Drew Thomas 0:12
Okay, so welcome to yet another episode of AmeriServ Presents: Bank Chats. I am Drew Thomas, this is a 2 Cents episode, and therefore, I have the omittable Jeff Matevish. Hey, Drew. Yeah. So, so what are we talking today?
Jeff Matevish 0:26
We are talking FDIC.
Drew Thomas 0:29
FDIC. Okay. So what's the FDIC?
Jeff Matevish 0:32
That is the Federal Deposit Insurance Corporation.
Drew Thomas 0:34
Indeed. And why are we talking about the FDIC today? Well, other than the fact that we don't want people going to sleep on us, why are we talking about the FDIC?
Jeff Matevish 0:43
Well, so a few days ago, we got a notification that, or a news article came out that starting April 1, from April 1 until the end of the year, every FDIC logo is being updated. It's going to kind of spell out what the FDIC is a little bit better, make it a little bit more transparent for everyone to understand what the FDIC does. Yeah. So, we have what, from now till the end of the year to change pretty much everything FDIC.
Drew Thomas 1:11
And you would think that you would think because it feels like it's everywhere, it is, from a banking perspective, we feel like we've put it on everything. But this is going to make it more conspicuous that we are an FDIC insured financial institution, right. And this is going to be true of just about every bank across the country. I mean, that's, I mean, most banks are FDIC insured. And so, what's the purpose behind it? I guess, like, is it actually going to be like the gold signs are going to change that are in the branches, or are there going to be things like...
Jeff Matevish 1:42
So, right now on the gold signs it does say at the bottom, backed by the full faith and credit of the US government. But it's very small. Yeah, you know, the letters FDIC stand out. And if you don't know what that is, and you know, just a bunch of letters. So, the new logo is going to have bigger, bolder, you know, the backed by the full faith and credit of the US government.
Drew and Jeff 2:03
Okay, so, so let's talk a little bit about the FDIC and what it is, because I think that there is some confusion about that. Okay. I think there's people that they do see it as just, well, that's the letters that are on every bank, but I don't really know what that means. Right? And so, I guess we can start with some history about the FDIC, and like, where it was created and why, and then we can kind of go into what it does. So, Mr. History, man, yeah, go ahead. Yeah, I know, I'm like that guy, that I'm the guy that watched Modern Marvels on History Channel all the time, and was like, oh, concrete. Yes, please. Let me, you know, give me an hour on that. Which by the way, concrete is fascinating when, anyway, I digress. So, the FDIC was created in 1933. And it was, it was basically done after the rise in bank failures that were happening during the early part of the 30s, the Great Depression going on, right 1929, the stock market crashed. And there were a lot of people that were taking their money out of their banks. And the banks were failing because they didn't have enough money to cover their losses or cover the, cover the deposit they were holding. And it really led to this rise of a lot of people sort of not being comfortable with the security of their money in banks. Right. So, the federal government actually made every bank close. And then there were new rules and regulations put in place in terms of the governance of deposits that were held at the banks. And the banks had to agree to those new rules and regulations before they were permitted to reopen. Right. Yep. So, somewhere around here, I actually have our original charter. That was, that was, yeah, it was from 1933, whenever we were permitted to reopen. Yeah. Yeah, it's pretty cool. It's under, we were US National Bank then, not the US National Bank of today, we were a different US National Bank. Back then there was no internet. So, the US National Bank could be just any, anywhere. There are lots of US national banks. But yeah, so, so that's where that comes from. So, essentially, the FDIC insures your deposits $250,000 per depositor, per ownership category at each FDIC insured bank. Okay. So, tell me what that means.
Jeff Matevish 4:07
On the hot seat. Okay. Yeah. So, all of your accounts put together at one financial institution deposit accounts, yeah. Is insured up to $250,000. Or actually at least $250,000.
Drew Thomas 4:20
Yeah, at least. I mean, that's what you can [guarantee]. That's what you're guaranteed.
Jeff Matevish 4:24
You're guaranteed $250,000 insured, so if you have, if you have multiple accounts at one bank, add them together, you're insured $250,000. Yeah, so the question is, so if you are in a joint account, how does that work?
