Somehow, the same issue plaguing last year’s failed banks is back in focus at the latest bank in crisis: massive loads of uninsured deposits.
To be sure, the risk isn’t anywhere close to that of the banks that failed last year: About 94% of domestic deposits at Silicon Valley Bank were uninsured and 90% of Signature Bank’s deposits were uninsured, according to the Federal Reserve.
The money is guaranteed by the Federal Deposit Insurance Corporation, which is funded by fees paid by major US banks.
About 40% of all money in the US, or $8 trillion, sitting in banks is uninsured, said Lawrence White, a professor at New York University’s Stern School of Business.
“It also risks violating the FDIC’s statutory requirement to resolve failed banks and protect insured depositors in the least expensive way possible.”Sometimes, he said, rescuing those uninsured depositors may be the cheapest way to protect insured depositors at banks.
Persons:
NYCB, Brian Snyder, James Lee, David Wessel, Lawrence White, University’s, Banks, Ting Shen, ”, Kori Suzuki, JPMorgan Chase, Michael Ohlrogge, Maxine Waters, Elizabeth Warren, “
Organizations:
New, New York CNN, New York Community Bancorp, Investors, Silicon Valley Bank, Federal Reserve, Bank, Xinhua, Federal Deposit Insurance Corporation, FDIC, Reuters, Brookings Institution, International Monetary Fund, University’s Stern School of Business, US Treasury, Bloomberg, Getty, Securities and Exchange Commission, Valley Bank, Signature Bank, JPMorgan, Bank of America, Citigroup, First Republic Bank, New York University’s School of Law, Financial Services, Banking Committee, CBS, Bank Coalition of America
Locations:
New York, Silicon, United States, New, ”, Washington , DC, San Francisco , California, Sen