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Are Regional Banks Safe?

Are Regional Banks Safe?

CNBC reported “Treasury Secretary Yellen says not all uninsured deposits will be protected in future bank failures. (Furthermore) Treasury Secretary Janet Yellen told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system. Yellen has been at the center of an emergency program to refund billions of dollars in uninsured deposits held by clients of the failed Silicon Valley Bank and the shuttered Signature Bank. But with markets recovering somewhat, lawmakers were concerned these backstops could become a new norm for big banks, giving “too big to fail” banks an unfair advantage over community lenders.”

However, as we all know! If we keep less than $250,000 in one account! We have the backing of the FDIC! See for details: FDIC insurance

https://www-cnbc-com.cdn.ampproject.org/c/s/www.cnbc.com/amp/2023/03/16/svb-signature-bank-failures-yellen-says-us-banking-system-is-stable-and-deposits-remain-safe.html

As a result this could harm community banks and most regional banks. 

Before the failure of Silicon Valley Bank and Signature Bank, these two banks were NOT considered systemically important banks and did not take the Fed mandated stress tests required of systemically important banks. 

However, apparently now, the Treasury Secretary states that only systemically important banks plus now Silicon Valley Bank and Signature Bank will insure 100% of customer deposits. 

This will cause businesses and some retail customers with over $250,000 in deposits to move away from community banks and regional banks. 


The Federal Reserve’s stress test, officially known as the Comprehensive Capital Analysis and Review (CCAR), is an annual assessment of the largest banks in the United States to determine their ability to withstand a severe economic downturn. Mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The stress test involves the Federal Reserve evaluating a bank’s ability to maintain adequate capital levels and continue operations under hypothetical scenarios of severe economic stress. The scenarios include a severe recession, high unemployment, and significant market shocks, such as a large drop in housing prices or a sharp decline in the stock market.

Banks become required to submit their capital plans to the Federal Reserve. Which evaluates them based on their ability to maintain sufficient capital levels. In addition continue operations during the hypothetical scenarios. If a bank’s capital plan becomes found to be deficient. As a result, the Federal Reserve may require the bank to take corrective action. Such as raising additional capital or reducing dividend payouts to shareholders.

The CCAR helps to ensure that banks have enough capital to withstand economic downturns. And continue lending to support the economy. It also promotes transparency and accountability in the banking sector, helping to restore public trust in the financial system.

Lately all we can read about these days are banks failing everywhere! Are we in a financial crisis? Now some worry will Bank of America collapse? 

And many others worry whether or not will Wells Fargo fail? 

And of course, many others worry about whether the more local establishments can keep breathing. Will First Republic Bank fail? Or is my money Safe in Schwab?

What is a regional bank?

A regional bank is a financial institution that operates within a specific geographic region or market, typically within a certain state, group of states, or a defined area. Regional banks are generally smaller in size than national or international banks and serve a more localized customer base.

Regional banks offer a range of financial services to their customers. Including traditional banking services such as deposits, loans, and checking accounts, as well as investment services and wealth management services. They may also offer specialized services tailored to the needs of the local market.

Such as agricultural lending in rural areas or commercial real estate lending in urban areas!

One of the advantages of regional banks is that they are often more familiar with the local market and can better understand the unique needs of their customers. They may also be more flexible in their lending practices, as they are not subject to the same strict regulatory requirements as larger banks.

Lastly, regional banks play an important role. Moreover, in providing financial services to their local communities and contributing to the economic development of their regions. While they may not have the same national or international reach as larger banks. They offer personalized service and a deep understanding of the local market. And we love good service in America!

Are Regional Banks Safe?