Chances are the answer is no. And if the answer is no, it’s fine to be a bystander for now.
You Probably Don’t Need to Run Anywhere
For individuals, the best bank stress test is a personal one. Do you have more than $250,000 at a single institution? The vast majority of people do not.
If you do, as Ms. Yellen acknowledged, the F.D.I.C. might not cover your theoretical losses. It’s simple enough to solve for this by opening accounts at other banks, so that you have $250,000 worth of coverage at each institution. (You might have more than that at a brokerage firm that stores your retirement savings. There are broad protections there, too, and you can read about them in the article I wrote this week with Tara Siegel Bernard, “Is My Money Safe?”)
When banks shut down, there is often panic and the kinds of lines you saw in photos of Silicon Valley Bank branches last week. Still, what generally happens for depositors whose balances in a failed bank are under the F.D.I.C. cap is this: Some other entity steps in, and deposits and A.T.M. withdrawals continue more or less as normal.
Still worried? Set up a backup checking account at another financial institution. Make sure the debit card stays active. Park a bit of money there if you have some to spare. Link it to any outside savings or brokerage accounts you have, so you could deposit money quickly if need be. And watch for monthly inactivity or low-balance fees.
You Probably Shouldn’t Sprint From Stocks, Either
As unsettling as the financial world may seem right now, the overall U.S. stock market rose this week. Sure, financial stocks bounced up and down, but if you have most of your stock investments in plain-vanilla index funds that own thousands of different company shares — and you should — your net worth may be higher than it was a week ago.
Even so, it is natural to wonder if the prospect of more bank failures is the sell-everything sign that you’ve been waiting for. Wouldn’t you feel better if all of your money was in cash and not in gyrating stocks?
It might, for a bit. But consider these numbers that Nejat Seyhun, a professor at the Ross School of Business at the University of Michigan, generated this week. Imagine that you held a giant basket of just about every U.S. stock and left it alone from 1975 to 2022. The return on that portfolio would have been 1,426 percent.
