WASHINGTON: In the United States and many other countries, the government guarantees a certain amount of each customer's deposits in the event of a bank failure, to protect both consumers and the broader financial system.AdvertisementWith the U.S. economy under threat of a recession, here's the state of play for banks in the United States:Currently, the Federal Deposit Insurance Corp guarantees deposits of up to US$250,000 per person, per bank.
That means, for example, that a married couple sharing a savings account would be guaranteed for up to US$500,000 in deposits. It also means that US$1 million in savings can be insured if the cash is spread across four different accounts at four different banks. Accounts the FDIC guarantees includes checking and savings accounts, as well as money market accounts and certificates of deposit.Of the US$14.
Generally speaking, regulators do not discourage banks from taking in uninsured deposits, so long as they manage that liquidity risk. But Gruenberg, a former chair of the FDIC, warned in October that uninsured deposits at larger regional banks could be at greater risk if that bank failed. That's because there are only a handful of banks big enough to buy a failing regional bank with more than US$50 billion in assets. It would then fall to the regulator to wind down the bank, exposing those account holders to losses.
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