April 2, 2023

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March 13, 2023 The latest in the Silicon Valley bank meltdown

6:32 p.m. ET, March 13, 2023

No, you should not withdraw your money from your bank. Below are answers to other key questions

From Ramisha Maarouf on CNN

after The stunning collapse of Silicon Valley Banking It has become the second largest bank failure in US history, and many customers are wondering if their money is safe.

Here are answers to some frequently asked questions:

Should I worry about the cash stored in my bank?

In short, if you have less than $250,000 in your account, you definitely don’t have to worry. That’s because the US government insures the first $250,000 in eligible accounts.

Many SVB clients have deposited over $250,000, and now that they can’t get their money back, some companies are struggling to make the payroll.

Should I withdraw my money from my bank?

No, it doesn’t make sense to withdraw all of your money from a bank, said Jay Hatfield, CEO at Infrastructure Capital Advisors and portfolio manager at the InfraCap Equity Income ETF. 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 wiser to have insured deposits versus uninsured deposits,” said Hatfield.

Your money is likely not going anywhere. Everyday consumers are unlikely to be affected. But going broke is a good reminder to be aware of where your money is, and not put it all in one place.

Bankrate analyst Matthew Goldberg said: “The first bank failure since 2020 is a wake-up call for people to always make sure their money is in an FDIC-insured bank, within FDIC limits and following FDIC rules.” (FDIC).

How does this compare to 2008?

The banking sector should, in theory, be more stable due to the regulatory reforms put in place after the crisis in 2008.

Government actions this weekend are also trying to prevent the next SVB, further stabilizing the sector after a chaotic week. Rising interest rates have crashed the value of SVB’s cheap Treasuries and other banks invested in years past – the bank’s run last week was due to SVB selling these securities at a huge loss to help drive customer deposit withdrawals after people started withdrawing their money from the market. Bank.

The Fed also said it would provide bank loans for up to a year against US Treasury securities and mortgage-backed securities that have lost value. The Fed will honor the original value of the debt to the banks that take out the loans.

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