‘Don’t panic,’ advise bank experts

Keep calm and bank on.

That’s the advice that banking industry experts are giving to depositors who have been rattled by the recent bank closure of Silicon Valley Bank and the near collapse of Signature Bank and Credit Suisse.

But most depositors can rest assured that their money is safe with the Federal Deposit Insurance Corp. (FDIC) guaranteeing accounts of $250,000 and under.

Small community banks found in most neighborhoods are on steady footing, according to a release from Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey.

“ICBA reminds consumers that they can bank with confidence at their local community bank knowing their money is safe because it is insured by the FDIC,” she said. “FDIC deposit insurance covers each depositor's account, dollar-for-dollar, up to the insurance limit. Since the FDIC was founded 90 years ago, no one has ever lost a penny of FDIC-insured funds. “Further, FDIC data show the community banking industry remains safe, sound, and secure.

According to the FDIC’s latest Quarterly Banking Profile, community banks outperformed the rest of the banking industry during the fourth quarter and had broad-based loan growth, strong capital ratios, and favorable asset quality.”

Widespread panic can cause a self-fulfilling prophecy if depositors rush to take their cash out of a bank in trouble, but most have the reserves needed.

Today, commercial banks “have a far bigger capital cushion to withstand losses today, with cash comprising 14% of their assets, compared with 3% at the start of the financial crisis,” Jeffrey Roach, chief economist of LPL Financial, told USA Today

Larger national and regional banks often have investors and depositors with accounts over the $250,000 threshold, but the majority are below that balance and are protected. In a statement on its website, Wells Fargo bank explains, “In addition to the vaults, security guards, and fraud protection measures that banks use to keep your money safe, a higher level of security is protecting your funds – the FDIC…The FDIC maintains stability and public confidence in the U.S. financial system by protecting depositor of insured banks against the loss of their deposits in the event that the financial institution fails. The FDIC's supervision program promotes the safety and soundness of FDIC-supervised financial institutions, protects consumers' rights, and promotes community investment initiatives.”

According to the FDIC, "no depositor has lost one penny of FDIC-insured deposits" since its inception when it was created by the federal Banking Act of 1933.

Credit unions also are still a safe place to bank. In a statement, National Credit Union Administration Chairman Todd M. Harper reported, “the credit union system remains well-capitalized and on a solid footing. The National Credit Union Administration continues to monitor credit union performance through both the examination process and offsite monitoring, and it will continue to do so into the future. Credit unions have access to a wide range of liquidity sources. The NCUA, along with its Central Liquidity Facility, is able to provide a back-up source of liquidity to member credit unions as needed…The agency continues to coordinate with the other federal financial institution regulators to ensure the continued resiliency of the American financial services system.”

But what if you do your banking online instead of a brick-and-mortar institution? According to bankrate.com, “Online banks are safe to use as long as they’re federally insured, you stay within coverage limits and you take some simple steps to protect your information. With the right security measures, online banks can open up the opportunity for you to earn some of the highest savings rates on the market and often with low or no fees.”

To learn more about the state of the banking industry, check out these sources online.

Independent Community Bankers of America


National Credit Union Administration


Compiled by Boots Gifford, boots@thedanielislandnews.com

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