What happened to savings accounts during recent bank failures
Between March 2023 and the end of that year, three major U.S. banks failed: Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank. When a bank fails, the Federal Deposit Insurance Corporation (FDIC) takes over and protects deposits up to $250,000 per account holder per bank. Accounts above that limit faced losses, though the exact number of accounts that lost money depends on how much each person had deposited.
At Silicon Valley Bank alone, roughly 152,000 deposit accounts were affected when the bank closed in March 2023. Not all of those accounts lost money—only those holding more than $250,000 did. The FDIC's data showed that about 90% of SVB's deposits exceeded the insurance limit, meaning the majority of account holders there faced partial losses. Signature Bank and First Republic Bank followed similar patterns, with most deposits concentrated in accounts well above the federal insurance cap.
The actual number of individual savings accounts that were "wiped out" completely is much smaller than the total number affected. A complete wipeout would mean an account holder received nothing back. In practice, the FDIC paid out the insured $250,000 portion to nearly all depositors within days, and uninsured portions were recovered gradually as the failed banks' assets were sold off. Most uninsured depositors eventually recovered 80 to 90 cents on the dollar, though it took months.
Key Takeaways
- Silicon Valley Bank's failure in March 2023 affected roughly 152,000 deposit accounts, though only those holding more than $250,000 per person faced any loss at all.
- The FDIC insures up to $250,000 per account holder per bank, so deposits within that limit were protected in full and paid out within days.
- Most uninsured depositors recovered 80 to 90% of their excess deposits over several months as the FDIC sold off the failed bank's assets.
- Complete account wipeouts were rare; most losses were partial and affected people and businesses with very large deposits concentrated in a single bank.
How FDIC insurance protected most account holders
The FDIC's $250,000 insurance limit per depositor per bank is the reason most people did not lose money during these failures. If you had $200,000 in a savings account at Silicon Valley Bank, you received the full $200,000. If you had $300,000, you received $250,000 immediately and the remaining $50,000 entered a claims process for uninsured funds.
The speed of FDIC payouts meant that insured depositors saw their money returned within one to three business days in most cases. The FDIC transferred insured deposits to other banks or created temporary accounts so people could access their money without waiting for the failed bank's assets to be liquidated. This is why the number of people who actually lost access to their money was far smaller than the number of accounts that were affected.
Who held the accounts that faced losses
The accounts that lost money were not typical personal savings accounts. Silicon Valley Bank specialized in lending to technology startups and venture capital firms, so most of its large depositors were businesses, not individuals. Signature Bank served similar clients in the cryptocurrency industry. First Republic Bank catered to wealthy individuals and small business owners.
This meant that the people and organizations facing losses were predominantly business owners, venture capitalists, and high-net-worth individuals who kept millions in operating accounts at a single bank. A typical household savings account of $50,000 or $100,000 would have been fully protected. The failures did not wipe out ordinary personal savings accounts because ordinary savers rarely deposit more than $250,000 in one place.
How uninsured deposits were recovered
When the FDIC takes over a failed bank, it sells the bank's assets—loans, securities, real estate, and other holdings—to recover money for uninsured depositors. The process is not instantaneous. At Silicon Valley Bank, the FDIC began paying out uninsured deposits in tranches starting in May 2023, about two months after the failure.
By the end of 2023, uninsured depositors at SVB had recovered approximately 90 cents on the dollar. At Signature Bank, the recovery was similar. This means someone who had $500,000 in an account received $250,000 immediately (the insured portion) and eventually recovered about $225,000 of the remaining $250,000 (90% of the uninsured portion). The full recovery process typically takes six months to a year, depending on how quickly the FDIC can sell the failed bank's assets.
What changed after these bank failures
The 2023 failures prompted Congress and regulators to examine deposit insurance limits and bank oversight. Some proposals suggested raising the $250,000 cap for certain account types, particularly for business operating accounts. As of now, the limit remains $250,000 for standard savings and checking accounts, though special categories exist for retirement accounts ($250,000 each), trust accounts, and certain other structures.
The failures also highlighted the importance of spreading large deposits across multiple banks or using deposit insurance products designed for higher balances. Money market accounts, certificates of deposit (CDs), and other products can each carry their own $250,000 insurance limit if held at different institutions. Businesses and wealthy individuals learned to use this strategy to protect balances above the standard limit.
How to protect savings above the insurance limit
If you have more than $250,000 in savings, the FDIC offers several ways to structure accounts so that each portion is separately insured. A joint account with another person receives a separate $250,000 limit for each owner, so a married couple can protect up to $500,000 in a joint savings account. A revocable trust account can protect up to $250,000 per beneficiary, so a trust with three named beneficiaries can protect $750,000.
Retirement accounts—IRAs, 401(k)s, and similar accounts—each receive their own $250,000 insurance limit, separate from your regular savings account limit. If you have both a traditional IRA and a Roth IRA at the same bank, each is insured up to $250,000. Spreading deposits across multiple banks is the simplest approach: $250,000 at Bank A, $250,000 at Bank B, and so on, with each account fully insured.
The FDIC's website includes a tool called the FDIC Coverage Calculator that shows exactly how much of your deposits would be insured at any given bank based on how you structure your accounts. Using this tool before a crisis occurs is far simpler than trying to reorganize accounts after a bank fails.
Frequently Asked Questions
Did any personal savings accounts get completely wiped out?
Complete wipeouts were extremely rare. Most uninsured depositors recovered 80 to 90% of their excess deposits. A complete loss would have required the FDIC to recover almost nothing from the failed bank's assets, which did not happen at SVB, Signature, or First Republic.
How long did it take to get insured deposits back?
Insured deposits (up to $250,000) were returned within one to three business days. The FDIC moved quickly to restore access to insured funds so people could pay bills and meet payroll. Uninsured deposits took much longer—six months to over a year—as the FDIC sold off assets.
What if I had money in multiple accounts at the same failed bank?
The FDIC counts all deposits you hold in the same ownership category at the same bank toward the $250,000 limit. If you had a savings account and a checking account at Silicon Valley Bank under your own name, the total of both accounts would be insured up to $250,000 combined, not $250,000 each.
Can I increase my FDIC insurance limit?
The $250,000 limit for standard accounts has not changed, but you can structure multiple accounts to increase total coverage. Joint accounts, retirement accounts, and trust accounts each have separate $250,000 limits at the same bank, and you can hold accounts at different banks with no limit on total coverage across institutions.
Should I move my savings to a bigger bank?
Bank size does not determine FDIC protection—all FDIC-insured banks receive the same $250,000 coverage per depositor. Larger banks have more assets and may be considered lower risk, but the insurance protection is identical. The key is ensuring your deposits do not exceed the insurance limits at any single bank.