Bank Failures in Brief – 2023 (2024)

FAQs

Bank Failures in Brief – 2023? ›

In 2023, three regional banks failed due to runs on deposits. Silicon Valley Bank (SVB) and Signature Bank both failed in March 2023, and First Republic Bank collapsed in May 2023.

Economic Factors: Higher interest rates also often lead to slower economic growth, meaning people are spending less money. Inflation, recessions, and housing market crashes can all cause banks to shut down.

The Office of the Inspector General for the Federal Reserve System later attributed Silvergate's collapse to its rapid growth in crypto deposits, as well as weaknesses in corporate governance and risk management — problems that left the bank vulnerable to the deposit flight that was ultimately its downfall.

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.

Consulting firm Klaros Group analyzed about 4,000 U.S. banks and found 282 banks face the dual threat of commercial real estate loans and potential losses tied to higher interest rates. The majority of those banks are smaller lenders with less than $10 billion in assets.

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.

2023 almost went down in the history books as the year America lost faith in its banks. Over a few weeks in the spring of 2023, multiple high-profile regional banks suddenly collapsed: Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank.

2023 in Brief

There are 5 bank failures in 2023. See detailed descriptions below. For more bank failure information on a specific year, select a date from the drop down menu to the right or select a month within the graph.

The failures of Silicon Valley Bank (SVB) and Signature Bank in March 2023 were the third and fourth largest bank failures in the United States since 2001 in terms of total assets lost. The only larger bank failures were those of Washington Mutual Bank in 2008 and First Republic Bank in May 2023.

Is the US banking system in trouble 2023? ›

Four mid-sized U.S. banks failed around March 2023, the most prominent of which was Silicon Valley Bank (SVB), which became the second largest bank failure in U.S. history after the failure of Washington Mutual in 2008. It is convenient to think the problems at these banks were isolated.

Since the establishment of the Federal Deposit Insurance Corporation (FDIC) in 1934, there have been 3,516 bank failures in the United States. Washington Mutual's failure in 2008, during the financial crisis, is the largest in the country's history. It stemmed from the bank's risky mortgage lending practices.

As the Federal Reserve began raising interest rates in 2022 in response to the 2021–2023 inflation surge, bond prices declined, decreasing the market value of bank capital reserves, causing some banks to incur unrealized losses; to maintain liquidity, Silicon Valley Bank sold its bonds to realize steep losses.

If your bank fails, up to $250,000 of deposited money (per person, per account ownership type) is protected by the FDIC. When banks fail, the most common outcome is that another bank takes over the assets and your accounts are simply transferred over. If not, the FDIC will pay you out.

In summary

Two major California banks — Silicon Valley Bank and First Republic — have failed. While some banking industry leaders have said the immediate crisis is over, stock prices for other regional banks, including PacWest and Western Alliance, fell this week.

Bottom line. For the most part, if you keep your money at an institution that's FDIC-insured, your money is safe — at least up to $250,000 in accounts at the failing institution. You're guaranteed that $250,000, and if the bank is acquired, even amounts over the limit may be smoothly transferred to the new bank.