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These are the largest bank failures

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  • First Republic Bank, Silicon Valley Bank, and Signature Bank have shut down in 2023.
  • Since the year 2000, there have been 562 bank failures.
  • There are still fewer failed banks in recent economic downturns than during the Great Depression, though.

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So far in 2023, three banks have shut down. You might be wondering whether bank failures are common or worrying about more banks closing.

To help you understand the news on the most recent bank failures, we'll explain why these failures occurred. We'll also cover how banking regulation has changed to better protect consumers.

What is a failed bank? 

When a bank can't manage obligations, a federal or state agency will shut it down. The Federal Deposit Insurance Corporation, or FDIC, will become the "receiver" of the failed bank. The FDIC will make sure that depositors get their insured deposits. 

The FDIC insures up to $250,000 per depositor, per ownership category. (Similarly, the National Credit Union Administration, or NCUA, insures up to $250,000 per depositor, per ownership category for credit unions.) Any money beyond the $250,000 limit is considered uninsured. This means you might not get all your money if a bank shuts down.

2023 bank failures

First Republic Bank, Silicon Valley Bank, and Signature Bank have all shut down in 2023. Here's a brief overview of why these banks failed.

Why did Silicon Valley Bank collapse?

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Silicon Valley Bank invested a large portion of its funds in Treasury and mortgage bonds, and the bank's portfolio lost a lot of value when interest rates rose.

"There was news about that, and some investors — some big depositors — told everybody, 'You need to pull your money out because the bank is failing,'" says Tom Wheelwright, CPA and CEO of WealthAbility

A lot of  Silicon Valley Bank depositors were founders of tech startups and companies. Too many people tried to withdraw their money at the same time, and the bank became insolvent — its liabilities exceeded its assets. As a result, the California Department of Financial Protection and Innovation shut down Silicon Valley Bank.

Why did Signature Bank collapse? 

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Signature Bank also had a large percentage of uninsured deposits. Many depositors of Signature Bank began taking out money from their bank accounts. Regulators decided to shut the bank down two days after closing Silicon Valley Bank.

Why did First Republic Bank collapse? 

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First Republic Bank had many wealthy customers. A majority of customers had more than the FDIC-insured limit of $250,000. Similar to the SVB and Signature Bank failures, a lot depositors took out their money in early 2023. Eventually, First Republic became insolvent, and the California Department of Financial Protection and Innovation shut down the institution.

List of failed banks over the last 5 years

Over the last five years, there have only been 10 bank failures. The following chart provides information on the day these banks were closed, the state where each bank was located, and the institution that acquired the assets of the failed bank. This chart uses information from the FDIC, where you can also find more information about failed banks.

Failed banks since the year 2000

There have been 563 bank failures since 2000. The majority of bank failures were linked to the 2008 financial crisis.

"The banks had invested in very risky types of investments," said Wheelwright regarding the bank failures that occurred. "When those derivatives showed that they didn't have value, that's when the banks failed."

It's important to note that fewer bank failures have occurred in recent economic downturns than during the Great Depression. For example, in 1933 alone, over 4,000 banks shut down. To protect depositors, the Federal Deposit Insurance Corporation was created in 1933. The FDIC oversees banks and protects depositors when a bank fails.

What to do if you're worried about banks shutting down

If you're worried about banks failing, it's important to remember that money deposited into bank accounts will be safe as long as your financial institution is federally insured. Up to $250,000 is secure in individual bank accounts.

Michael Collins, a business professor at Endicott College, says that from a deposit perspective, the government is going to step in and make sure that people have access to their insured deposits so they won't lose any of their money.

Wheelwright also recommends finding out where your bank is investing money. Financial institutions with more diversified portfolios tend to have more financial stability and are less likely to fail. Some banks may include information about their investments on their websites. You could also learn about the different types of loans available at a financial institution, or whether it's received designation as a community development financial institution or eco-friendly bank.

Sophia Acevedo is a banking reporter at Business Insider. Sophia joined Insider in July 2021. She writes bank reviews, banking guides, and banking and savings articles for Personal Finance Insider. She is also a Certified Educator in Personal Finance (CEPF).Sophia is an alumna of California State University Fullerton where she studied journalism and minored in political science. She is based in Southern California.You can reach out to her on Twitter at @sophieacvdo or email [email protected].Read more about how Personal Finance Insider chooses, rates, and covers financial products and services >>Below are links to some of her most popular stories:

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