When your bank fails

1 Aug 2024 · 1 min

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In this video, Jerry Taylor explains what happens when a U.S. bank fails, using the 2023 wave of large bank failures as a recent example. He outlines the role of the Federal Deposit Insurance Corporation (FDIC), a regulator created in the 1930s after the Great Depression, which protects depositors by insuring eligible accounts up to $250,000 per depositor. Taylor details which account types are covered—checking, savings, money‑market, and certificates of deposit—and clarifies that joint accounts receive $250,000 coverage for each co‑owner. He then describes the FDIC’s typical response when a bank collapses: an official announcement, the search for another FDIC‑insured bank to purchase the failed institution’s assets, and the mechanisms that ensure depositors retain access to their insured funds. The overall message reassures consumers that regulatory safeguards are in place to minimize disruption when a bank fails.

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If your bank fails, this is what will happen. In 2023, we had some of the largest bank failures in United States history. And when a bank fails, we have regulatory agencies that will step in to protect consumers as much as possible. And this is what will happen. You've probably heard of the Federal Deposit Insurance Corporation. That was a regulatory agency that was started in the '30s after the Great Depression. That agency is known as the FDIC, and they insure depositors at banks up to $250,000. So checking accounts, savings accounts, money market accounts, certificates of deposit, these are the types of accounts that the FDIC insures. And it's $250,000 per depositor. So if it is a joint account, it's $250,000 per person on that account. When a bank fails, the FDIC will generally make an announcement about it, and they will look to sell the assets of the failed bank to another FDIC-insured bank. If there is not a bank that wants to