The banking industry has seen a bit of upheaval over the past week, and we’ve seen some market volatility as a result.  I’m sure you’ve seen the images of the people lining up in front of their SVB-owned local bank, hoping to get their savings back.

There’s been a lot of talk about the government’s role after two banks failed over the course of 3 days.  Should the government bail out the banks?  What about the people and businesses that used the banks? Is there any recourse?

This is where the FDIC comes in.  It was established in 1933 as part of the Banking Act of 1933, also known as the Glass-Steagall Act.   The country saw the collapse of 9,000 banks over the course of four years, with 4,000 of those banks closing in the first quarter of 1933.  This resulted in a loss of $1.3 billion to depositors.  1

Today, the FDIC’s mandate has expanded to include regular risk assessments of all institutions insured by the FDIC, and the limit has been permanently increased to $250,000 per account.

With the failure of Silicon Valley Bank, the FDIC made this statement.  This means that all depositors of the bank will be able to have access to their money.  However, creditors and shareholders will not be protected.


What does the FDIC Cover?

The FDIC covers deposits into certain accounts, up to $250,000 per account, per depositor, for each type of account.

  • Checking accounts
  • Negotiable Order of Withdrawal (NOW) accounts
  • Savings accounts
  • Money market deposit accounts (MMDA)
  • Time deposits such as certificates of deposit (CDs)
  • Cashier’s checks, money orders, and other official items issued by a bank

What the FDIC Does Not Cover

  • Stock investments
  • Bond investments
  • Mutual funds
  • Crypto Assets
  • Life insurance policies
  • Annuities
  • Municipal securities
  • Safe deposit boxes or their contents
  • S. Treasury bills, bonds or notes*

*These investments are backed by the full faith and credit of the U.S. government.

For more detailed information on FDIC coverage, you can also visit the FDIC’s site: Your Insured Deposits

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Visit for more information. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and Napier Financial are separate entities from LPL Financial.

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