By now you have probably heard of the bank collapse of Silicon Valley Bank and the subsequent shut down of an additional California bank. Moody’s Investors Service has put six other US banks on review for potential downgrades. What do you need to do as a consumer?
For most consumers, the answer is don’t panic! None of our local banks are on this review list. If you have more than the FDIC insurance limit of $250,000 in your accounts at one institution, we recommend checking the credit rating of the bank used. Moody’s or BauerFinancial.com can let you see their assessment of institution. While that doesn’t guarantee that there won’t be an issue, it does help you make a reasonable assessment. There are banks in Florida as low as 3 stars on a 5-star scale and there are credit unions in the region with as low as 2 stars.
The FED (Federal Reserve System) and the Executive Branch are working the issue and working to keep Americans from facing any losses. The worst thing that could happen right now is what is called “a run” on banks and panic withdrawals. As we learned in 2008 there are some banks that are “too big to fail” and the government would have to bail those organization out rather than allowing collapse.
Our recommendations:
- Check your bank’s credit rating
- Review the amount of funds you have in each institution (not each account but all funds at that institution)
- Based on the above talk to your branch banker. They are there to help. They don’t want you to lose money either.
- Based on the above consider opening accounts at other 5 star or 4-star institutions
- Consider an insured cash sweep account
- Consider the costs of multiple accounts in time travelling from location to location and in bank fees
- Make an informed decision
