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What happenedEleven top banks today agreed to deposit $30 billion into First Republic Bank. First Republic has been under growing pressure since the collapse of Silicon Valley Bank last week. Both Fitch Ratings and S&P Global Ratings downgraded the bank on the back of reports that First Republic depositors were moving their money elsewhere, fueling speculation it could be the next to fall.Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist and U.S. Bank all agreed to make unsecured deposits of between $1 billion and $5 billion in an effort to restore confidence. “The banking system has strong credit, plenty of liquidity, strong capital and strong profitability,” Citi said in a statement. “Recent events did nothing to change this.”
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So whatThe move goes some way to reassure consumers worried their savings or even paychecks could get tied up in the unfolding crisis. The hope is that it will prevent further contagion, which Dick Bove, an analyst from Odeon Capital said it might. “The Federal Reserve does not have the money to stop a bank run, but the banking system itself does have that money, and they’re putting it in place to stop this once and for all,” he told Bloomberg.Now whatIf your bank account is covered by FDIC insurance and you have less than $250,000 per person, per bank, your funds will be protected in the event of bank failure. The issue with SVB and, to a lesser extent, First Republic, is that they have a relatively high percentage of uninsured deposits — money that wouldn’t normally be covered by the FDIC cap.First Republic stressed that it has a focus on safety and a diversified deposit base. This sets it apart from SVB which had a heavy emphasis on start-ups and tech companies. Today the bank released a statement thanking the bigger institutions for their support and confirming that, “Daily deposit outflows have slowed considerably.”Nonetheless, we are not out of the woods yet. If you have more than $250,000 in the bank, now might be a good time to think about moving some to a different institution or looking for other ways to cover any excess.Regardless of how much money you have, here are some factors to consider when looking for the safest bank to park your cash in:FDIC insurance: Almost every U.S. bank has this protection, but it is worth double checking. Call the bank or use the FDIC’s BankFind tool to be sure.Bank size and credit rating: Bigger banks with strong credit ratings are much less likely to fail as they have more liquidity and will be better able to swallow any losses.Percentage of uninsured deposits: Search online to find out if your bank has a large proportion of deposits that aren’t covered by the FDIC. This could be an indication that it’s more at risk of failure.These savings accounts are FDIC insured and could earn you 14x your bankMany people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Goldman Sachs Group, JPMorgan Chase, and PNC Financial Services. The Motley Fool has a disclosure policy.
Image source: Getty Images
What happened
Eleven top banks today agreed to deposit $30 billion into First Republic Bank. First Republic has been under growing pressure since the collapse of Silicon Valley Bank last week. Both Fitch Ratings and S&P Global Ratings downgraded the bank on the back of reports that First Republic depositors were moving their money elsewhere, fueling speculation it could be the next to fall.
Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist and U.S. Bank all agreed to make unsecured deposits of between $1 billion and $5 billion in an effort to restore confidence. “The banking system has strong credit, plenty of liquidity, strong capital and strong profitability,” Citi said in a statement. “Recent events did nothing to change this.”
Save: This credit card has one of the longest 0% intro APR periods around
More: Save while you pay off debt with one of these top-rated balance transfer credit cards
So what
The move goes some way to reassure consumers worried their savings or even paychecks could get tied up in the unfolding crisis. The hope is that it will prevent further contagion, which Dick Bove, an analyst from Odeon Capital said it might. “The Federal Reserve does not have the money to stop a bank run, but the banking system itself does have that money, and they’re putting it in place to stop this once and for all,” he told Bloomberg.
Now what
If your bank account is covered by FDIC insurance and you have less than $250,000 per person, per bank, your funds will be protected in the event of bank failure. The issue with SVB and, to a lesser extent, First Republic, is that they have a relatively high percentage of uninsured deposits — money that wouldn’t normally be covered by the FDIC cap.
First Republic stressed that it has a focus on safety and a diversified deposit base. This sets it apart from SVB which had a heavy emphasis on start-ups and tech companies. Today the bank released a statement thanking the bigger institutions for their support and confirming that, “Daily deposit outflows have slowed considerably.”
Nonetheless, we are not out of the woods yet. If you have more than $250,000 in the bank, now might be a good time to think about moving some to a different institution or looking for other ways to cover any excess.
Regardless of how much money you have, here are some factors to consider when looking for the safest bank to park your cash in:
FDIC insurance: Almost every U.S. bank has this protection, but it is worth double checking. Call the bank or use the FDIC’s BankFind tool to be sure.Bank size and credit rating: Bigger banks with strong credit ratings are much less likely to fail as they have more liquidity and will be better able to swallow any losses.Percentage of uninsured deposits: Search online to find out if your bank has a large proportion of deposits that aren’t covered by the FDIC. This could be an indication that it’s more at risk of failure.
These savings accounts are FDIC insured and could earn you 14x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Goldman Sachs Group, JPMorgan Chase, and PNC Financial Services. The Motley Fool has a disclosure policy.
