With the recent developments with Silicon Valley Bank and First Republic, people have been asking us this question: What happens if my bank is seized?
If your bank gets seized by the Federal Deposit Insurance Corporation (FDIC), it means that the bank has failed and can no longer operate. The FDIC is a federal agency that insures deposits in banks and thrift institutions, and its primary role is to protect depositors in the event of bank failures.
If the FDIC seizes your bank, your deposits are typically insured up to $250,000 per depositor, per account type, at each FDIC-insured bank. This means you should receive your insured deposits back, up to the insurance limit, even if the bank cannot return your deposits to you.
In most cases, the FDIC will arrange for another bank to take over the failed bank’s accounts and continue providing banking services to its customers. This means you may be able to continue accessing your accounts and conducting transactions as usual, but with the new bank.
If the FDIC cannot find another bank to take over the accounts, it will send depositors a check for their insured deposits. It’s important to note that this process can take some time, and you may need immediate access to your funds while the FDIC is resolving the bank’s failure.
Overall, while having your bank seized by the FDIC can be an unsettling experience, the FDIC’s insurance program is designed to protect depositors and help ensure that they receive their insured deposits back in case of a bank failure.