Drew and Jeff 4:38
Okay, so, so yeah, so you're right. So, let's break this down. So, when we look at some of the issues that happened, like last year with that, with those two banks, that failed, right, they had a lot of money from very few depositors, relatively speaking. So, they had a lot of eggs in very small baskets. And what happened was, a lot of those people decided they wanted their money right then and there, which they're obligated to get, but that meant that the bank didn't have enough funds from other depositors to keep themselves afloat. Yeah. Right. So, so most banks will make sure that their deposits are spread out over lots and lots and lots of customers, so that if you, Jeff come in and say, hey, I want all my money, I'm able to say, okay, here you got, right, right. I don't want you to do that. But you're entitled to your money, right. But if too many people come in all at once and say they want their money, right, the bank only has so much on deposit available, right? Because a bank is in business to loan money. So, what really a bank is doing, is it's taking your deposits, and then it's loaning a percentage of those deposits out as far as lending. And then those are being paid back. And there's a yin and yang, there's a give and take, fancy math, yep. So, and but a bank is required to keep a certain amount of deposits available for withdrawal, right. So, you cannot, as a bank, lend out every dollar you have on deposit, you have to retain a certain amount. But if too many people come in all at once and say they want their money, that's where the bank runs into problems. So, that's where the FDIC comes in and says, okay, you know, if you Jeff have, say you have three accounts at a bank, and each of those accounts has $100,000 in it. Okay. So, that's $300,000 total across the three at that one bank. So, if something were to happen to that bank, you would be insured for at least 250,000 of that money, right? Because you are the sole owner on all three of those accounts. So, even those are $100,000 in one, $100,000 in another, and $100,000 in another, you're not insured per account, you're insured per bank for you, right? Okay. So, you add all those together, and then you get whatever you get, and that's, that, you're, you're insured for at least $250,000 of that money. If you and your wife have those three accounts, well, if you're joint owners on each of those three accounts, well, now you're insured up to $500,000, because you get $250,000 insured against those three accounts, and so does your wife. So, if there's $300,000 in those three accounts, then you would insured for all of it. Guaranteed. Okay, right? Because you get 250, she gets 250.
Drew and Jeff 4:38
Okay. And that's per financial institution though too. So, if you had money in a different bank, that's insured as well, you could be insured. Right? Yeah. Right.
Drew and Jeff 6:55
So, just because you got paid out on one doesn't mean you wouldn't get insured on the other, right. If you have bank A and bank B, right. Now, again, I'm gonna reiterate, it is exceedingly rare for bank failures to happen in today's world. Oh, yeah. Right. That doesn't mean they don't, remember, we saw examples of that last year. I mean, it can happen. But those people were made good. And matter of fact, I think they were actually made whole, like they were, the federal government ended up giving them back all of their money, even though they were only insured technically up to 250. They ended up getting, but there's no guarantee of that so the, so I just want to make sure that that's, that's understood that the $250,000 is what you're guaranteed to be insured for. Yeah. So, yeah, so that's the thing like, you know, keeping your money in a bank, the whole idea behind the FDIC was to give you that, that sense of security to know that no matter what happens to your bank, your money is safe.
Jeff Matevish 8:02
So, no more hiding your money under your mattress, like your grandparents.
Drew Thomas 8:05
Oh yeah, please don't do that. Okay, please. When it comes to stuff like that, I don't care what bank you put your money into, just don't do that. It's unsafe on so many levels. I mean, if people get wind first, okay, let's look at it this way. [If] people get wind, first of all, that you have that amount of money in your house, you're putting yourself at risk for people coming in and stealing from you, possibly robbing you and causing you physical harm. You don't want to do that. Alright, you don't want your money in a place where it's unsafe as far as keeping you as a, as a human being safe, right. But more than that too, you know, you're also putting yourself at risk or your money at risk if there's some sort of an event. Like god, god forbid, there's a fire, yeah, or a tornado, or a hurricane, or something that happens to your home where you're forced to make a decision on, do I save my life? Do I save my pet's life? Or do I save the money that's hidden under my mattress? Like, it's not worth it. Right? So, and you don't want to lose your I mean, you don't want to lose your life savings because you need your money. But you don't want to lose your life either. So, please don't hide your money in your house. I mean, I know somebody, I mean, keeping a certain amount of cash set aside, I get, but not all of it, like don't do that your bank is safe, you know, and the FDIC is designed to make sure you feel that it is safe because it's insured by the federal government over and above whatever your bank itself is doing. Right, right. There's also just, just to make everybody aware, I know the podcast called Bank Chats, but we talked about all things financial and financial related, right. There is a credit union version of the FDIC. Yeah. And that is called the NCUA, the National Credit Union Administration. I want to say I want to double check. Administration. Yes.
Drew and Jeff 9:45
Is that what I said? Yeah, that's Yeah, okay. You got it. Right.
Drew Thomas 9:50
So, the National Credit Union Administration, they, they have a very, very, very, very similar program. Yeah. Same limits, essentially the same rules. I'm not going to get into all the details because there may be some, some little nuance, yeah, difference. Yeah. Canadian Football versus the NFL, AFL versus NFL. Yeah. So, I don't know if there's any little tweaks or anything like that, but, but essentially, they have a very, very, very similar program. Okay. So, if you have your money in a credit union, then you're still protected.
