Here’s All The Banks Are Craving Right Now—And What To Do If Your Money Is In There

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If history has taught us one thing about bank runs, it’s that when a financial institution collapses, panic tends to turn into panic. As concern spread in and beyond the Bay Area after last week’s collapse Silicon Valley BankRumors began to swirl that the famous tech financial institution would pull others down with it.

Then began Monday with several banks trading halted in their stocks because the stocks were falling fast. If you have money in a bank whose share price has seen a decline and trading has come to a halt, it important to know that Federal Reserve announces bank term funding program The bank failure went a long way toward stopping the domino-effect. Experts agree that while the stock market in for a volatile ride, these are not echoes of the horrific financial crisis of 2008. “Consumers need to separate falling stock prices and volatile trading from their actual deposits in the bank,” explained Mark Newman, financial advisor and CIO of Constrained Capital. “Their investment in the shares of these banks may be at risk. Deposits in banks up to $250,000 are not at risk as long as the bank is FDIC protected,” he said.

The magic number the FDIC insures for many accounts is $250,000, yet the Fed’s policy for depositors in SVBs has promised to cover uninsured deposits to prevent a wider financial collapse. “Lastly, if your money in SVB and it is $250,000 or less, you will be fine. It is insured. If you have more than that, they’ll protect you anyway,” Newman said.

,[The Federal Reserve’s policy] sends a powerful signal that depositors will be made whole in the current environment and also removes mark-to-market risk, which many were concerned about,” explained analysts at Morningstar in a research note on Monday morning. They said, “These steps should go a long way towards being a circuit breaker on the current panic in the financial system, although we are not sure there a way to undo the psychological change.”

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Which banks are in trouble?

First Republic Bank Shares plunged 75% on Monday after falling 35% last week, giving way to banks with collateral damage of SVB’s bank run last week. The company’s trades were halted on Monday morning due to a sharp fall in the stock price even after the bank received rescue liquidity from the Federal Reserve. JPMorgan Chase on Monday. The funding boosts the bank’s unused liquidity to $70 billion.

Regional banks have been particularly affected by the massacre. as of Monday afternoon, comerica The bank, a Dallas, Texas-based financial institution, saw its shares plunge as much as 30%. keycorpThe one that operates KeyBanc saw a similar steep decline, falling 28% as of Monday afternoon. first horizon Shares fell more than 20% and trading was halted. however it is important to note All Many of these banks are covered by FDIC insurance, depositors with less than $250,000 need not panic that their cash is at risk of disappearing, even if more banks fail.

In a statement released over the weekend, First Republic Bank founder Jim Burbert and CEO Mike Roeffler told depositors that the bank’s liquidity position is “very strong, and its capital is well above regulatory limits for well-capitalized banks.” “

Is my money safe in the bank?

While seeing all red next to your financial institution’s ticker is worrying enough, if you have money in these banks, you shouldn’t take their share price declines as a sign that they’re going to fail. . “From a depositor’s point of view, the decision by the government to stand behind all deposits also reduces the risk of further bank runs,” explained Brand McMillan, chief investment officer at the Commonwealth Financial Network. “With a more solid system in place and the government acting aggressively, as of now, there appears to be little systematic risk in place. We will not see another major financial crisis.”

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what can do What do you do if you have money in one of these banks? “In times like these, consumers should focus on the things they can control,” said Bankrate analyst Matthew Goldberg. “That means, making sure they’re at an FDIC-insured bank and that their balance is within FDIC limits and that they’re following the FDIC’s coverage rules — that their money is safe in the event of a bank failure.” ,” He added.

How much does the FDIC insure?

As for whether you should move your money, the best advice is to evaluate where you should store your savings as they have always been. “Sunday was the day you had to change your clocks and check your smoke detectors to protect yourself and your home — you’d be prepared for emergencies,” Goldberg said. “Well, people need to check their FDIC deposits to make sure that their money is in an FDIC-insured bank and that their balance is within FDIC limits and that they’re following FDIC rules.” Recent bank failures need to be used as a reminder to scrutinize insurance coverage,” he added.

Goldberg stressed that depositors should use the tools provided by the FDIC. bankfind suiteThe Electronic Deposit Insurance Calculator (EDIE), and the FDIC’s phone number (1-877-275-3342) are available to consumers, and you should use them to choose a financial institution to store your savings (regardless of impending bank collapse concerns). subject or not). You can search your bank by name in the FDIC’s BankFind Suite and use EDIE to confirm that you are within FDIC limits. You should also confirm that you are following FDIC insurance regulations.

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Newman explained that it’s always a good idea to have multiple accounts at different banks, and especially if you have more than $250,000 in cash. “The big money center banks like JPM and Citibank are going to be safer for larger deposits than the local bank down the street, which may not be as high as a ‘too big to fail’ bank,” he explained. . Keep in mind, however, that medium-sized and small banks are not the only ones affected by market warnings from health financial institutions. charles schwab fell 30% in the last five days, and Bank of America fell 14% in the last five days.

while depositors shouldn’t panic, shareholders can still hold their breath this week.

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