By Adriana Morga -
The Associated Press
Is the money from your savings safe in the banks after the recent turmoil, interventions and bankruptcies in the sector?
Federal authorities announced Monday the intervention of San Francisco-based First Republic Bank, making it the third to collapse in the last two months in the US Most of its assets are being acquired by JPMorgan Chase.
First Republic was a bank with many wealthy customers who rarely defaulted on their loans.
But the vast majority of his deposits exceeded the $250,000 limit guaranteed by the Federal Deposit Insurance Corporation (FDIC), meaning his clients were not protected in the event of bankruptcy.
That worried analysts and investors, eventually leading to what's known as a bank run.
Silicon Valley Bank and Signature Bank, which mainly served the tech industry, collapsed in March under similar circumstances.
Under the agreement reached on Monday, First Republic clients will be able to access all their money, the FCID agency said.
First Republic's branches will become JPMorgan's and First Republic's clients will become JPMorgan's clients.
Logos of the First Republic bank in Massachusetts.Steven Senne / AP
Is my money safe?
If your money is in an FDIC-insured bank and you have less than $250,000 per account, you will recover your savings in bankruptcy.
Almost all banks are insured by the FDIC.
You can look for the FDIC logo at teller windows or at the entrance of your bank branch.
Credit unions are insured by the National Credit Union Administration.
If you have more than $250,000 in a bank account, which is rare, the amount over that limit is considered uninsured and experts recommend moving the rest of your money to another financial institution, explains Caleb Silver, editor-in-chief from Investopedia, a financial media website.
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Should I be aware of the health of my bank?
If you're worried your bank might fail, there are a few things to keep in mind, according to Silver:
Keep an eye on the stock price.
Keep an eye on your bank's quarterly and annual reports.
Activate a Google Alert to be notified if your bank is in the news.
Be sure to pay close attention to your bank's behavior, Silver said.
“If they're trying to raise money through a stock offering or if they're trying to sell more shares, they may have balance sheet issues,” she said.
Companies sell shares or issue new ones for various reasons, so context is important.
First Republic Bank did so this year when the dangers it faced were well known, prompting an exodus of investors and depositors.
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Should I look for alternatives?
If you have more than $250,000 in your bank account, there are several things you could do.
Open a joint account.
You can protect up to $500,000 by opening an account with someone else, like your partner.
"A married couple can protect up to $1 million at the same bank if they each have an individual account and also have a joint account," said Greg McBride, an analyst at Bankrate.
Open other accounts at other banks.
Do not keep your money at home or elsewhere, it is better to have it in the bank, especially if the amount is insured.
Even people who have more money than is insured often get the full amount in bankruptcy.
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How long does it take for insurance to cover the money if a bank fails?
FCID usually returns money from bank deposits in a matter of days.
You can return it to another bank account at an institution that is also insured or write a check.
What about other investments?
Clients should look closely at the types of investments they have with their bank to learn how many of their assets are FDIC-insured.
The FDIC offers an Electronic Deposit Insurance Estimator, a tool to find out how much of your money is insured by a financial institution.
FDIC deposit insurance covers:
Current accounts;
accounts with negotiable withdrawal order (NOW);
savings accounts;
Money Market Deposit Accounts (MMDAs);
certificates of deposit (CDs);
cashier's checks;
Postal twists;
other official items issued by an insured bank.
FDIC deposit insurance does not cover:
Inversions in actions;
bond investments;
mutual funds;
life insurance policies;
annuities;
municipal values;
safe deposit boxes or their contents;
Treasury Department bills, bonds, or notes;
cryptoassets.
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What is the difference between a credit union and a bank?
Both credit unions and banks allow customers to open checking and savings accounts, among other products.
The key difference is that credit unions are not-for-profit institutions, which tends to translate into lower fees and lower balance requirements, whereas banks are for-profit.
Sometimes it also means it's easier for credit union customers to get loans, McBride said.
Typically, customers can join credit unions based on where they live or work.
Credit unions serve fewer customers, which also allows for a more personalized experience.
The tradeoff is that banks tend to have more staff, more physical branches, and newer technology.
When it comes to the safety of customer money, both banks and credit unions insure up to $250,000 per customer.
While banks are insured by the FDIC, credit unions are insured by the NCUA.
“Whether it's at a bank or a credit union, your money is safe.
There is no need to worry about security or access to your money,” McBride said.
