Don’t Stress, Banks Have Aced The Test [Economic Study]

Your Money Is Safe In The Bank

With all the uncertainty today, it can be nice to have peace of mind knowing that your money is insured in the bank. No matter what you’ve been told, under your mattress isn’t the safest place.

So You're Skeptical

The results of the Fed’s 2021 annual bank stress test may put your mind at ease. The test, conducted on 23 of the nation’s largest banks, helps ensure that they can support the economy during economic downturns. The evaluations are performed by estimating their losses, revenue, and capital levels under hypothetical scenarios over nine quarters. Below shows the top six banks in the U.S. based on test performance. 

Blue Chip Partners 2021 with data from The U.S Federal Reserve

The 2021 scenario tested a severe global recession, with commercial real estate and corporate debt markets being struck the hardest. The result: all 23 banks passed with flying colors. Additionally, they were able to stay well above their risk-based minimum capital requirements.

You Don’t Need To Stock Up On Cash Either

At the start of the pandemic, there was a sharp increase in withdrawals from people stockpiling their money at rates similar to what we saw during Y2K. These bank runs are unnecessary as, since 2006, the FDIC insures up to $250,000 per-depositor per insured bank for each account ownership category. Your checking, savings, and money market deposit accounts, as well as certificates of deposit, are insured. However, it is essential to note that mutual funds, annuities, stocks, and bonds are not insured- even if acquired through a bank. If holding a joint account, you and your spouse would receive $250,000 in coverage for your joint-account balance, plus $250,000 per person for any individual accounts you have, up to a maximum of $1 million.

Rest Easy

Hopefully, with the cash out from under your mattress, you can have a more comfortable sleep knowing your money is safe and insured at your bank. It is there for withdrawal when you need it, and there isn’t much of a need to make a panic withdrawal, even in times of uncertainty. 

To read more about the Fed’s 2021 banking stress test, view the full report here. 

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