What Causes Banks to Fail?

Today on Financial Clarity for Doctors, Corey and Rachelle unpack some of the details behind the fall of Silicon Valley Bank (SVB).  Is the whole banking industry in trouble, and should we be worried?

Banking is reliant on trust:

• Depositors need to trust that the money they place in the bank will be there when they need it or the whole system collapses.
• If banks give customers reasons to be afraid, then people may withdraw their money.
  • Lots of SVB depositors tried to withdraw money within a short period of time, and the bank could not easily liquidate investments (some of which had lost money) and distribute all those bank account balances at the same time.
  • Federal government stepped in to make the depositors whole again.
• Federal protections in place to help facilitate trust in the banking industry.
  • Look for FDIC insurance coverage at your bank, which protects most balances up to $250,000.
  • In the case of SVB, the government helped make depositors whole above the FDIC limits.

 

Simple steps like double-checking FDIC limits and coverage at your bank, can help ensure that your deposits are safe.

For more financial planning tips from Corey and Rachelle, find them on social media!
LinkedIn: @CoreyJanoff and @RachelleVanderzanden; Instagram: @CoreyJanoff and @VanderzandenRachelle; and Twitter: @CoreyJanoffCFP and @RachelleFinance 

Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Finity Group, LLC and Cambridge are not affiliated. Cambridge does not offer tax or legal advice.