AARP Eye Center
Wall Street and Main Street got shocking news on Friday, March 10, when the Federal Deposit Insurance Corp. (FDIC) announced that Silicon Valley Bank had failed. Another shock came two days later when the FDIC announced that Signature Bank had collapsed. Silicon Valley Bank was the second-largest bank failure in history; Signature was the third-largest.
AARP Membership — $12 for your first year when you sign up for Automatic Renewal
Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP The Magazine.
The twin collapses slammed shut a quiet period in banking: Silicon Valley’s was the first bank failure since October 2020. Bank failures rarely occur without affecting other banks and businesses; bank stocks were down sharply when trading reopened after the weekend as investors and depositors grew nervous about the safety and soundness of other banks.
The FDIC took the extraordinary step of guaranteeing all deposits in both banks; most of those deposits were not covered under FDIC rules. Typically, depositors must stand in line with the failed bank’s other creditors to recover the uninsured portion of their accounts.
There’s no guarantee that the FDIC will be as generous in the future. And that’s why you should know the limits of deposit insurance — and take steps if any of your accounts is over the limit.
FDIC insurance covers bank checking accounts, savings accounts, money market deposit accounts and certificates of deposit as well as cashier’s checks and money orders. Deposit insurance doesn’t cover stocks, bonds, mutual funds or other investments purchased through a bank, nor does it cover the contents of safe-deposit boxes. Investors in a bank’s stock are not covered, either.