Banking Crisis 2023 (2024)

FAQs

Are banks in trouble in 2023? ›

The 2023 United States banking crisis was a series of bank failures and bankruptcies that took place in early 2023, with the United States federal government ultimately intervening in several ways.

Moving your money to other financial institutions and having up to $250,000 in each account will ensure that your money is insured by the FDIC, McBride said. Do not withdraw cash.

The news: Last Friday, Pennsylvania financial regulators seized and shut down Philadelphia-based Republic First Bank in the first FDIC-insured bank failure of 2024.

The crisis seems to have abated with the government's aggressive response, and the broader banking system remains well capitalized. But the system remains under significant pressure as interest rates continue to rise and the economy's growth slows.

The banks of greatest concern are Flagstar Bank and Zion Bancorporation, according to the screener. Flagstar Bank reported $113 billion in assets with a total CRE of $51 billion. The bank, however, only had $9.3 billion in total equity, making its total CRE exposure 553% of its total equity.

First and foremost, it is essential to choose a bank that is insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC insures deposits up to $250,000 per depositor, per insured bank. This means that if your bank fails, you can still get your money back up to the insured amount.

Your money is safe in a bank, even during an economic decline like a recession. Up to $250,000 per depositor, per account ownership category, is protected by the FDIC or NCUA at a federally insured financial institution. What happens if my bank fails during a recession?

The US is moving toward cashless payments, with a substantial increase in the use of mobile wallet apps and contactless cards. A report from the Federal Reserve Bank of San Francisco found that payments made using cash accounted for just 18% of all US payments in 2022.

1. Federal Bonds. The U.S. Treasury and Federal Reserve (Fed) would be more than happy to take your funds and issue you securities in return. A U.S. government bond still qualifies in most textbooks as a risk-free security.

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.

Why are banks failing? ›

As rates go up, the value of long-maturity securities decreases, inflicting huge losses on many banks. Considering rising interest rates, upcoming data should show that losses have ballooned to more than $600 billion.

That's because the nation's largest banks are shutting down branch locations in droves. Last year, 2,454 bank branches closed, according to S&P Global Market Intelligence. As of December, the number of bank branches in the U.S. had shrunk by more than one-fifth compared to 2009. More have closed since then, too.

FDIC Insurance

Most deposits in banks are insured dollar-for-dollar by the Federal Deposit Insurance Corp. This insurance covers your principal and any interest you're owed through the date of your bank's default up to $250,000 in combined total balances.

Read the CFPB's order. Read the CFPB's 2022 action against U.S. Bank. In its previous action against the bank, the CFPB fined U.S. Bank $37.5 million for illegally accessing its customers' credit reports and opening checking and savings accounts, credit cards, and lines of credit without customers' permission.

Accounting for openings and closings, a net 1,409 bank branches closed in 2023, compared with 1,854 in 2022 and 2,928 — the highest on record — in 2021, according to S&P Global Market Intelligence data. In 2023, 2,454 branches closed and 1,045 opened.

The final rule adopts a new metrics–based approach to evaluating bank retail lending and community development financing, using benchmarks based on peer and demographic data. The agencies will develop data tools using reported loan data that give banks and the public additional insight into performance standards.

The banking industry is in a much healthier place now than it was after the financial crisis of 2008. Total global assets climbed to $154,211 in 2022, up 3.79 percent YoY from 148,583 in 2021, according to The Banker's Top 1000 World Banks Ranking for 2022.