How the FDIC Protects Depositors’ Cash | WSJ Your Money Briefing

[@soufianechalouh5069]

97% of SVB clients have more than 250k$. Apparently this video's only for the 3%.

[@vrclckd-zz3pv]

If you had used crypto instead you wouldn't need FDIC insurance 🤡

[@Smartskull0]

Stop having kids people! Spare them all the pain & suffering in this cruel world we live in. No one asks to be born, and we don’t have the moral right to inflict serious, preventable harms upon our children without their consent

[@Wyatt-vh8ti]

Agreed

[@charlestran2759]

killer

[@annam.3300]

This is a very sad outlook.. while I understand where you come from, there is more to life than suffering, there is love, family, true friendship, beautiful nature, religion and many other things that make living in the cruel world worthwhile

[@mauriciosolano9342]

Don't have this loser mindset Turn off your news and you'll be happier

[@Cayde-7-yo5vs]

thats why you have different currencies and also physical cash gold and silver in a safe or burried cause they wont pay you back quick enough to pay your bills.

[@watb8689]

it says it protects, but doesn't give you the timeline when you can get your money back. It can be after your death. So best to get your deposits out from the banking system and diversify

[@jharonc2582]

Lol you're funny 😁 😂

[@chinguunerdenebadrakh7022]

If it's inside the 250,000 USD limit, FDIC needs no asset selling to cover that, they just cover that with their own money on hand (collected from other banks' insurance premiums). There's absolutely no reason to rush into a bank when you hear a bad news (unless you're a stupid company owner who failed to spread risk and somehow have millions of future salary locked in there).

[@auro1986]

how? by closing your bank, stealing your money, and making you unemployed

[@privatedeletebuttongooglei5221]

It's $200,000.00/ bank ACCOUNT NOT BANK.

[@floridaman7]

Explain how people got non insured money insured.

[@RM-jb2bv]

Lol WSJ is a parody account

[@RM-jb2bv]

Madness. FDIC deposit insurance was 100K then 250K. Now it is UMLIMITED! She didn’t mention that little tid bit. We are now watching Soviet style state TV

[@stachowi]

it's called "too big to fail"... they scare the plebs that it's good for them.

[@blackaugust2035]

Exactly. Money must come from somewhere. And there is no free lunch.

[@ericedwards904]

Well it is a bit more complicated than that, basically the feds stepped in early to seize the bank's assets as they were undergoing a fire sale to prevent them from giving away their assets for pennies on the dollar. On paper, they had the assets to cover the deposits, but that they couldn't readily access them as quickly as the bank run required. For simplicity sake, I'm avoiding the conversation of bank stress testing and other regulations and which administration may or may not have affected this situation as that's a political question, not a financial question. IMO, this will end up being a good example of the FDIC's usefulness in protecting depositors at the end of this fiasco, regardless of the normal $250k insured limitation. Currently, this situation seems to have been exacerbated by several factors. There is obviously a good chunk of blame on the bank's execs over not sufficiently covering their assets hedging with interest swaps (which I hope will serve as a lesson to the sector in general, but I doubt it). Due to the rising interest rates, the inverse pressure is exerted on bond prices as now older bonds with lower interest rates would have to be sold below face value if not held until maturity. Where the FDIC and the Fed comes in handy is that their time horizon is effectively infinite, whereas a private bank has to be able to meet customer withdrawal demands. The feds can assume ownership of the bonds and hold them until maturity so as to not have to shed them at big losses to cover deposit withdrawals. Basically, it came down to a near-term liquidity issue instead of situation where asset levels fell below deposit levels. That is the particular reason why the FDIC and Fed are willing to cover all deposits at SVB as they can slide a lot of the assets onto their balance sheets and just hold them until maturity. The stopgap is them financing the withdrawals through the deposit insurance funds held by the FDIC, which are ultimately financed by the banks themselves. You could argue these costs are passed onto consumers, and most certainly some are, but a good chunk will just be assumed by all the banks' insurance contributions without much change as it is a competitive market. That's just how insurance works. Currently, it appears that is the situation: i.e., a bank had sufficient assets to cover all deposits, but not sufficient liquidity to accept all customer withdrawals. Blood is required for such a mistake, and the various investors and creditors of SVB will bear it (including a good chunk of "normal" or "regular" people who had not ever heard of SVB, but as a component of the S&P500 was undoubtedly a part of many retirement plans). But in this situation, depositors were able to be fully insured which is a stabilizing move on the part of the feds. I think there's an argument to have over whether all deposits were covered at any amount versus, say, 90% or 95% of deposits covered above the FDIC-insured limit thus taking a haircut off of depositors for risking money above insured limits, but the first to the trough usually get the most slop. With such steep interest rate increases, it may end up that traditionally "safe" investments in treasuries actually end up being "toxic" assets for these banks. That is something that hasn't really happened before, but also provides a potentially mitigating situation where the feds can seize their own bonds to stabilize and prevent bank runs. Ultimately, hindsight will be 20/20, but we don't have that benefit in the here and now.

