CWG Insight Series: Banking Issues Follow Up

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On Sunday we released an update on the Silicon Valley Bank failure indicating what you should know and what we are doing as your Personal CFO team. That update can be found HERE. A lot has occurred in the last 24 hours, and we wanted to provide you with an update and additional details. 

Government response to bank failures 

Sunday night the Federal Reserve, Treasury Department, and FDIC released a statement backing depositors of Silicon Valley Bank, and all other banks through the creation of a new “Bank Term Funding Program”. During a call with reporters on Sunday, a senior Treasury official said, "no other depositors need to worry about the future of their banks," according to CBS News. 

Essentially, banks can access funds from the government to meet depositor cash requests. This is not a bail out but a loan so there will be no direct cost to the taxpayer for this government assistance. 

What is Crown doing for our clients? 

First, we evaluated which of our clients have bank accounts with more than $250,000 in balance at any one bank, in any one ownership structure. In the event you meet this criterion, we may be reaching out directly to assist you in creating an action plan to make changes to your cash holding structure.  

Secondly, we evaluated what banks, if any, we should be concerned about. The two main factors we are evaluating are balance sheet quality and withdrawal trends over the last four quarters. In the event you have an account with a bank we feel is unsafe, we will be reaching out directly to assist you in creating an action plan to quickly rectify the situation.  

While there is no immediate concern if you fall into either of the above, a quick, educated, and thoughtful action plan will set your mind at ease and eliminate any potential of risk moving forward. 

Do you need to do anything? 

No action is needed at this time. Crown will reach out to any clients that may have heightened risks currently or in the future.  

How does FDIC insurance work? 

The FDIC protects the money depositors place in insured banks in the unlikely event of an insured-bank failure. Each depositor is insured to at least $250,000 per insured bank. 

It’s important to note that it’s $250,000 per deposit account, per bank, and per ownership category (individual, joint, business, etc.).  

What is covered? 

Checking accounts, savings accounts, money market accounts, certificate of deposits (CD’s), cashier’s checks, and money orders. 

What is NOT covered? 

Stock and bond investments, mutual funds, life insurance policies, annuities, municipal securities, safe deposit boxes and their contents, US Treasury bills, and crypto assets.