So is the fear valid? What do you need to know about your bank to make sure your money it is safe?
Most importantly, make sure your bank is FDIC insured. FDIC insures your deposits up to $100,000 per person and $200,000 per married couple. You can check on your bank's website to verify if they are FDIC insured. Only if your bank is not FDIC insured, would I suggest moving your account to another bank. If you have more than $100,000 in an account, your best bet would be to split your money between different financial institutions and stay within the FDIC limit of $100,000. The FDIC can come to the rescue of those individuals whose account exceeded the $100,000 limit but they are by no means required to do so.
That is good to know about standard checking and saving accounts but what about Money Market accounts?
Money market funds are the cash portion of your investment accounts. Unlike most checking and saving accounts, they are not FDIC insured. Money market funds are backed by financial institutions. Another concern the public has is the validity of their annuities and life insurance policies. Fortunately, the federal government has taken measures to actively make sure that the policies written by issuing companies are going to be honored.
Yesterday the market was down a lot and then finished way up. What changed?
Well, news started to break that the government might be considering creating a huge safety net for banks -- similar to what it did in the S and L crisis. This would likely prevent future bank failures. The market was thrilled about this news and financial stocks skyrocketed at the end of the day.