People shouldn't panic after the recent bank collapses, experts say. Here's the smart thing to do | CNN Business

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In the wake of failures at Silicon Valley Bank and Signature Bank and separate issues at Credit Suisse and First Republic, many Americans are asking the question: Is my money safe?

Lloyd Blankfein, the former CEO of Goldman Sachs said the answer is not black and white on “Fareed Zakaria GPS” Sunday. “The answer is kind of a yes with an ellipsis,” Blankfein said. That’s because the government took away the Federal Reserve’s ability to issue a blanket guarantee of all deposits in the system, a power it utilized in 2008.

The expression that gets tossed around in these conversations is moral hazard – meaning if these depositors are protected, “they and other depositors in the future won’t be so careful where they leave their money.” This could cause a repeat of the current crisis, he said. Blankfein supported a policy change to raise the FDIC-insured limit. “Do we want to make it the duty of depositors to do that kind of forensic accounting analysis on banks?” Blankfein said.

 

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