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Why Are Banks Failing 2023 and Who Knew?

The year 2023 has seen a number of bank failures, both in the United States and around the world. These failures have raised concerns about the stability of the global banking system.

What actually IS a bank failure?

A bank failure occurs when a bank is unable to meet its financial obligations. This can happen for a number of reasons, such as:

  • Lack of liquidity: A bank needs to have enough cash on hand to meet its daily obligations. If a bank does not have enough liquidity, it may be forced to close its doors.
  • High levels of debt: Banks borrow money from other banks and investors to fund their operations. If a bank has too much debt, it may be unable to repay it.
  • Loan defaults: When borrowers do not repay their loans, it can put a strain on a bank’s finances. If a bank has too many loan defaults, it may be forced to close its doors.

Why Is This Happening Now? 

There are several scholarly explanations as to why this has been happening and a lot of it depends on what side of the political aisle you sit on but the larger concern is that the Federal Reserve has been more than aware of the banks that have closed and are very aware of upcoming banks at risk.

Whatever the reason, the fact remains that the FDIC did not do enough to prevent the bank failures of 2023. This has raised concerns about the stability of the global banking system and the ability of the FDIC to protect the financial interests of consumers.

What Can I Do if MY BANK FAILS?

There are a few things you can do to protect yourself if your bank fails:

  • Keep your money in a FDIC-insured bank: The FDIC insures bank deposits up to $250,000. This means that if your bank fails, you will not lose more than $250,000 of your money.
  • Spread your money around: Don’t keep all of your money in one bank. Spread your money around different banks so that if one bank fails, you will not lose all of your money.
  • Keep track of your accounts: Make sure you know how much money you have in each of your accounts. This will help you to track your spending and make sure that you do not overdraw your accounts.
  • Have a backup plan: If your bank fails, you may need to have a backup plan for accessing your money. This could include having a credit card, a checking account at another bank, or a line of credit.