When you deposit money at a bank, you might remember seeing a note or icon that the money is FDIC insured. That means that the Federal Deposit Insurance Corporation protects the money you deposited in the unlikely event that the bank fails. But — and this is key — the insurance only covers deposits up to $250,000 per depositor, per insured bank, for each account ownership category. (https://www.fdic.gov/resources/deposit-insurance/faq/)

Silicon Valley Bank — SVB for short — serves a number of technology and venture capital firms. The vast majority of its deposits were uninsured. That means many firms who had more than $250,000 deposited may lose money after regulators shut the bank Friday. A number of these accounts belong to companies funding operations and payroll, so $250,000 may not last long. Folks are concerned about contagion if companies can't pay employees or vendors.

The big question going forward is: Will SVB get bailed out? A number of high-profile investors are making a case for it. What that bailout might look like is unclear; it's possible the government will protect all of the bank's deposits.

Keep in mind: Saving or recouping client deposits is different than bailing out the bank's shareholders.

This is an important story. Given how connected our economy is, the ripple effects could be significant. However, I want to emphasize one point:

SVB's collapse DOES NOT mean YOUR money is at risk. Bank deposits up to $250,000 are FDIC insured and protected.

If you have questions beyond what I've covered here… Let me know; I'll do my best to keep you informed.

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Paul

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