With rising concerns over troubled financial institutions, many people may decide that burying their money in the desert a la Heisenberg might be a more practical solution than trusting their bank. However, it might not be time – not just yet, anyway.
Regardless of the many bankruptcies, takeovers, and mergers, most of our banks are still secure. WaMu and Wachovia were the exceptions to the rule. In fact, banks are required to set aside a certain amount of funds to even be FDIC insured; the total amount in reserve is nearing record highs of over $1.5 trillion.
With the news that there are over 100 banks on the FDIC’s “Troubled Banks” list, keep in mind that there are nearly 9,000 well-established banks in the United States, and if the majority begin to fail, humanity will probably have a lot more to worry about than just their savings. Media likes to highlight drama, not normalcy. In the past 25 years, less than 15% of banks who were on this list actually failed – and those that failed were either bought out by the FDIC or another banking institution, or closed.
This type of news can also be troubling for not just banking customers, but employees, as well. Without good employees, even the best banks can fail. So it is important that financial institutions also make their employees feel secure. Otherwise, it could be a “Chicken Little” type of chain reaction. Scared employees can scare off scared customers, if not properly informed.