Jeff Matevish 10:18
So, it doesn't matter where you have it, as long as it's at a financial institution, you're covered if that financial institution is insured, yeah. Okay.
Drew and Jeff 10:26
Yeah. Now, let's also touch just a minute to I think it's important to touch on what kinds of accounts are insured. Oh, yeah. Right. Right. So, checking accounts, savings accounts. That's the Federal Deposit Insurance Corporation, so deposits, deposit accounts, right. Okay.
Drew Thomas 10:41
So, if you have a CD, if you have a checking account, a money market, those are, those are the kinds of things that are insured. Please keep in mind that the FDIC does not insure investments. So, if you have anything that's tied to the stock market, if you have life insurance, if you have any kind of other investments that your bank helps you with, right, or that their trust company, their trust department helps you with or something like that, those kinds of accounts, those kinds of financial instruments are not covered. Okay? So, please keep that in mind that if you are investing, and there is the potential for loss, right, because, and you're going into it knowing that there is a potential for loss of that type of thing. Your, your 401 K, right, your 401 K can go up or down, right, based on where your money is invested. Anything volatile. Yeah. Yeah. You know, I hate to even use this, bring up this term, but, but things like Bitcoin and things like that, the those, those are not insured, right? So, just keep that in mind, too. You know, we're talking about depository, stuff.
Jeff Matevish 11:46
Okay. Yeah, yeah.
Drew Thomas 11:47
So, what else do we got? Where do we have more information about this stuff?
Jeff Matevish 11:52
So, we do have an article in our Financial Library section on our website, it's called, "Is the Money in My Account Safe?" And in that article, you'll learn a little bit more about the FDIC, the NCUA, what kind of accounts are insured, and how much and you know, a little bit more in depth than what we've talked about here. So, you can actually you can get more information from that article.
Drew Thomas 12:15
That's awesome. Yeah, that's, I mean, and we'll put the link in the description. Oh, yeah. Yeah. So, I know, we always say like, when we talk about stuff, like don't click on links, but you can click the link in our description, that's fine. Yeah. So, definitely keep an eye on that. There's lots of, there's other good information out there, too, on our website about other stuff, about the FDIC, so essentially, I guess, to wrap all this up, the bottom line is these changes don't really affect the consumer, except to make you more aware, right, of what institutions are covered and which ones are backed by the FDIC and which ones are not. Right. So, just keep that in mind that when you start seeing some of these changes, and these additional additions on your bank signage, or the ATMs or their mobile apps or something, it's, it's, it's nothing other than to just make you more aware. Really, is what it comes down to.
Jeff Matevish 13:04
Yeah, you know, this change just sparked to good, you know, hey, this might make a good 2 Cents. Indeed.
Drew and Jeff 13:09
Yeah. And I think it has. I think so too. I don't know what everybody else thinks we'll have to find out. Yeah, leave a comment. Yeah, please do. Yeah, let us know. You know, give us some feedback, go to the website, ameriserv.com/bankchats, right, there's a forum there. You can give us some feedback. Tell us what you think of the show. If you have questions that you'd like to answer. What we'd really like to do ultimately is have a show that we just go through everybody's questions. Yeah. And start, you know, answering some things back. So, that would be great. Yeah, just go to the website. Give us a question. Let us know what's going on.
Jeff Matevish 13:39
Yeah. Topics that you want to hear us talk about. Yeah. Also, a good idea. Yeah.
Drew Thomas 13:44
If we haven't talked about something that you're like, why haven't they talked about that yet? Let us know. Yeah, we'd love to know. And if you haven't followed the show, if you haven't subscribed to the show, first of all, why not? But please do because not only does it make sure that you don't miss any episodes or information, but it also helps the show. Yeah, it does. Absolutely. So, the more subscribers we have, the more likely it is that these algorithms out there will surface the show a little higher and make other people more aware of us. And if you like what you hear, it really does help us if you subscribe and follow the show or whatever, whatever platform you're on. They use different terms. But subscribe, follow, like, whatever it is. Yeah, that really helps, too. Yeah. So yeah. All right.
Drew Thomas 14:25
I think we're good.
Drew and Jeff 14:26
I think it was good. Yeah. Anything else? I'm good for the day.
Drew and Jeff 14:29
All right. Thanks Drew.
Drew Thomas 14:42
This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts with the goal of helping to take some of the mystery out of financial and related topics, as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast and any resources available for download from our website or other resources relating to Bank Chats, is not intended, and should not be understood or interpreted to be financial advice. The host, guests, and production staff have Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The host of Bank Chats is not an attorney, accountant, or financial advisor, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation.
Drew Thomas 15:48
Thank you for listening. Please check out our full library of episodes which can be found on the ameriserv.com website. You can also download or stream the podcast from your favorite podcast app.