Is my money safe after bank collapses? Former Goldman Sachs CEO says sort of
March 19, 2023 at 14:24
Lloyd Blankfein, the former CEO of Goldman Sachs said the answer is not black and white on Fareed Zakaria GPS Sunday.
“The answer is kind of a yes with an ellipsis,” Blankfein said.
Instead, the central bank along with the Federal Deposit Insurance Corporation and the Treasury Department, have the power to guarantee deposits bank by bank if they find a systemic emergency.
“I think you’re able to rely on it,” Blankfein said.
“But there is a tail risk in that lack of absolute certainty.”Experts say in the wake of the bank collapses not to rush to withdraw money.
Each deposit account owner is insured up to $250,000 — so, for example, if you have a joint account with your spouse, your money will be insured up to $500,000.
“Do we want to make it the duty of depositors to do that kind of forensic accounting analysis on banks?” Blankfein said.
If it’s certified, we get on them.”The difference between 2008 and now is the difference in assets, Blankfein said.
The problem now is “people pulling out their deposits but the assets are, probably, in the long run good money, but they’ve suffered a loss of valuation in between,” Blankfein said.
If the current model of banking stays in place, most Americans will think their money is only safe in too-big-to-fail banks, Blankfein said.
Most big countries have a few big banks with branches,” Blankfein said, adding that the US has banks that specialize in certain industries, like SVB with tech.
“I wouldn’t necessarily want to experiment and withdraw that,” Blankfein said.