[@phuocluong7974]

Well the FDIC just basically threw the 250k insurance limit out of the window. FDIC is now expected to cover any and all deposits to an unlimited amount. Best advice is to move your money to a FDIC bank that pays the most amount of interest for your money.

[@phuocluong7974]

@Liberal Culler move your money to the bank that offers you the highest interest rate on your savings account regardless of how risky the bank is. The FDIC is now expected to insure all your deposits (even if it’s in the billions).

[@OneCobalt]

Well it is a bit more complicated than that, basically the feds stepped in early to seize the bank's assets as they were undergoing a fire sale to prevent them from giving away their assets for pennies on the dollar. On paper, they had the assets to cover the deposits, but that they couldn't readily access them as quickly as the bank run required. For simplicity sake, I'm avoiding the conversation of bank stress testing and other regulations and which administration may or may not have affected this situation as that's a political question, not a financial question. IMO, this will end up being a good example of the FDIC's usefulness in protecting depositors at the end of this fiasco, regardless of the normal $250k insured limitation. Currently, this situation seems to have been exacerbated by several factors. There is obviously a good chunk of blame on the bank's execs over not sufficiently covering their assets hedging with interest swaps (which I hope will serve as a lesson to the sector in general, but I doubt it). Due to the rising interest rates, the inverse pressure is exerted on bond prices as now older bonds with lower interest rates would have to be sold below face value if not held until maturity. Where the FDIC and the Fed comes in handy is that their time horizon is effectively infinite, whereas a private bank has to be able to meet customer withdrawal demands. The feds can assume ownership of the bonds and hold them until maturity so as to not have to shed them at big losses to cover deposit withdrawals. Basically, it came down to a near-term liquidity issue instead of situation where asset levels fell below deposit levels. That is the particular reason why the FDIC and Fed are willing to cover all deposits at SVB as they can slide a lot of the assets onto their balance sheets and just hold them until maturity. The stopgap is them financing the withdrawals through the deposit insurance funds held by the FDIC, which are ultimately financed by the banks themselves. You could argue these costs are passed onto consumers, and most certainly some are, but a good chunk will just be assumed by all the banks' insurance contributions without much change as it is a competitive market. That's just how insurance works. Currently, it appears that is the situation: i.e., a bank had sufficient assets to cover all deposits, but not sufficient liquidity to accept all customer withdrawals. Blood is required for such a mistake, and the various investors and creditors of SVB will bear it (including a good chunk of "normal" or "regular" people who had not ever heard of SVB, but as a component of the S&P500 was undoubtedly a part of many retirement plans). But in this situation, depositors were able to be fully insured which is a stabilizing move on the part of the feds. I think there's an argument to have over whether all deposits were covered at any amount versus, say, 90% or 95% of deposits covered above the FDIC-insured limit thus taking a haircut off of depositors for risking money above insured limits, but the first to the trough usually get the most slop. With such steep interest rate increases, it may end up that traditionally "safe" investments in treasuries actually end up being "toxic" assets for these banks. That is something that hasn't really happened before, but also provides a potentially mitigating situation where the feds can seize their own bonds to stabilize and prevent bank runs. Ultimately, hindsight will be 20/20, but we don't have that benefit in the here and now.

[@thomasucc]

Why tap taxpayers

[@privatedeletebuttongooglei5221]

Wrong. Give the f

[@DannyBoy443]

All those damned software developers waiting in line for their money lol. Shame.

[@arjunchatterjee875]

"I believe the FDIC can help you get your deposits back..." Lol 🤣🤣🤣🤣🤣

[@fredrickriffel5845]

People don't seem to understand that the government can not help you because the government is bankrupt it's self. The Government debit is so large that is can not pay it's debit. The whole system will collapse.

[@JamesDubinskyJr]

If you have that much set up a trust and each beneficiary in the trust is covered for 250k collectively in the trust

[@ashbay]

We appreciate what you do Mike!!!

[@blackaugust2035]

There's no perfect system. The real question is what is the number of banks they could protect? Because we know there's no free lunch.

[@chinguunerdenebadrakh7022]

It's covered by insurance premiums by other banks.

[@stachowi]

Money printer go BRRRRRR... is how, and we all (the world) pays for it.

[@homewall744]

Imagine if people could just buy insurance for the amount of coverage they need. 99.99% of people only need insurance up $20K, and those who have more SHOULD PAY MORE to have more insurance. Imagine if we had free markets instead of government "insurance."

[@OHIO-EXPLORATION]

well that would suck.

[@yongchen4158]

Insurance money great investigation reporting