’s a primer on FDIC insurance.
What is the FDIC?
The FDIC is an independent federal agency created at the depth of the Great Depression, the greatest economic crisis of modern history.
The crisis led to public demand for the protection of their bank deposits. The Banking Act of 1933, which established the FDIC, was signed into law by President Franklin D. Roosevelt on June 16, 1933.
The FDIC insures deposit products, including savings and checking accounts, money market deposit accounts, and certificates of deposit.
“In the 90-year history of the FDIC, no one has lost a penny of their insured deposits,” according to FDIC spokesman Brian Sullivan.
Silicon Valley Bank has collapsed. Here’s what we know. How much of my money is FDIC-protected?
Banks have to disclose to consumers whether they are FDIC-insured. If you are unsure whether your money is federally insured, use the FDIC’s tool, the Electronic Deposit Insurance Estimator. It helps consumers figure out on a per-bank basis how much of their money, if any, exceeds coverage limits.
Insurance works by ownership categories, and each is insured separately for up to $250,000. Here are the four most common categories: individual, joint, retirement and trust. Here’s an example of how the coverage would work for a married couple:
Under this scenario, total FDIC insurance would be $2 million.
Does FDIC protect my retirement savings?
If your retirement savings are in deposit products, the funds are FDIC-covered up to at least $250,000 per depositor, FDIC-insured bank and ownership category.
Non-deposit products not covered by the FDIC include stocks, bonds, mutual funds, annuities, insurance products and crypto assets.
Securities (or stocks), mutual funds and bonds are covered by the Securities Investor Protection Corporation. SIPC is a nonprofit corporation created under the Securities Investor Protection Act of 1970.
“Our job is to recover missing cash or securities if your brokerage firm has gone out of business,” SIPC points out on its site.
It is essential to understand that SIPC is not the securities-world equivalent of the FDIC, the nonprofit says.
SIPC points out it focuses on “restoring customer cash and securities left in the hands of bankrupt or otherwise financially troubled brokerage firms.”