Some say the decision to guarantee deposits beyond the typical $250,000 limit was necessary to keep the financial system stable. Others argue this sets a bad precedent if other banks run into trouble.
that anyone has stashed away at a federally protected bank. Anything beyond that is not guaranteed to be protected should a financial institution go belly up.
Banks pay fees that go into an insurance fund. That fund is what helps pay customers back — up to $250,000 — in the event a bank fails. The FDIC is tapping into this same fund, not money from taxpayers, to pay SVB and Signature Bank customers back in full, including those uninsured portions. Regulators say they had to make an exception for Silicon Valley Bank and Signature Bank because there were signs panic was spreading and this was the only way to contain the possibility of a larger run on the banks.Analysts and former Fed officials are concerned that the FDIC's move will reset expectations and leave people under the impression that uninsured depositors — and those who manage those deposits — will ultimately be covered no matter what.
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