A serious and risky thing is going on in America right now and I wanted to just talk a little about it. Just in case you've got a friend or a relative that falls in this category it'll be cool to know the details of it and the gravity of the risk involved.
People are dumping billions into banks without even thinking about protection. JPMorgan Chase, Wells Fargo and Bank of America alone hold a serious huge amount of cash to the tune of $2.62 trillion and it's all uninsured deposits. So that's just money sitting completely unprotected if anything goes wrong. I'm surprised the way people trust banks this much, especially when you take into consideration what happened with Silicon Valley Bank.
What I learned about the FDIC while doing my little research on it was that FDIC only guarantees deposits up to $250,000. So that means anything over that is just gone if the bank should say collapses.
You see, big companies and wealthy individuals might be able to survive that kind of loss, but for the regular or average person, the retirees and small businesses, it would be a total financial disaster waiting to happen.
All this possible danger and yet the trend keeps going up. I also got a little facts from the research that uninsured deposits grew by over $126 billion, that's way more than the insured ones. Why is this the case? Well maybe people just assume the government will always step in. Maybe they just are not paying attention and with the way it looks, it's easy to overlook until you get caught by it.
Just look at what happened to Republic First Bank. No one declared a systemic risk, so uninsured depositors got stuck with partial payouts. Oh and there was no special treatment. That kinda disaster could easily happen again. The unfortunate thing is that instead of being cautious, people keep handing banks their cash like nothing could ever go wrong.
What's the banks stand on this? The banks, of course, are loving it. They are making billions in profits while sitting on a pile of money that is technically at risk but still keeps flowing in. You might ask, shouldn't the Banks make their customers aware of such a risk? Why should they, when they could just take the money.
They're just sitting on their asses with strong earnings, happy executives and a system that will probably bail them out again if things go south. While that's happening, the average depositor is basically gambling with their deposits without even realizing it.