FDIC Protects All Depositors from Losses at Two Shuttered Banks

On March 12, 2023, the U.S. Department of Treasury, Federal Reserve, and FDIC assured depositors of two recently failed large regional banks that they would have continued access to the entirety of their deposits (including those deposits in excess of the FDIC’s $250,000 insured limit).  This comes after the California Department of Financial Protection and Innovation and the New York Department of Financial Services took possession of the two large regional banks following bank runs from worried customers.  The FDIC is serving as receiver for both banks.

Although the depositors will receive protection for the entirety of their deposits, the banks’ shareholders and some of their unsecured creditors will not be afforded the same protections.  Losses to the Deposit Insurance Fund from the extraordinary protection offered to these banks’ depositors will be recovered by a special assessment on banks.  Moreover, the Federal Reserve stated that it will make available additional funding to eligible banks to help them meet the needs of all their depositors.